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Poseida Therapeutics, Inc. (NASDAQ:PSTX) reported Q3 2022 revenues of $116.31 million beating Wall Street estimates by $115.47 million- a stretch of almost 100%. The clinical-stage cell and gene therapy company’s EPS in the quarter bit by $0.92, beating forecasts by $1.57. The company’s share price has surged 67.98% (YoY) falling just 0.9% shy of the 52-week high of $7.73. Poseida’s rally comes as the company made some board changes including the resignation of its founder that spearheaded the company’s spinout from the parent company- Transposagen in 2015.
Thesis
Poseida Therapeutics, Inc. announced that it had positive preclinical data for the treatment of Hemophilia A with the use of P-FVIII-101. Poseida produced the super piggyBac delivery system that will be used by the non-viral liver-directed gene therapy (P-FVIII-101) to cure Hemophilia A. The company also has clinical early results for its first two fully-allogeneic programs: P-MUC1C-ALLO1 and P-BCMA-ALLO1 expected to deliver differentiated off-the-shelf CAR-T cell therapies vital for cancer patients.
Quarterly performance assessment and Revenue plan
Poseida did not realize any product sales in the quarter, but it recorded collaboration revenues and license agreements with Roche Holding (OTCQX:RHHBY) and Takeda (TAK). Revenues of $116.3 million realized in the three months ending on September 30, 2022 were attributed to research services under the collaboration agreement with Takeda. This agreement was entered into in Q4 2021 while the agreement with Roche only became effective in Q3 2022. In essence, Poseida had a 100% (YoY) revenue surge since it did not record any revenue in the quarter ending on September 30, 2021.
Poseida has made progress since it entered into a collaboration/ license agreement with Takeda in October 2021. At the time, it granted TAK its worldwide license to gene-therapy technologies that included piggyBac, Cas-Clover, and biodegradable DNA/ RNA nanoparticle deliveries including treatments for Hemophilia A. The two companies are on course to develop 6 in-vivo gene therapy programs with Takeda having the option to add two more programs. Poseida acts as the main research entity in this agreement (up to the candidate selection stage) while Takeda is set to manufacture and commercialize the product.
Poseida received an upfront payment of $45 million and is set to receive preclinical milestone payments above $82.5 million if all 6 in vivo programs are achieved. Then again Takeda will pay Poseida another $2.7 billion as a commercial milestone payment (with $435 million paid for each aggregate target reached) from the clinical development deal. To sum it up, the payments are likely to reach $3.6 billion if the milestones of the two additional programs by Takeda are also achieved. That’s not all, Poseida will receive royalties (on net sales) on a product-by-product as well as a country-by-country basis with the company set to receive the payments for at least 10 years.
Poseida is advancing its broad pipeline with its CAR-T portfolio consisting of both autologous and allogeneic/ off-the-shelf products. The company has advanced its investigational clinical programs with 1) P-MUC1C-ALLO1 (potential fully allogeneic treatment for solid tumors) now in Phase 1 clinical trial, 2) P-PSMA-101 (potential autologous treatment for metastatic castrate-resistant prostate cancer) currently in Phase 1 but whose patient enrolment has unfortunately been stopped, 3) P-BCMA-ALLO1 (an allogeneic potential treatment for relapsed/ refractory multiple myeloma- currently in Phase 1 trial). This fully CAR-T product candidate is being developed in coordination with Roche after the collaboration and license agreement took place in July 2022.
P-FVIII-101 Treatment
As noted earlier, Poseida had 6 in vivo treatments (in conjunction with Takeda) with P-FVIII-101 set for Hemophilia A. First off, this treatment involves the combination of Poseida’s piggyBac technology with liver-directed gene therapy. Hemophilia A on its part is a hereditary bleeding disorder caused by the body’s inability to produce enough Factor VIII leading to improper blood clots.
In December 2022, Poseida made an oral presentation indicating that new data on P-FVIII-101 showed normalized levels of FVIII in an animal prototype of Hemophilia A. This new data forms one of the 6 positive signals needed to trigger part of the $3.6 billion deal with Takeda. The Presenter, Brian Truong stated,
“The data being presented today show that P-FVIII-101 has the potential to correct a deficiency in FVIII to near normal levels in juvenile mice, providing a path forward for a more tolerable, durable treatment for Hemophilia A in pediatric patients. Current treatment options are not curative and require lifelong treatment, and P-FVIII-101 may have the potential to significantly improve outcomes for people with Hemophilia A.”
Poseida obtained long-lasting responses after offering the test subject just a single dose over the 7-month study period. According to me, this report is ground-breaking considering that current gene-therapy approaches were shown to be inappropriate for treating Hemophilia a, juvenile patients. Poseida’s researchers also noted positive therapeutic activity after the mice were subjected to repeated doses of P-FVIII-101. The same effect of factor VIII normalization was also seen when the mice received just one dose of P-FVIII-101. This conclusion indicated that the P-FVIII-101 doses could be titrated or measured per the patient’s response during administration.
Takeda has invested billions in cell and gene therapies. Back in October 2021, Takeda signed a license agreement with Selecta Biosciences (SELB). The license involved SELB’s ImmTOR technology needed for the treatment of lysosomal storage disorder. In the deal, SELB is entitled to up to $1.124 billion with additional tiered royalties tied to future commercial sales.
What makes Takeda’s deal with Poseida special is that, unlike other gene therapies whose development entails using a virus to get the gene to liver cells, P-FVIII-101 instead uses nanoparticles to deliver the genes. To put it more precisely, Poseida’s piggyBac enzyme during the treatment will be used to put the therapeutic gene in the patient’s DNA.
The U.S. FDA has only approved Roche’s factor VIII mimetic emicizumab (Hemlibra, Genentech) for the prevention of bleeding in adults/ children with hemophilia A. Reports also indicate that the FDA is close to evaluating the Roctavian gene therapy by BioMarin Pharmaceuticals (BMRN). This therapy is for adult patients devoid of a history of factor VIII inhibitors. BMRN submitted its biologics license application to the FDA in September 2022. BioMarin announced recently that all its participants in its Phase 3 study met primary and secondary efficacy endpoints at 3-year analysis with stable and durable annualized bleed control for Roctavian.
Presentation for P-MUC1C-ALLO1 and P-BCMA-ALLO1
Poseida Therapeutics also announced that they had seen encouraging responses in its two fully allogeneic programs P-MUC1C-ALLO1 and P-BCMA-ALLO1 at their lowest dosage levels with patients exhibiting favorable tolerability. The company is hopeful that in FY 2023, it will continue enrolling patients and increase their administration with higher dosage levels to identify strategies to improve the therapeutic index. These strategies include, among others; “redosing, cyclic dosing, novel preconditioning regimens, and combinational therapies.”
Poseida’s Phase 1 clinical trial is evaluating P-MUC1C-ALLO1 as a potential treatment for multiple solid tumors from epithelial cells. These tumors are not limited to breast, colorectal, lung, ovarian, pancreatic, and renal cancers.
Another fully allogeneic CAR-T-product is being investigated by Poseida in Phase 1 clinical trial of P-BCMA-ALLO1. This product candidate has exhibited positive outcomes for the treatment of relapsed/ refractory multiple myeloma. In July 2022, Poseida entered into a license agreement with Roche for the internal pilot manufacturing of P-BCMA-ALLO1. Upon completion, this drug is expected to be licensed to Roche as it will cater to its future development costs.
The global market value for the treatment of multiple myeloma is projected to grow from $30.46 billion in 2020 to $55.87 billion in 2026 growing at a CAGR of 10.6%. In the U.S., anti-myeloma treatments cost more than $100,000 a year. The costs are aggravated by high treatment intensity, increasing treatment durations, advanced imaging, and the need to use more supportive agents.
The use of Poseida’s non-viral piggyBac (nanotechnology) delivery system may help to alleviate part of the huge costs engendered in anti-myeloma treatments. Additionally, Poseida uses its cryopreservation system to preserve doses while its “Cas-CLOVER site-specific Gene-Editing system lowers reactivity while boosting molecular technology” to scale manufacturing.
Risks to be considered
At the moment, Poseida Therapeutics is not generating any revenues from product sales with its most promising candidate P-MUC1C-ALLO1 still in the Phase 1 clinical trial. The company’s financing at this point emanates from collaboration revenues, license agreements, equity offerings, and debt financing. Failure in realizing licensing and collaborative revenues on time may mean Poseida will have to turn to an equity offering which may mean stock dilution and a reduction of the share price.
Poseida’s use of CAR-T therapy in both autologous and allogeneic product candidates faces the challenge of complex logistics, poor product manufacturing, high toxicity levels, and cost. Research indicates the most common toxicity concerns (after the infusion of CAR-T cells) include “neurologic toxicity, tumor lysis syndrome (TLS), on-target off-tumor effects, anaphylaxis, and other hematologic problems.”
Poseida has incurred a net loss of $30.7 million for the 9 months that ended on September 30, 2022, with negative cash flows from operations amounting to $29.2 million in the stated period. The company expects to incur net losses for the next few years since its leading product candidate is in Phase 1 trial with no product sales expected until after a few years. The company has accumulated a shareholder deficit amounting to $437.5 million. However, Poseida’s cash balance of $279 million is sufficient to fund operations for the next 12 months. This is true considering Poseida used $117.44 million as CapEx.
Bottom Line
Clinical stage cell and gene therapy company, Poseida Therapeutics, Inc. is advancing its Phase 1 investigational clinical programs for P-MUC1C-ALLO1, and P-BCMA-ALLO1 with future development activities expected once the Phase 1 trials are over. Poseida is supported by two heavyweights in the gene therapy space- Takeda and Roche. Its liver-directed gene-therapy product P-FVIII-101 for the treatment of Hemophilia A exhibited positive outcomes with the company promising more results in 2023. This disclosure is good news, Takeda has outlined a payout of up to $3.6 billion in the event Poseida completes 6 in vivo targets. Overall, Poseida’s combination of the piggyBac technology with its nanotechnology delivery system is turning out as a potential game-changer in the industry.
In my view, Poseida Therapeutics, Inc. stock has the potential of exceeding 100% share price return later in 2023 since it is already trading at its 52-week high of $8.03. I, therefore, recommend a buy rating of the stock.
Editor’s Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.
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