Aikido Pharma Inc. (NASDAQ: AIKI) announced excellent phase 1 data at the annual ASCO meeting. The data was presented by Dr. Scott Tagawa a Professor of Medicine & Urology at Weill Cornell Medicine and an AIkido Pharma Scientific Advisory Board member.
The phase 1 study met its primary endpoint of safety and tolerability and has already started treating patients in its phase 2. The drug is called Actinium-225 radiolabeled J591 (225Ac-J591) antibody used in the advanced prostate cancer study. It is classified as an antibody-drug conjugate (ADC) which essentially means it is an antibody that is loosely bound to a payload drug that is ideally only delivered to the cancer cell thereby reducing the collateral damage to healthy cells. This is the first successful use of an ADC with a radioactive isotope and may break open this field of research.
ADC’s are a platform technology that first got approval in 2009 of Mylotarg® a drug manufactured by Pfizer (NYSE: PFE) to treat newly-diagnosed CD33-positive acute myeloid leukemia (AML). The ADC’s carry a chemotherapy molecule to the cancer cell. To date 9 ADC’s have been approved by the FDA. The most well-known Antibody Drug Conjugate is Troveldy which gained approval last year for 3rd line metastatic Triple Negative Breast Cancer (mTNBC) patients.
When Gilead Sciences (NASDAQ: GILD) purchased Immunomedics for a record $21 billion the headlines were heard around the world with respect to the new valuation paradigm of these ADC’s. Gilead didn’t spend $21 billion for the 7,000 mTNBC patient population that they can treat but rather for the platform technology that it represents to treat many other cancers.
Highlights from the ASCO presentation:
- Declining PSA levels in treated patients
- Declining circulating tumor cell (CTC) count in treated patients
- Actinium-225 radiolabeled J591 well-tolerated with preliminary evidence of efficacy in a heavily pre-treated patient population
- Actinium-225 radiolabeled J591 safe at tested dosage
Using PSA as the primary indicator of effectiveness is not well-advised given how sensitive PSA levels can change to external influences unrelated to the cancer. Circulating Tumor Cells (CTC’s) in conjunction with the PSA is a completely different story because a reduction in CTC’s is a very strong indicator of increased survival. Experts all agree that CTC negative groups have significantly prolonged survival. While these results don’t indicate a CTC negative group in this study, it’s reasonable to be very optimistic as they go into the dose-escalation phase of the study because the mechanism of action appears to be working as theorized.
At the conference a key opinion leader in prostate cancer research, Neal Shore, MD, FACS, Medical Director for the Carolina Urologic Research Center and recent addition to the Company’s Advisory Board, said
“The Phase I trial results of the 225Ac-J591 antibody for these advanced prostate cancer patients, who had extensive tumor burden as well as having experienced numerous life prolonging therapies, are impressive, both from a response and safety standpoint. PSA declines and CTC responses were clearly evident. Additionally, this novel antibody conjugate demonstrated very good tolerability during this DLT phase 1 trial. The unique properties of 225Ac-J591 suggest it as a very promising candidate for combination treatment with beta emitters, whereby the synergy of therapeutic isotope combination and broader tumor effect would have the potential to further shape theragnostic platforms.”
In layman’s terms, the doctor was pointing out that the 31 patients in this study were in really bad shape because they had a bunch of therapies that failed before they got into the trial and their tumors were very large. The key metric of efficacy was the lowering of CTC’s and the PSA which translates into the fact that the treatment works. How well it works is to be determined in the ongoing phase 2, but these are stellar results no matter which way a person looks at them which is why they have moved on to the phase 2 trial so quickly.
AIKI Investment Summary
The company has $102 million in the bank and a modest burn rate of $4.0 million annually. There are about 90 million shares outstanding which means they have $1.13/sh of cash in the company.
The stock is trading at $1.08 which is a discount to cash which doesn’t make economic sense.
AIKI represents one of the safest plays in biotech because there is virtually no risk if they fail. The company owns about 10% of a drug that according to GILD could be worth $20 billion.
Using the most conservative of estimates that an approved drug is worth $1.0 billion the results announced today confirmed about $100 million of value coming into the stock in the coming years in a worst-case scenario.
The drug seems like it’s going to be on a fast track for approval because the safety profile was characterized as “very good” which is not something to take lightly when talking about radioisotopes.
With no debt in AIKI this company could be considered a SPAC with billions of upside and no risk to the downside.
It’s a lottery ticket with a 40% chance of pulling a winning ticket now that it’s in phase 2 with an almost guarantee that you get your money back if you lose. Investors should also keep in mind the potential for this platform technology to be acquired by big pharma now that there is compelling evidence the drug works with a benign safety profile.
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