Rubius: Poor Data, Punishing Environment, Beaten Stock (NASDAQ:RUBY)

Rubius (NASDAQ:RUBY) had a 24% short interest when I covered it in March. The price was above $6. Those who shorted the stock at that time made a good deal of money, because after the company presented additional data from RTX-240 at AACR in April, the stock fell more than 80%. Today it is a penny stock, trading at 79 cents. It has only been 3 months. Such is the unpredictable world of biotech.

Rubius was once a highly attractive stock. It wasn’t attractive because of strong fundamentals or solid data, but because its founders are world famous scientists. The company was built “upon the discoveries of Professors Harvey Lodish and Hidde Ploegh of the Whitehead Institute for Biomedical Research at MIT and the research and findings of Flagship Pioneering’s VentureLabs.” Professor Lodish is a highly regarded biologist under whose tutelage multiple scientists have won the Nobel Prize. So that was the initial attraction of Rubius.

However, the company has singularly failed to live up to its promise. After an initial spurt of decent data, Rubius has failed miserably, time and again, to show positive data. Their first molecule was RTX-314, and it was a complete failure. RTX-314 was targeting phenylketonuria, a rare genetic disease where BioMarin (BMRN) is the market leader. So, anyhow, Rubius did not start off well, despite the promise of its novel red blood cell therapeutic platform.

Last year, RUBY stock saw a brief spurt after it produced some positive data at AACR, and I naturally expected another such spike if it was able to replicate last year’s performance this year at the AACR. However, that did not happen, and RUBY posted very disappointing data this year. This has caused the terrible fall in this punishing economy, and has made me doubtful of the company’s future itself.

The data it presented at AACR was for RTX-240 targeting a group of advanced solid tumors. This was a phase 1/2 trial. A few partial responses were seen in a few cancers – non-small cell lung cancer (“NSCLC”), metastatic anal cancer, and metastatic uveal melanoma. However, this was not good enough to consider the molecule as a monotherapy, with only 3 responses out of 27 patients.

At AACR, the company presented data from two arms of this phase 1 trial, with one arm being in solid tumors and the other in AML. The AML program did not produce much drug activity at all, and is being abandoned. There were only 5 stable diseases out of 17 patients with late stage disease. This was not at all impressive because dozens of AML trials have produced much better data.

In the solid tumor arm, as well, besides the two partial responses reported earlier – one confirmed, the other unconfirmed, there was one more unconfirmed partial response, bringing the number to 3 out of 27. 7 of these patients achieved stable disease, but overall the results were pretty unimpressive, despite the company’s optimism. Perhaps a combination with pembrolizumab will boost the drug’s activity, however the company definitely needed a better monotherapy result to impress investors.

For reference, the PR data was:

• an unconfirmed PR (uPR) with 41% decrease of all target lesions and a notable decrease of an external protruding chest wall mass in a patient with NSCLC whose disease had progressed on prior anti-PD-L1 therapy;

• a confirmed PR with a 54% reduction in the target lesions in a patient with metastatic anal cancer whose disease had progressed on anti-PD-L1 therapy; and

• a uPR with 100% decrease of the target hepatic lesion and resolution of multiple non-target hepatic lesions in a patient with metastatic uveal melanoma whose disease had progressed on anti-PD-1 therapy

The company will also report phase 1 data for RTX-240 in combination with pembrolizumab in advanced solid tumors and data from additional NSCLC and renal cell carcinoma patients in the second half of the year. They just expanded the original trial to add 20 new less heavily pretreated patients with NSCLC and RCC. This was based on single agent activity in these two indications from the just reported trial. This data was as follows:

The uPR in NSCLC and 5 cases of stable disease (SD) were observed across the 3e10 cohorts, including 3 SDs in patients with metastatic NSCLC and 2 with RCC supporting the Company’s decision to expand the Phase 1 arm of RTX-240 plus pembrolizumab to NSCLC and RCC patients.

They will also report initial data for RTX-321 in HPV 16-positive cancers. This molecule showed “promising pharmacodynamic effects with dramatic expansion of CD4+ T cells,” according to the company.

Financials

RUBY has a market cap of $80mn and a cash balance of $176mn. R&D spends were $38.3 while G&A were $12.6mn. At that rate, they hardly have cash for 2 more quarters, given these are figures from March. The company claims they have cash till the second half of 2023, but I don’t get the math.

Bottomline

The data they presented could have been forgiven in a better investment environment, but 2022 is not the year for this sort of lukewarm data. This is a punishing time for biotech, and Rubius was thoroughly punished for their so-so data. The company also does not have much cash, or rather, they are just spending too much money for the results they are producing. At its core, the theory itself is attractive, but I would be very wary of investing in this stock, however low its share price may have stooped.

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