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Leap Therapeutics (NASDAQ:LPTX) is a great speculative biotech play to look into. That’s because it has proven its ability to use its drug DKN-01 in a few indications thus far. The most notable ones would be the most recent prostate cancer data, which was released in May 2022 and then presented at the ASCO medical conference. The drug alone as a monotherapy didn’t do too well in my opinion, but when it was combined with docetaxel (chemotherapy) responses were better. Not only that, but the premise of the drug is to target patients with high levels of the DKK1 protein biomarker. Well, DKN-01 when combined with docetaxel did well in both DKK1 high and low expressing tumors. DKN-01 is also being explored in patients with Gastric cancer. For 1st line gastric cancer and 2nd line DKK-1 high expression Gastric cancer patients, DKN-01 + tislelizumab (anti-PD-1 drug) + chemotherapy is being used for them. Final Data for 1st line patients will be released Q3 of 2022 as a catalyst. Final data for 2nd line patients will be released by Q4 of 2022. These are additional catalysts that investors can look forward to looking to trade this biotech.
DKN-01 Alone And In Combination For Prostate Cancer
The first program to look at is the recent set of results using DKN-01 alone and in combination with chemotherapy for the treatment of patients with prostate cancer. Prostate cancer occurs in a man’s prostate, which produces the seminal fluid that nourishes and transports sperm. Those who have prostate cancer have several symptoms which include:
- Blood in the urine
- Frequent urination
- Weak or interrupted urine flow
- blood in the seminal fluid
These are just a few of the symptoms that are involved with prostate cancer. It is estimated that there are about 3 million U.S. cases per year for this type of cancer. It is imperative that additional treatment options exist for these patients. That’s because it is the second-leading cause of cancer death for Men in the United States. It is estimated that the global prostate cancer market could reach $12 billion by 2025. This is another large multi-billion dollar market opportunity for it to go after. The thing is that Leap has decided that if it wants to treat men who have metastatic castration-resistant prostate cancer. When it comes to the term castration resistant, that means patients progress in disease despite taking androgen deprivation therapy (ADT). ADT is used to attempt to stop the spread of cancer or to prevent the progression to a later stage. The way it works is that androgens are male sex hormones and are required for the prostate to function normally. That’s a good thing, but there is a problem. Prostate cancer also uses androgens to grow as well. Castration-resistant prostate cancer, also is coined as such, when the cancer continues to grow despite hormone therapy being given. In other words, the cancer stops responding to ADT. Not only that, but the plan is to target these mCRPC patients who are likely to respond. As such, the goal was to recruit mCRC patients who are DKK-1 high biomarker positive.
This investigator sponsored study first started to enroll patients back in 2019. These were mCRPC patients who have progressed on one or more prior androgen receptor therapies (ADTs). Such ADTs are Xtandi from Pfizer (PFE) and Zytiga from Johnson & Johnson (JNJ). These therapies work sometimes, however, many patients don’t respond to these ADTs and that is when they may need new treatment options like DKN-01 from Leap or other investigational drugs in the clinic. Patients that entered the study were screened to see if they have high levels of DKK1. Again, to make sure that they have a better chance at responding to treatment. If patients had not received prior taxane chemotherapies, then they were to be given DKN-01 and docetaxel. If patients had already taken chemotherapy or refused to receive it, they were just be given DKN-01 alone as a monotherapy. Initial findings from this phase 1/2 investigator sponsored trial were presented at the ASCO 2022 Annual Meeting. A total of 13 patients were enrolled and were split two different dosing groups. The groups were split as follows:
- 7 patients with DKN-01 monotherapy dosing with 300 mg or 600 mg
- 6 patients with DKN-01 plus docetaxel combination dosing 300 mg or 600 mg
What was the takeaway from this study? First and foremost, both doses of DKN-01 either given alone or with chemotherapy had no dose limiting toxicities observed. This is good, because the company going forward can use either of these doses for the next study. It could also test a higher dose if it feels that it is necessary to do so. The downside is that when DKN-01 was given alone as a monotherapy it didn’t perform well at all. In the monotherapy cohort 2 out of 5 patients achieved stable disease (SD). On the bright side, the drug performed very well when given in combination with docetaxel. When DKN-01 was combined with docetaxel, it was shown that all 5 evaluable patients had a partial response (PR) by RECIST criteria. This was 3 confirmed and 2 unconfirmed partial response. A second positive that came out of this study with respect to the combination cohort is that it performed well in both DKK-1 low and high expression patients. This included 2 out of 3 patients with aggressive variant prostate cancer or AVPC.
Financials
According to the 10-Q SEC Filing, Leap Therapeutics had cash and cash equivalents of $103.2 million as of March 31, 2022. The biotech has a good amount of cash and it was able to obtain some funding through a licensing agreement. This was a licensing agreement whereby BeiGene obtained an option to develop and commercialize Leap’s DKN-01 drug in the Asia Pacific Region excluding Japan. At that time, it did a $27 million equity financing agreement with BeiGene and two institutional investors. The biotech states that it believes it has enough cash to fund its operations for at least the next 12 months from the date of the 10-Q SEC Filing, which was filed on May 13, 2022. I don’t believe it will wait until 2023 to raise cash though. I believe it may have to start raising cash by at least Q4 of 2022. What could also be likely is that it may choose to raise cash with a catalyst or release of good news. Leap intends to release results for DKN-01 in both 1st line and 2nd line Gastric cancer patients in Q3 and Q4 of 2022 respectively. If either of these data releases are positive, then I believe Leap will immediately take advantage of a sharp increase in the stock price. Thus, I expect it to raise cash as quickly as possible. Of course, that’s only if the data ends up being very good. Regardless, I believe that a cash raise will be done before the end of 2022.
Risks To Business
The thing is that there are still risks that investors should be aware of before investing in this biotech. As I noted above, only the combination of DKN-01 and chemotherapy yielded substantial results in treating patients with mCRPC. The big thing to note with respect to this is that it was only achieved in 5 patients which is a small sample size. In order to confirm these findings, the company will have to prove this outcome in a larger patient population. This will be done with succeeding cohorts, or the next set of clinical studies. The other set of risks would be the data readouts which are expected in Q3 and Q4 of 2022 which I have noted directly above in Gastric Cancer. Initial data was pretty good when it was shown that 25 1st line patients in part A who received DKN-101 therapy + tislelizumab + chemotherapy had an ORR of 68.2%. This was more pronounced in DKK1-high patients with an ORR of 90% (9 partial responses). The median progression-free survival (PFS) was 10.7 months and median overall survival (mOS) had not yet been reached. Updated survival data for 1st line patients is what will be released in this latter part of 2022. With second line treatment 30 DKK1-high gastric cancer patients who received a full cycle of DKN-01 therapy had obtained an ORR of 25%. Again, data from this portion of the study will also be updated. There is no guarantee that final data from either of these cohorts will be successful. The final risk involves the financial situation I described above. It is my opinion that a cash raise will be needed at least before the end of 2022.
Conclusion
In conclusion, I believe that Leap Therapeutics is a great speculative biotech play to look into. Not only has it shown some proof of concept that DKN-01 can indeed work in treating patients with Gastric cancer and prostate cancer, but that its drug works better when it is established in combination with another type of cancer drug. The drug doesn’t work as well alone as a monotherapy, but when it was combined with chemotherapy or tislelizumab response rates were much better.
Another aspect to consider is that it has the ability to possibly establish late-stage studies later on that incorporate a specific set of patients. What do I mean by that? Well, it has the ability to target DKK1-high expression patients. This mean, it can go after patients who are likely to respond. This, as opposed to targeting the whole patient population instead.
Lastly, there is potential here with two specific catalysts that are approaching in the 2nd half of 2022. Both of these will be updates on the use of DKN-01 in combinations for the treatment of 1st line Gastric cancer patients and in 2nd line DKK1-high expression Gastric cancer patients. I believe there is a lot of potential here. One last risk to note would be that the stock trades at around $1.28 per share. A trial failure reported later this year would likely cause the stock to trade below $1 per share. Please keep that in mind before investing into this speculative name.
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