BriaCell Therapeutics: Fast-Tracking High-Potential Breast Cancer Immunotherapy (BCT:CA)

Thesis

BriaCell Therapeutics (NASDAQ:BCTX) (BCTXW) (TSX:BCT:CA) is a Canadian biotech company focused on developing treatments against various solid tumors, by using irradiated and further engineered cell lines against tumors. The stock has not been covered on this website before.

Lead candidate Bria-IMT’s mechanism of action is differentiated from other immunotherapies, and may bring several advantages. Next to several preclinical treatment candidates in a variety of tumors, BriaCell itself puts Bria-IMT for the treatment of third-line breast cancer at the forefront of its programs. Advanced metastasized breast cancer is notoriously hard to treat, as patients in this disease setting are often already gravely ill with only months to live.

Bria-IMT has received FDA fast-track designation on the basis of its tolerability profile and overall survival data, improving that reported in literature by 50% or more. After two earlier trials, Bria-IMT is currently being tested in combination with immune checkpoint inhibitors. Earlier results have shown either disease control or progression-free survival [PFS] versus last therapy in 70% of patients, and improvements in quality of life and pain levels.

The company has recently announced that the FDA has agreed on the design of its potentially pivotal registrational Phase 2 study in advanced breast cancer, and on its primary endpoint, which is similar if not identical to what gave rise to Bria-IMT’s fast-track designation.

Having seen best responses from Bria-IMT in patients with matching HLA molecules, Bria-OTS hopes to allow these best responses seen with Bria-IMT in all patients, by creating 15 HLA-matching Bria-IMT versions, together referred to as Bria-OTS. And the company has several other things going on.

I see a qualitative and determined management and meaningful upside for the stock. The year 2022 saw a corporate buyback program of up to 10%, uncommon for a biotech company. The company enough cash to drive Bria-IMT forward. There is recent insider buying, and the company has just announced that it is considering taking measures against naked short selling.

Introduction

BriaCell’s pipeline is impressive, but at this point the focus is really on the first two drug candidates shown below.

This is the company’s development timeline.

This is the company’s five-year stock chart.

The recent uptick may be related to the company announcing positive data at the latest breast cancer symposium, new patents for Bria-OTS for multiple cancer indications, a timeline for the IND-filing, and a positive end of phase II meeting with the FDA with the start of its potentially pivotal registrational trial for Bria-IMT.

Analyst price targets have an average of $20, which translates to an average 170% upside. I believe these may be revised upward over the coming years, with BriaCell’s progress unraveling.

Bria-IMT

Mechanism of action

Bria-IMT’s mechanism of action is differentiated from other immunotherapies. Bria-IMT, or SV-BR-1-GM, is an irradiated allogeneic cell line derived from a breast cancer cell. As a cancer cell, it is supposed to induce a response by the immune system. Irradiation should ensure it does not proliferate. In that sense, it works similar to INmune Bio’s (INMB) INKmune, but that’s where the comparison ends. As a breast cancer cell line, it is thought to be most efficacious in breast cancer patients. It expresses HLA class I and II molecules, which may make patients with matching HLA classes more susceptible to successful treatment. Bria-IMT is engineered in different ways with two purposes. The first purpose is to have Bria-IMT function as an antigen-presenting cell which is recognized by the body’s immune system, so that the immune system recognizes those antigens present on breast cancer cells. The second purpose of the engineering is to boost the immune response by secreting GM-CSF. Bria-IMT antigens presented to CD4 + and CD8+ T cells induce a tumor-directed immune response. Bria-IMT also directly activates T cells.

The HLA system encodes cell surface molecules that present antigens for T-cells. People have different HLA types. Bria-IMT presents HLA class I and II molecules, and better responses have been seen in patients with matching HLA types.

The first two proof-of-concept trials

BriaCell has conducted a first clinical trial with the parental cell line SV-BR-1, and then two others using the engineered version Bria-IMT.

In each trial, no significant adverse events were noted, and the drug candidate was well tolerated. Adverse events were limited to minor irritation at the injection site.

In the first trial, a median overall survival of 12.1 months was noted. GM-CSF and cyclophosphamide were added to the treatment regimen. A detailed report on that trial can be found here.

In the second trial, a medial overall survival of 35 months was noted. One responder had seen a more than 90% regression during treatment, and upon relapse when halting treatment, again responded to re-treatment. Cyclophosphamide and IFN-α had been added to the treatment regimen. A detailed report on that trial can be found here.

Fast-track designation

On the basis of the above trials, BriaCell has on April 13, 2022 received FDA fast track designation for Bria-IMT for the treatment of metastatic breast cancer.

This is the data which the FDA apparently relied on, as presented at the San Antonio Breast Cancer Symposium in December 2021, showing an overall survival as ranging from 12 months to 21 months, which is at least 50% better than reported in the third-line setting in 2020. Efficacy also seems to improve with HLA-matches and cancer grade match, which may give way to targeted therapy.

The Phase I/II trial

Bria-IMT is currently being tried in Part II of an open-label Phase I/II trial, both as monotherapy, and in combination with immune checkpoint inhibitors. The monotherapy study had 3 2-week cycles, followed by monthly treatment. The combination study had 3-week cycles. The combination with immune checkpoint inhibitors was thought useful because of >90% expression of PD-L1 on patients’ cancer cells, as checkpoint inhibitors lower immune suppression, which could be synergistic with Bria-IMT’s stronger immune response.

The Phase I part is finalized. In October 2022, the company mentioned that the randomized Phase II part efficacy evaluation was progressing, with survival data and clinical benefit being compiled.

Data from the Phase I part were presented at different times, with the latest update being at the 2022 San Antonio Breast Cancer Symposium, where BriaCell presented several posters showing the showing multiple benefits from treatment with Bria-IMT, as announced on December 8, 2022.

In all subsets of patients, Bria-IMT presented an excellent tolerability profile, with no dose-limiting toxicities.

Most patients experienced progression free survival that was similar or better than their last therapy, which is expected to continue as patients remain on study.

In combination with Incyte’s PD-1 inhibitor retifanlimab, in 12 heavily pretreated patients with a median of 5 prior regimens, 70% of patients showed disease control and/or progression-free survival compared with their last therapy regimen.

Significant tumor reductions were reported in several patients. Tumor reduction and disease control rate was seen in 57% of patients, with the potential of progression-free survival compared to last therapy. The progression-free survival data is still early, as patients continue to remain in the study.

In combination with PD-1 inhibitor Keytruda, the following responses were seen in the Phase I/II trial in 11 patients with a median of 7 prior therapies in Phase I/II.

Disease control rates of 100% and 75% were seen in patients with higher HLA matches, including 1 partial response [PR] and 3 stable disease [SD]. Significant tumor reductions were again reported in several patients.

Bria-IMT’s efficacy was also seen to correspond with breast cancer grade, which is logical as Bria-IMT is derived from a grade II breast cancer cell line. About 40% of breast cancers are grade I/II. In patients with grade I/II HR+, a clinical benefit rate of 63%, progression free survival of 5.8 months, and objective response rate of 25% were noted. These patients actually represent a large segment of the patient population. In the monotherapy arm, 71% or 5 in 7 grade I/II patients had clinical benefit, and in the combination arm, 86% or 6 in 7 patients who were grade I/II had clinical benefit. Both sets of patients were heavily pretreated, with a median or respectively 7 or 6.5 prior regimens.

Patients on Bria-IMT were also reported to have better quality of life scores and less pain reported by many gravely ill advanced metastatic breast cancer patients treated with the Bria-IMT™ combination regimen.

Efficacy in metastasized cancer was also seen, with the below reduction in a metastasis behind the eye as most impressive example.

Finally, Bria-IMT was shown to reduce circulating tumor associated cells, CAMLs and CTCs, biomarkers that predict progression-free survival and overall survival.

These results are impressive in light of similar clinical trials (page 11), showing response rates from 6.9% to 59% with a median of 24%, progression-free survival ranging from 8 weeks to 12 months with a median of 5 months, and overall survival ranging from 6 months to 31 months with a median of 13 months.

Ten sites are enrolling patients at this time, and the company is noting an uptick in enrollment. Guidance here is that additional clinical data should be communicated in the first half of 2023, possibly at the AACR meeting in April 2023, with an update of patients in the Phase 1 trial and possibly a first look at the Phase 2 data.

Advantages of Bria-IMT’s differentiated character

I have stated before that analyst overview do not yet include these differentiated approaches using irradiated cancer cell lines in their oncology overviews. I believe this will happen given their differentiated approach, and as good results will eventually find their way to the market.

As Bria-IMT does not have any theoretical cross-resistance or overlapping toxicity with other treatments, it could be used as an additional and life-prolonging treatment options, all the more so as it comes with such an advantageous safety profile. This may be the biggest argument in favor of a long position in BriaCell.

As an irradiated cancer cell line, Bria-IMT will express multiple ligands/receptors at once, without the need to engineer each of them. Bria-IMT expresses at least 22 immunostimulatory genes, and dozens of breast cancer antigens.

Cell engineering does takes place, but subsequent proliferation appears rather easy, with a potentially lower production cost.

The good tolerability profile allows repeat dosing and persistence of therapy, which is an issue in many other CAR-T therapies. In one example, one patient had seen tumor regression until fifth dosing, the maximum that had been allowed by regulators. The tumor came back afterwards, and BriaCell had been authorized to give additional doses to the patient, who subsequently saw his tumor regress again.

Readying for a potentially pivotal trial

On January 18, 2023, BriaCell announced that it had a positive end of phase II meeting with the FDA, which led to an agreement from the FDA on the primary endpoint and the essential elements of the pivotal registration study design. The trial will be in combination with an immune checkpoint inhibitor in advanced metastatic breast cancer, and in case of success, would allow the company to submit a Biologics License Application (BLA) and go for commercialization approval.

A letter to shareholders of January 24, 2023 mentioned that the pivotal and potentially registrational study’s endpoint would be linked to survival improvement, which is good as it was also the basis for fast-track designation. This was BriaCell’s preferred primary endpoint.

The addressable population is large, namely all breast cancer patients who have failed the available approved therapies. That may eventually allow for a larger market than the metastatic breast cancer market.

Patient dosing should be able to start in the second half of 2023.

Bria-OTS – HLA-matching expands treatment scope and potential efficacy

Bria-OTS is being developed as a patented HLA-matching version of Bria-IMT, which should allow superior efficacy due to HLA-matching in over 99% of patients with advanced breast cancer. Bria-OTS will have 15 distinct HLA-subtypes. The goal is to treat patients with the version of Bria-OTS which matches their biology. Like Bria-IMT, it is an off-the-shelf approach, but this time allowing personalization and therefore hopefully systematically optimum responses.

BriaCell eventually plans to expand the technology behind Bria-OTS to different cancer types, with platform potential.

An IND is expected to be filed in the first half of 2023, and clinical studies should commence shortly after IND clearance. BriaCell expects to start dosing patients with advanced metastatic breast cancer in a Phase I/IIa clinical trial in the first half of 2023.

Other treatment candidates – things under the hood

Three further drug candidates have been identified for melanoma, lung cancer and prostate cancer, Bria-Pros, Bria-Lung and Bria-Mel, with the one in prostate cancer currently receiving most attention. . In July 2022, BriaCell announced a partnership with Waisman Biomanufacturing to manufacture and supply Bria-Pros for the treatment of prostate cancer, with a Phase I/II trial expected to follow.

BC106 is a highly selective PKCδ -inhibitor that is seen to produce substantial cytotoxicity against multiple human tumor lines, including multiple RAS transformed tumors, at nanomolar concentrations. That selectivity leads to potentially targeted therapy, as PKCα inhibition may lead to toxicity against healthy cells.

A lot of things are going on under the hood. Just in 2022, three further announcements are worthwhile highlighting. On November 30, 2022, BriaCell announced an AI collaboration and license agreement with BioStrand to develop further anti-cancer antibodies. On August 4, 2022, BriaCell announced having licensed soluble CD80 from the University of MarylandEarlier in 2022, a research agreement with Harvard Medical School, with the option to license innovations owned by Harvard, was announced to identify novel cancer targets.

Valuation considerations

The global breast cancer market size is almost $32 billion, and grows with a CAGR of about 10%, with 264,000 cases being diagnosed in women in the US each year. Metastatic breast cancer is about 6% of those cases. Given the content of the FDA’s agreement, I am willing to consider that BriaCell may eventually be approved for a larger market than only that of metastatic breast cancer, namely for the entire breast cancer market. Still, it probably will not be used as a first line therapy. 20% of the total market of women diagnosed with breast cancer in the US is 52,800. According to the company’s timeline, a BLA should be able to be filed in 2025, in which case approval could follow in 2026. Pricing is a difficult one. I am assuming a $50,000 price tag for the therapy, which is well below current immunotherapies. For that pricing, peak sales could be at $2.4 billion. A probability adjustment by 20% would bring this to $528 million.

Bria-OTS could be much more efficacious and could address a market that is potentially much larger.

The $150 million market cap is still far from a valuation that truly factors in the potential of success that BriaCell has already shown at this stage.

In its latest annual report, BriaCell itself included this calculation of the addressable market, for metastatic breast cancer only:

BriaCell’s annual report includes this overview of approvals for breast cancer and subsequent market uptake, showing a differentiated place for Bria-IMT and strong market potential, with the least performing approved drug having $235 million US sales, and the best performing one almost $3 billion. That underscores the realistic character of my approach above.

The company itself likes to consider that it is valued considerably lower than some of its peers, as shown below.

Note that several valuations are not up to date any more, some having gone up and others having come down. Most impressively, Fate’s (FATE) market cap is almost cut in half after a recent collaboration termination, after already having come off its 2021 high.

In recent news: BriaCell’s future actions against alleged naked short sellers

On January 23, 2022, BriaCell announced that the company is investigating the alleged illegal trade of securities which may have resulted in an artificial depression of the company’s share price. As a result, BriaCell is implementing a plan to address the issue which may include legal action. It thereby takes action in the wake of Genius Group’s announcement (GNS), and others such as Agriforce Growing (AGRI), Verb Technology (VERB), Ryvyl (RVYL), Helbiz (HLBZ) and SciSparc (SPRC).

What is the exact basis for that is unclear. BriaCell’s stock has been depressed, like other biotech companies, but the past year’s huge sell-offs are either not related to news, or to very positive news.

Particularly the sell-off from April 8, 2022 to May 12, 2022 bringing down the price from C$ 15.05 to C$ 5.58, seems impressive. On April 7, 2022, BriaCell announced preparatory work for Bria-OTS and on April 13, 2022 it announced FDA fast track designation for Bria-IMT, not really events that should lead to such downward pressure. Another drop on September 16, 2022, from C$10.9 to $ C8.07 is unrelated to news. Another brutal slide down from C$ 7.866 to C$ 5.9 again seems unrelated to news.

I am curious to see how this will play out in the longer run.

Determined Leadership – Corporate Buyback – Insider Buying

Looking at earlier credentials, BriaCell management is high-quality. The clinical strategy team has been involved in 19 earlier drug approvals. Insider ownership at 25% is also noteworthy; management has put several millions of dollars at stake here.

Uncommon for a biotech company, BriaCell has in September been buying back a considerable amount of its shares under its corporate buyback program announced in September 2021, to purchase up to 10% of common shares and up to 10% of listed warrants. That equates 1,341,515 common shares and up to 411,962 publicly traded BCTXW warrants over a 12-month period. The latest filing that I found showed that as of October 27, 2022, 1,031,672 common shares and 259,059 publicly traded warrants had been repurchased.

In December 2022, insider James Bondiarenko has purchased 50,000 shares, representing $ 245,940, and raising his stake in the company by about 40%.

Financials

BriaCell’s latest cash position was $37 million and its cash burn is only $11 million over the last year. The company recently considered that should be able to drive the Bria-IMT program forward without the need to raise additional financing.

BriaCell has 15.5 million shares outstanding, with 1,670,400 in options and 8,121,950 in warrants. The float is 11.41 million.

Risks

Like any biotech investment, investing in the biotech space comes with considerable risk. BriaCell has not received approval for its treatments yet. The competition in the oncology space is high, and good results from a competitor may lower expectations for success and commercialization for Bria-IMT or Bria-OTS. The FDA may impose a hold, in case patients would e.g. suddenly worsen with the cancer line which Bria-IMT was derived of. The trial can also not meet its endpoints, in which case a more difficult path to approval would await the company.

Conclusion

BriaCell is an undercovered oncology-focused biotech company with two impressive drug candidates, Bria-IMT and Bria-OTS, and preclinical candidates lined up for further expansion.

Bria-IMT, its main product, has been granted fast-track designation and comes with several advantages compared to competing immunotherapy candidates. The company recently announced a successful end of Phase 2 meeting with the FDA, and received agreement on the primary endpoint, similar to the basis for fast-track designation. This substantially de-risks the trial in my eyes. Throughout trial updates, Bria-IMT continues to confirm its tolerability profile and efficacy, which appear good enough for approval to me if repeated in the pivotal trial.

As best responses are seen in patients with matching HLA-types, the development of Bria-OTS was the logical next step. Bria-OTS is differentiated in 15 subtypes which should allow personalization of treatment and optimum response in all patients.

BriaCell has experienced and determined leadership, which can be seen by partnerships, continued efforts to expand the company’s pipeline, an executed share buyback program, recent insider buys, and a plan to take action against alleged naked shorting.

Even after the executed share buyback and in light of a low cash burn, the company seems to have sufficient cash to drive Bria-IMT to approval without the need for additional funding.

In light of the above, I give BriaCell a Strong Buy rating.