GlycoMimetics: A Cancer-Cure Lottery Ticket Grabbing My Attention (NASDAQ:GLYC)

A powerfully bullish chart pattern from late 2022 is found in the trading of small biotech research firm GlycoMimetics, Inc. (NASDAQ:GLYC). A flood of buying occurred when the company announced in early November somewhat better than expected quarterly earnings (I mean less income loss), alongside hints by management that a drug to treat a difficult-to-cure form of leukemia cancer was delivering uncommonly positive results in small Phase 1 and Phase 2 trials, with a Phase 3 underway. Company leaders have been somewhat perplexed (and excited) by the results being achieved and asked the FDA and medical experts to help verify their data and trial setups. The bullish take: it is possible the company has stumbled upon something of a cancer cure when used in combination with other therapies.

From the November 9th earnings call transcript:

… This past quarter, we made substantial progress with our pivotal Phase 3 trial of uproleselan in combination with chemotherapy in patients with relapsed, refractory, acute myeloid leukemia and we further strengthened our foundation in line with our goal to become a commercial stage company.

We are particularly excited to share with you today that the U.S. Food and Drug Administration recently cleared the addition of an Interim Utility Analysis to our uproleselan Phase 3 study protocol. We believe this Interim Utility Analysis should be essential given that the blinded pooled patient population in our study is living longer than expected.

As part of our decision, we conducted careful analysis of the followup data from previous AML, we engaged in multiple discussions with medical experts, and we met with the FDA in order to validate our plan. As a reminder, we completed enrollment of our pivotal trial one year ago this same week, and as we announced in our second quarter earnings call, the Phase 3 population is broadly similar to that of our completed Phase 1/2 study with respect to age, severity of AML, prior stem cell transplantation rates and distribution of relapse and refractory patients, which taken together gives us confidence that we recruited the appropriate patient population.

The Phase 3 study is slower accumulation of blinded pooled survival events prompts us to extend the overall survival event trigger projection for final analysis from mid-year 2023 to around year end 2023. Simultaneously, we see an ethical need for this interim analysis to address the possibility that this slowdown in patient events may relate to benefit from uproleselan study therapy …

Again, a few weeks ago, management released a little more of the raw trial data at the 64th American Society of Hematology Annual Meeting. With almost no fanfare and reaction by Wall Street initially, below is an excerpt of baseline findings:

The University of Texas MD Anderson Cancer Center, Houston, TX

This Phase Ib/II clinical trial evaluates safety, tolerability, and preliminary efficacy of uproleselan added to cladribine and low-dose cytarabine (LDAC) in patients with treated secondary AML. A majority of 15 patients enrolled were male (n=10) with ECOG status of less than 2 (ECOG 0=1; 1=10; 2=4). Median age was 71 years. Preliminary results from 12 evaluable patients at 3.3 months follow-up found cladribine and LDAC combined with uproleselan generated few treatment-related adverse events. The combination produced an overall response rate of 62% in a very high-risk population with expected median survival below 5 months. Disease responses were seen irrespective of previous hypomethylating agents and Venetoclax exposure. Enrollment in the study is ongoing.

Presenter: Brian A. Jonas, M.D., Department of Internal Medicine, Division of Malignant Hematology, Cellular Therapy and Transplant, University of California Davis School of Medicine, Sacramento, CA

This Phase I study is evaluating the safety, tolerability, and preliminary efficacy of uproleselan in combination with azacitidine (Aza) and Venetoclax (Ven) in patients with untreated AML who were unfit for intensive chemotherapy. The majority of the 8 patients enrolled were female (n=6) with a median age of 78. Four patients had secondary AML, including 3 with therapy-related AML, and 75% had ELN adverse risk cytogenetics. Preliminary results showed that uproleselan with Aza/Ven did not lead to any dose-limited toxicities. The most common Grade 3-4 adverse events and serious adverse events were hematologic in nature. Dose modifications and/or cycle delays were common. In this study the combination produced promising preliminary results, with all 8 patients having a MLFS+ response. Five patients (63%) achieved CR and one patient achieved CRi, for a total CR/CRi rate of 75%, and two patients achieved MLFS. Four of the CR/CRi responses were MFC MRD-ve, for an overall MRD-ve CR/CRi rate of 50% and 67% among the CR/CRi responders. Enrollment is ongoing with current plans to add two additional sites to the study …

I am not a doctor and do not have any specialized training in medical issues, but a little research and reading on my part revealed all the other drugs in development for AML by competing firms (and combination therapies of them) are nowhere close to delivering complete remission rates of 50% to 70% in this hardest of all to treat forms of leukemia. In fact, other “promising” inventions in this research area are seeing CR number of 30% or far less. Does this mean GLYC has absolutely found a huge money-making opportunity with repeatable treatment results on larger populations beyond the 15 or fewer enrolled in these early-stage trials? Absolutely not, but what if this drug can produce widespread cures and relief for tens of thousands? What if this drug and new combinations can treat other cancers?

Insider Buying

Pretty much everyone in the know at GlycoMimetics has been aggressively purchasing shares since the November 9th initial public explanation of trial results exceeding expectations. You can review below how a few insider sells in March morphed into heavy management buying in November and December, as reported by Nasdaq’s website listing of required SEC filings. My read is insiders believe they have discovered an important breakthrough.

Bull Rush Chart Pattern

If a big announcement appears in coming weeks, the insider buying and super-strong accumulation pattern of November-December will make perfect sense in hindsight. Below are two 15-month charts of price and volume changes daily, alongside a number of momentum indicators.

On the first chart, notice how the Accumulation/Distribution Line, Negative Volume Index, and On Balance Volume creations are all rising straight up at the same time. This momentum formation is incredibly rare to find during bear markets, and smacks of aggressive buying trends in the stock. In addition, the NVI spike last week (marked with a red arrow) highlights tons of buying on slower (albeit still high) volume trading sessions. It may indicate a lack of supply, as buyers overrun the marketplace.

The second chart includes the 20-day Chaikin Money Flow calculation, which reversed from steady selling trends to sharply positive buying ones (marked with the green box). The 28-day Average Directional Index showcased a low-volatility balance of supply and demand in early November (circled in blue), often occurring at major bottoms in price, just before good news explodes price higher. And, amazing “relative strength” vs. the S&P 500 index has been the bottom line result over several months.

Final Thoughts

Of course, I have watched and traded all types of biotech announcements that have fizzled or proven overly optimistic numerous times over the decades. However, in this specific situation, heavy insider buying has appeared AFTER the latest public announcements (with no buys before), a very low valuation and basic worth for the company ($160 million at $3 per share) leaves plenty of potential upside, and continuing extreme levels of buying interest in the stock over 8 weeks could be signaling GlycoMimetics is on to something.

Corroborating my momentum pattern research, Seeking Alpha’s Quant Ranking of the company has jumped to #5 overall compared to 4,763 equities sorted daily. The good news is price is not much higher than a year ago, meaning considerable upside may remain for new investors.

I suggest readers look over the latest effort in November here by Seeking Alpha contributor William Meyers, who writes on the company regularly. He explains more of the history of GlycoMimetics and its latest cancer-treatment invention. Under a Breakthrough Therapy review, the FDA recently allowed for a Q1 2023 interim analysis of uproleselan for AML. So, hopefully a stronger conclusion on the drug’s future will be revealed sooner rather than later.

The odds of a big gainer beyond $3 a share will depend on the FDA data review. If the news is quite positive, GLYC instantly becomes a takeover candidate by a larger pharmaceutical firm. Of course, a tempered readout of ongoing trial results, or news that the small sample groups in Phase 1 and Phase 2 trials were not representative of larger populations, could force price back to $2 or even $1 per share.

In essence, this pick is similar to a lottery scratcher ticket. The chances of losing your whole investment over the next year or two are better than 50/50, as the company has no revenue and large cash burn (the company has less than a year of capital left at current research spending rates). More than likely, optimism from the FDA review could lead to new share issuance, especially at higher prices to continue in-house development efforts.

In a best-case scenario, investors could hit the jackpot and earn many multiples of today’s investment price, as substantial future revenue (and income) may become a justifiable proposition for the business. If a significant leukemia cancer cure has been found that will help in other cancer fights, a valuation far above $160 million for the company could be approaching.

I personally bought a minor stake in GlycoMimetics weeks ago (representing far less than 1% of my portfolio) just in case really good news is about to be announced. The chart pattern and overwhelming buying interest are my reasons for optimism. In the end, if I rapidly lose 50% or more of my capital on negative GLCY drug-development news, such would prove a slight road bump for my portfolio overall. If you do decide to purchase shares, I strongly suggest you keep your position size on the light side. The investment proposition is far from a slam dunk in the early stages of patented-drug clinical research.

Thanks for reading. Please consider this article a first step in your due diligence process. Consulting with a registered and experienced investment advisor is recommended before making any trade.