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Selecta Biosciences, Inc. (NASDAQ:SELB) is a great speculative biotech play to look into. Most of its pipeline is in the early stages of development, however, it does have one phase 3 program. This phase 3 programs involves studies known as DISSOLVE I and DISSOLVE II. These studies are using a biologic therapy known as Pegadricase (SEL-212) for the treatment of patients with chronic refractory gout.
Why I believe it’s worth a look is because has already completed enrollment of the DISSOLVE II study. Topline results are expected in Q1 of 2023. This sets up a huge catalyst to look forward to which could possibly change the scope of the company. The thing to note is that a lot of programs are being developed around the ImmTOR and ImmTOR-IL.
In essence, both of these technologies are responsible for inhibiting an immune response observed in autoimmune diseases. The reason? To promote superior safety of therapies and to allow more frequent administration of life saving drugs. It can use its technology platform and apply it to many biologics and gene therapies. For instance, an AAV gene therapy known as SEL-302 for the treatment of patients with Methylmalonic acidemia (MMA), is being combined with ImmTOR. A phase 1 study for this patient population is expected to start in Q4 of 2022. Another program of note involves the tolerogenic therapies established in Selecta’s pipeline.
The goal is to use ImmTOR to be able to target the root cause of patients with primary biliary cholangitis (PBC). By adding in ImmTOR, it can suppress a severe immune response observed in the liver when given a particular therapy. Thus, this is how it intends to go after the root cause of PBC.
Lastly, there is a potential path forward for a boost in the ImmTOR technology platform. This is to be done with another technology developed by Selecta known as ImmTOR-IL noted above. With ImmTOR-IL, it will be able to expand the scope of Treg (T Regulatory) cells. These Tregs are important in being able to inhibit immune responses to antigens. With so much possibility, plus an expanded pipeline, these are the reasons why I believe it is a great speculative biotech play to look into.
ImmTOR Makes Sense For Being Used Against Primary Biliary Cholangitis
Primary Biliary Cholangitis is an autoimmune disorder whereby the body mistakenly attacks the bile ducts of the liver. This in turn leads to severe liver damage. Where does ImmTOR come into play here? The goal for Selecta is to use ImmTOR to generate immune tolerance observed in PBC. This is achieved with tolerogenic dendritic cells (DCs) which activate anti-specific regulatory T cells (Tregs) to inhibit such an immune response to the problematic antigens.
How is a tolerogenic message sent? What Selecta intends to do is to encapsulate rapamycin and autoantibodies (in the case of targeting PBC it is using autoantigen PDC-E2) in a nanoparticle to allow the dendritic cell to send a tolerogenic message out. The reason to use a nanoparticle for this process is to limit systemic exposure of drug material and to enable self tolerance with ImmTOR.
There is, however, a deeper reason on why starting off ImmTOR with encapsulated PDC-E2 against PBC is a smart move. It is because more than 80% of PBC patients have autoantibodies against PDC-E2. If this therapy is done right, then natural self tolerance should be restored and in tandem directly target the root cause of PBC. A potential improvement can also be achieved by adding in ImmTOR-IL. ImmTOR-IL is the use of ImmTOR with a proprietary IL-2 protein agonist.
What’s the reason for needing ImmTOR-IL? Bottom line, the expansion of antigen-specific Tregs to enhance immune tolerance. It makes sense, the more Tregs in play, the greater the effect of immune tolerance which can be achieved. IND-enabling studies are underway in which ImmTOR-IL is being co-administered with PDC-E2 against PBC to eventually begin a phase 1 human study. Further enhancement for this program is working with its partner Cyrus Biotechnology to develop a next generation IL-2 molecule to be combined with ImmTOR. Such a candidate is expected to be nominated by the end of 2022. The goal is to start off with diseases that have a single pathogenic antigen to focus on, like PBC, then move on to other related indications.
Advanced Phase 3 DISSOLVE Program Could Bring Much Needed Proof Of Concept For ImmTOR
Selecta is currently undertaking a phase 3 program known as DISSOLVE. This involves DISSOLVE I and DISSOLVE II studies, which are currently ongoing. However, this program is being partnered with Sobi. Selecta received a $10 million milestone payment from Sobi due to completion of enrollment for the DISSOLVE II study. These studies are using SEL-212 to treat patients with chronic refractory gout. Gout is a form of arthritis in which patients have severe pain in their joints in one area. Chronic gout is where such pain and inflammation occurs repeatedly. Not only that, but in other areas of the body as well. Chronic refractory gout remains a huge problem that needs to be dealt with.
This is where SEL-212 comes in from Selecta. It is a combination of the company’s proprietary pegylated uricase (pegadricase) combined with ImmTOR. Pegadricase was developed to sustain Serum Uric Acid (SUA) levels in these patients with chronic refractory gout. ImmTOR as you guessed, to inhibit formation of anti-drug antibodies (ADAs). This is where ImmTOR plays a huge role in that it has the potential to change the landscape in this area if successful. Why is that? Current treatment options like pegloticase cause patients to develop anti-drug antibodies. This is bad because in turn the effectiveness of the treatment is reduced immensely. Thus, Doctors have a need to administer immunomodulators as a co-treatment.
On the flip side, ImmTOR may be able to generate an immune tolerance to such autoantibodies. Not only providing safety, but potentially amplifying the effectiveness of the treatment itself. If this is successfully done, it could create a competitive advantage over other approved biologics for chronic refractory gout. The problem with biologics, AAVs and other targeted therapies is that autoantibodies reduce effectiveness of them. If ImmTOR can mitigate the formation of such anti-drug antibodies, then it can have a huge impact in being effective against a cross range of autoimmune disorders.
Results from both phase 3 studies from the DISSOLVE program are expected in Q1 of 2023. The point here is that proof of concept will need to be established when this data is read out. That’s because it would signify that ImmTOR achieves its primary function of mitigating anti-drug antibodies. This will prove that this technology from Selecta can be applied to other treatment options such as biologics and other gene therapies alike.
It has already gone on to advance other wholly owned treatments to prove this point. For starters, SEL-302 is the company’s wholly owned gene therapy in combination with ImmTOR for the treatment of patients with Methylmalonic Acidemia (MMA). A phase 1 study using this AAV gene therapy with ImmTOR is expected to begin in Q4 of 2022. There are many other early stage programs wholly owned which make use of ImmTOR through the use of biologics, gene therapies or tolerogenic therapies.
Multiple Partnerships Could Expand Upon Opportunity with ImmTOR And ImmTOR-IL Platforms
The thing is that even though Selecta Biosciences has been able to do well in developing a partnership with Sobi for the use of SEL-212 for the treatment of patients with chronic refractory gout, it has been able to establish additional partnerships based of the ImmTOR technology platform. Such other partnerships established are with Takeda Pharmaceutical (TAK) for lysosomal storage disorders, AskBio for Pompe Disease, and Sarepta Therapeutics (SRPT) for neuromuscular disorders. Speaking of the research license and option agreement with Sarepta for ImmTOR, it was extended. In addition, in June of 2022 it was noted by Sarepta to Selecta that certain pre-clinical milestones were achieved. It will receive a $2 million payment for the extension of the agreement to Q1 of 2023 and a $4 million payment for achieving the preclinical milestones. The receipt of such payments is expected during Q3 of 2022.
However, it’s important to look at the larger picture here with respect to the ImmTOR technology platform. What drove Sarepta and these other companies to want to partner with Selecta? It’s because some challenges plaguing gene therapies and other types of treatments, whereby anti-drug antibodies limit potential/frequency dosing options of said therapies. A major hurdle to gene therapies is the inability to dose more. Why? It all has to do with anti-AAV antibodies which develop with gene therapy. Selecta, along with one of its partners AskBio noted that ImmTOR and ImmTOR-IL were able to potentially address key efficacy and safety challenges found in gene therapy.
The poster shown at the 25th Annual Meeting of the American Society of Gene & Cell Therapy (ASGCT) was titled as follows “Combination of ImmTOR Tolerogenic Nanoparticles and IL-2 Mutein Synergistically Inhibits the Formation of Anti-AAV Antibodies.” As I laid out in the other section above, IL-2 is being added to ImmTOR to increase the magnitude of Tregs, which in turn enhances immune tolerance capabilities. The end result is to allow the re-dosing of gene therapies without tolerability issues. The bottom line here is that the use of ImmTOR and ImmTOR-IL hold potential to change the landscape of many types of therapies, including gene therapies. This is a largely why I believe Sarepta, Takeda and AskBio are all taking a chance on the ImmTOR and ImmTOR-IL platforms. They want to see if major hurdles observed in the gene therapy space can be overcome through these technologies.
Financials
According to the 10-Q SEC Filing, Selecta Biosciences had $143.4 million in cash, cash equivalents and marketable securities and restricted cash as of June 30, 2022. The reason for the huge cash increase was because of an equity offering it achieved in the second-quarter of 2022. That is when it sold a total of 27,428,572 shares of its common stock and accompanying warrants to purchase up to 20,571,429 shares of common stock at a combined offering price of $1.41 per share and accompanying warrant. The warrants to purchase shares of common stock have an exercise price of $1.55 per share, are immediately exercisable and will expire five years from the date of issuance. In total, Selecta raised approximately $38.7 million from this particular offering. It believes that it now has enough cash on hand to fund its operations into mid-2024. Based on this expectation, I don’t see a need for it to raise cash immediately. However, I believe that if it obtains positive results from the phase 3 data readouts in Q1 of 2023, then I expect it to immediately take advantage of a sharp rise in the stock price.
Risks To Business
There are several risks that traders/investors should be aware of before investing in Selecta Biosciences. The first risk involves the phase 3 DISSOLVE program. Results from both studies are expected to be released in Q1 of 2023. There is no guarantee that either or both of these studies will be successful. If ImmTOR fails to deliver it would be a huge blow to the concept of establishing immune tolerance. However, I don’t believe it will be the end. That’s because ImmTOR, as I noted above, is being added to IL-2. As such, it’s possible that IL-2 might be needed as an addition to increase Tregs to amplify the effect of immune tolerance. In which case, investors will have to wait a bit longer to see this proof of concept. Not only that, but another possibility is that maybe ImmTOR works better with gene therapies, as opposed to other types of treatments. The bottom line here is that while ImmTOR/ImmTOR-IL may not work well with biologics, it may perform better for AAV gene therapies. Of course, all this will have to be proven in human studies in the coming years.
A second risk then pertains to the ongoing partnerships. If one partner doesn’t achieve their desired end result, then they won’t hesitate to terminate the ongoing agreement. In which case, Selecta would lose out on potential milestone payments. The good news so far is that Selecta achieved the milestone relating to the partnership with Sarepta and will receive payment based on preclinical achievement for the use of ImmTOR/ImmTOR-IL. Therefore, so far so good in terms of advancing such a partnership.
Conclusion
I believe that Selecta Biosciences is a great speculative biotech play to look into. It has the use of its ImmTOR and ImmTOR-IL platforms for which it can build upon. Even if ImmTOR alone doesn’t succeed, there is still a chance for ImmTOR-IL. As I said before, the addition of IL-12 has shown to expand Tregs, which in turn may produce a more profound effect, compared to ImmTOR all by itself. There is still a pipeline even if SEL-212 doesn’t meet its primary goal of helping patients with chronic refractory gout in the phase 3 studies. Other potential possibilities are being explored. For instance, ImmTOR is being co-administered with PDC-E2, which is the autoantigen implicated in PBC.
With the advancement of ImmTOR/ImmTOR-IL, several partnerships, expanded pipeline and other combinations possible, these are the reasons why I believe that Selecta Biosciences is a great speculative biotech play to look into.
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