Chinese market for MM drugs

CASI Pharmaceuticals Inc (NASDAQ:CASI) Is Undervalued On Chinese Uncertainty

CASI Pharmaceuticals Inc (NASDAQ:CASI) is up close to 75% so far this week and currently trades at $3.28, having gained close to 50% during the session on Wednesday alone.

This is something of an under the radar play in the biotechnology and healthcare space right now.

CASI Daily Chart

CASI Daily Chart

The company’s pipeline (at least, that is, the elements of it that are going to drive near-term upside reevaluation) is rooted in bringing treatments to market in China primarily, and the US as secondary. This Chinese focus serves as an added risk factor for many, given the notorious uncertainty surrounding the decision-making process of China’s Food and Drug Administration (CFDA), but for anybody that is willing to take on that little bit of extra risk, there’s plenty of opportunity to be had in this region.

And, for anybody looking to gain exposure to one such opportunity, CASI looks like it could be a smart choice.

Management just put out a pipeline development update and, with it, served up some time frames to keep an eye on related to pretty much its entire development portfolio (both China focus and US focus).

It is this update that is pushing things skyward right now.

What were the standout elements of the update and what are we looking for going forward as supportive of potential further upside momentum for the stock?

There are three assets in particular that we are interested in here at Insider Financial and these are called EVOMELA, MARQIBO and ZEVALIN.

CASI licensed all three from Spectrum Pharmaceuticals, Inc. (NASDAQ:SPPI) late last year.

The first, EVOMELA, is probably the most interesting and is the one that is attracting the most attention right now on the back of the latest update. It was approved in the US as a treatment for multiple myeloma during early 2016 and CASI picked it up from Spectrum (or at least, that is, picked up the Chinese rights to the drug) in December 2016.

The company has submitted an import drug registration clinical trial application (CTA) to the CFDA and, as per the most recent update, the latter has granted EVOMELA priority review, meaning we should see turnaround on the CTA before the end of this year. If the agency in China green lights a clinical trial (which is highly likely, given the priority review designation) then there is a good chance that the company can move straight into a pivotal investigation and get a running start on its path towards commercialization in the region. There were more than 12,000 new cases and more than 9,000 deaths from multiple myeloma in China in 2015 and, with the aging of China’s population, the number of new cases is rapidly rising. Melphalan, which is the basis of EVOMELA, is the standard of care treatment globally (except in China, where it is not yet approved) for pre-transplant patients and if the company can get it approved it would be a major revenue driver.

Outside of EVOMELA, there’s a CTA for MARQIBO with the CFDA right now that the company expects will complete a review within the next 4 to 6 months and for which a clinical trial should kickoff within six months after review completion.

ZEVALIN is a little more complicated, requiring separate CTAs for both its antibody kit and the radioactive Yttrium-90 component, but the first part is already under review and the latter part is in the submission process. Management expects to initiate the confirmatory trial within six months after the CFDA’s approval of both the kit and the Yttrium-90 submissions, so we are probably looking at around a 12-month turnaround time on that one.

Bottom line here is that there are three assets, each of which is about to move into a near-term pivotal trial in China and all of which are targeting markets with considerable revenue potential in the country.

At June 30, cash on hand was little over $23.4 million, which should be enough to carry through to trial initiation but keep in mind that we may see some dilution ahead of mid-2018.

We will be updating our subscribers as soon as we know more. For the latest updates on CASI, sign up below!

Image courtesy of Kevin Dooley via Flickr

Disclosure: We have no position in CASI and have not been compensated for this article.

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CASI Pharmaceuticals Inc (NASDAQ:CASI) Is Undervalued On Chinese Uncertainty
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