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Poseida Therapeutics, Inc. (NASDAQ:PSTX) is a great speculative biotech play to look into. Even though the stock leaped higher on the back of a deal it did with Roche (OTCQX:RHHBF, OTCQX:RHHBY), I believe that further upside is possible. Why is that? That’s because it is expected that it will have two data readouts from phase 1 studies in the 2nd half of 2022.
One phase 1 study is using P-BCMA-ALLO1 for the treatment of patients with relapsed/refractory multiple myeloma (R/R MM) and then P-MUC1C-ALLO1 is being used for the treatment of patients with a wide range of tumors. With results being released any day now in the 2nd half of 2022, I believe that further upside is possible.
Poseida is shifting more towards allogeneic therapies, which means “off-the-shelf” capability, as opposed to autologous CAR-Ts which use cells engineered from the patient to be treated. However, it will still advance some autologous CAR-Ts. For instance, it is advancing P-PSMA-101 which is being developed for the treatment of patients with metastatic castrate-resistant prostate cancer (mCRPC) in an ongoing phase 1 dose-escalation trial. It even has other programs it is advancing, for instance, it even boasts an early-stage gene therapy pipeline. I especially think it has huge potential with an allogeneic CAR-T it is advancing known as P-ckit-ALLO1. This is because it can be used both as a pre-conditioning agent for hematopoietic stem cell transplant or as a treatment for patients with acute myeloid leukemia.
These are all the reasons why I believe that further upside is possible with Poseida stock, despite the rise on the back of the Roche deal. I believe this is a good speculative biotech play to look into based on the multiple routes it has with respect to its technology.
Major Deal Up To $6 Billion Potential
First and foremost, Poseida Therapeutics landed a huge deal with Roche, which could be worth up to $6 billion. I think this is a great deal for many reasons. The first is that Poseida will receive an upfront payment of $110 million because of it. This deal encompasses allogeneic CAR-Ts being developed for hematological malignancies.
One key thing to note is that some CAR-Ts that are being advanced are those that already exist in the pipeline. For instance, this deal includes P-BCMA-ALLO1 which is being advanced for the treatment of patients with multiple myeloma (MM) and then P-CD19CD20-ALLO1 for the treatment of patients with B-cell malignancies. Remember when I spoke above about the capability to expand technologies? Well, P-CD19CD20-ALLO1 is a dual allogeneic CAR-T which is being developed to go after two targets on cells. An IND filing to begin a phase 1 study for the treatment of patients with B-cell malignancies is expected in 2023. Poseida believes that it could hold a huge competitive advantage on the basis of being able to develop a CAR-T that can go after dual targets at the very same time. In essence, potential to improve safety and longer duration of response.
Current CAR-Ts in the pipeline will not be all, though, because both companies will work together to develop new/improved CAR-Ts together. This is a great deal, because all Poseida will be responsible for is manufacturing CAR-Ts and then advancing them through phase 1 studies. From there, Roche will be responsible for getting the product candidates through late-stage studies and then marketing them. As I stated, Poseida has the ability to earn up to $6 billion in aggregate milestone payments and tiered royalties on net sales of products marketed.
Additional Upside Possible With Two Data Readouts In The 2nd Half Of 2022
The stock climbed a lot on the back of the $6 billion deal with Roche. However, I believe that further upside is possible with two catalysts approaching any day now in the 2nd half of 2022. These include results from two phase 1 studies which are ongoing at the very moment.
One phase 1 study is using P-BCMA-ALLO1 for the treatment of patients with relapsed/refractory multiple myeloma. Multiple Myeloma is a type of cancer which forms in a type of white blood cell called a plasma cell. These healthy plasma cells help you fight off infections by making antibodies that recognize and attack foreign invaders. Why this type of cancer is horrendous is because cancerous plasma cells accumulate in the bone marrow. In turn, they crowd out healthy blood cells that are needed to fight off infections. Not only that, but they can damage other parts of the body like: bones, immune system, kidneys and red blood cell count.
It is said that there are about 200,000 cases of MM in the United States. There are symptoms that these patients experience which are:
- Pain in bones
- Fever
- Loss of appetite
This, for sure, is another large market opportunity. It is said that the global multiple myeloma market could reach $20 billion by 2027. Current treatment options for these patients aren’t that great, either. They range from chemotherapy to radiation, which, as you know, are toxic options. A second phase 1 study is using P-MUC1C-ALLO1 which is being developed for the treatment of patients with a wide variety of solid tumors such as breast and ovarian cancers.
Advancement Approaches For CAR-Ts And Other Technologies
As I stated above, the primary move in the pipeline is to advance allogenic CAR-Ts. However, it is advancing an autologous CAR-T candidate known as P-PSMA-101 which is being developed for the treatment of patients with metastatic castrate-resistant prostate cancer (mCRPC) in an ongoing phase 1 dose-escalation trial. The company has several types of technologies, which is a huge reason why I believe that further upside is possible here. The technologies in which Poseida Therapeutics has are:
- Super piggyBac – involves gene insertion (DNA modification system) – ability for larger cargo load to improve upon prior generation CAR-TS
- Cas-CLOVER – gene editing system – ability for multiple edits and resting T-cell edits – little to no off-target activity
- Gene delivery using AAV or nanoparticles for delivery – AAV or nanoparticles encompassing the use of piggyBac or Cas-CLOVER for in-vivo editing against genetic diseases
- CAR-T – multiple improvements noted with respect to this such as: safety switch, armoring, positivity selection (using only CAR-Ts that have been modified for use), footprint free (efficient gene editing with no off-target toxicity and booster (ability to produce hundreds of thousands of doses from a single run)
Lastly, another type of technology is stem memory T cells (TSCM cells), which uses piggyBac tech as well. Stem memory T cells I think are great because of what it could mean for advancement of CAR-Ts. That’s because they live long, hold the ability to reconstitute the entire spectrum of T cell subsets in the early stage and can even do the same for T effector cells. In clinical trials, they have shown the ability to survive years after treatment. What potential lies with this? Ability to generate a CAR-T with a much longer duration of response.
I think this company has huge potential because of what it has already achieved with respect to its technology. In essence, its technology can be used alone or put together in combination. This is proven with P-ckit-ALLO1 in the pipeline. This candidate uses multiple technologies from Poseida, which include:
- piggyBac gene delivery
- Cas-CLOVER site-specific gene editing system
- Proprietary “booster molecule” targeting human c-kit
As you can see, it can put its technologies together to form an even stronger long-lasting clinical candidate. Not only are multiple technologies incorporated into P-ckit-ALLO1 but it has already shown the ability in preclinical models to act as a preconditioning agent and the ability to destroy acute myeloid leukemia (AML) cells. It was shown that P-ckit-ALLO1 eliminated >95% of hematopoietic stem and progenitor cells (HSPCS). In addition, it was shown to prolong survival in mouse models of AML.
That’s preclinical evidence, but Poseida did a retrospective analysis of patients in a BCMA trial it has ongoing with CAR-Ts. It notes that best responses were correlated with the percentage of stem memory T-cells occurring in patients’ product prior to therapy. I think the ability for this candidate to act as both a pre-conditioning agent and a therapy at the same time is advantageous. Especially, when there is the possibility for it to be a less toxic option compared to other currently available therapies.
Financials
According to the 10-Q SEC Filing, Poseida Therapeutics had cash and cash equivalents of $183.5 million as of March 31, 2022. The company has so much cash on hand because of several events over the last few years. For instance, it obtained $224 million of gross proceeds from an IPO it did back in July of 2020. Other cash obtained was $334.3 million of gross proceeds from the sale of shares of its redeemable convertible preferred stock, $60 million gross proceeds from borrowings under its loan agreement, and $23.8 million in grant funding from CIRM.
Not only that, but it has another partnership for which it had already established. This is a partnership that it had established with Takeda Pharmaceutical (TAK) in 2021, where it received an upfront payment of $45 million. There is the ability to earn up to $3.6 billion for all 8 programs established under the deal. The estimate was that it would only have enough cash to fund its operations for at least the next 12 months with the $183.5 million in cash as of March 31, 2022 as noted above. However, with the recent upfront payment it received from Roche of $110 million, I believe Poseida has further runway before it needs to raise cash again. As such, I see no need for a cash raise until mid-2023 at the earlier. The only way that a cash raise could be done earlier is if management intends to take advantage of the huge rise in share price over the Roche deal or for another business transaction it may be considering.
Risks To Business
Even with all the great potential that exists with this biotech, there are several risk factors that traders and investors should consider. The biggest risk lies with the two potential data readouts coming out in the 2nd half of 2022. These would be from phase 1 studies using P-BCMA-ALLO1 for the treatment of patients with relapsed/refractory multiple myeloma (R/R MM) and P-MUC1C-ALLO1 for the treatment of patients with a wide range of solid tumors. There is no guarantee that either or both of these studies will turn out to be successful.
Another risk factor to consider is that P-BCMA-ALLO1 is part of the recently developed Roche deal. If Roche doesn’t like the data it sees for this candidate or any future candidate under the collaboration, then it’s possible it could pull out of this deal. The same goes for the Takeda deal that was established. Both Poseida and Takeda are advancing gene therapies such as P-FVIII-101 piggyBac Factor VIII Nanoparticle for the in vivo treatment of Hemophilia A. However, this is only in preclinical testing. If Preclinical testing doesn’t pan out or if a phase 1 study is unsuccessful, then that could give Takeda an excuse to cut out of its deal as well. The point being that both established partnerships rely on successful clinical data and for the ability of Roche/Takeda to stay on as partners.
Conclusion
I believe that Poseida Therapeutics is a great speculative biotech play to look into. I believe that it has a lot of stuff going for itself in terms of pipeline advancement. Especially, when you consider that there are two catalysts coming any day now in the 2nd half of 2022. These will be the data readouts from phase 1 studies using P-BCMA-ALLO1 for the treatment of patients with relapsed/refractory multiple myeloma (R/R MM) and P-MUC1C-ALLO1 for the treatment of patients with a wide range of solid tumors.
Poseida’s advantage as a biotech is its ability to combine its technologies. That is, developing CAR-Ts or gene therapies that use piggyBac or Cas-CLOVER. I even described above how it could combine piggyBac, Cas-CLOVER and a proprietary “booster molecule” targeting human c-kit to develop a preconditioning agent for hematopoietic stem cell transplantation and as a potential AML therapy. I would like to think that its versatility in such combinations could play out well in the coming years. It also boasts two large multi-billion dollar milestone payment deals as well from Takeda and Roche if it all works out.
Based on its well-established pipeline, plus technologies which can be combined together, these are the reasons why I believe Poseida Therapeutics is a great speculative biotech play to look into. The reason why I believe that there is additional upside is because of the two data readouts I noted above, both of which are expected any day now in the 2nd half of 2022.
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