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Celator Pharmaceuticals (NASDAQ:CPXX) is an innovative, undiscovered cancer drug developer that is looking to improve chemotherapy with new technology. The company is heading into a pivotal Phase III trial, and it is has substantial support from venture capital funds and the medical community. Here are some of the main reasons that I find this story compelling:
- They're developing a drug that could significantly upgrade treatment of Acute Myeloid Leukemia (AML) - this hasn't happened in decades
- They lower the toxicity of chemotherapy to AML patients via liposomal delivery
- The technology boosts the efficacy of combination chemotherapy with ratiometric dosing
- Financial support from the Leukemia & Lymphoma Society and top VC firms
- Efficacy/Safety already well known and profiled for common chemo agents
- They already have a drug that is going into Phase III for sAML indication
Celator has two products in human testing - CPX-351 (for AML) and CPX-1 (for Colorectal). They are both patented liposomal formulations of combination chemotherapies. The people who are following the company are probably anticipating updates for the drug CPX-351. CPX-351 is the drug that is heading into the Phase III pivotal trial.
Celator's CombiPlex Platform
The concept for CombiPlex is actually quite simple. Celator puts two chemo agents together in a specific ratio, and delivers this cytotoxic mixture to cancer cells with a liposome. The ratio takes advantage of latent synergistic effects seen with combination chemotherapy when adjusted to a specific molar ratio.
Determination of this synergistic ratio is a tedious process, but Celator has already done years of research on optimization of the combination chemo ratiometric dose. This chart from their website shows some of the data collected from experiments with cytarabine and daunorubicin:
As you can see, they also tested in multiple cancer cell lines. It is apparent from the data presented above that the 5:1 cytarabine to daunorubicin ratio may be ideal for leukemia. Currently, it is not.
Why don't doctors just administer the chemo at the synergistic dose?
IV injection of combination chemotherapy at a specific ratio and dose is not very reliable. The ratio will only "exist in the body" for a short period of time due to big differences in the way that the body processes these drugs. Cytarabine and daunorubicin, the drugs combined to form CPX-351, are hydrophilic and hydrophobic. Cytarabine is expelled rather quickly from the body (via urine) while daunorubicin takes a lot longer to excrete (via feces).
Why doesn't another company create a liposomal formulation for combo chemo?
From my understanding, Celator has a highly customized and proprietary liposome that is able to contain both hydrophilic and hydrophobic molecules. The specific liposomal formulation (containing the chemo agents) is patented.
CPX-351 & Acute Myeloid Leukemia
CPX-351 is currently the most advanced product being developed by Celator, and it is designed as an upgrade to the current standard of care. It is a liposomal formulation of cytarabine and daunorubicin at a [molar] ratio of 5-to-1. It is meant to replace what is known as a "7 + 3" chemotherapy regimen, which consists of 7 days of cytarabine with 3 days of an anthracycline. The most common anthracycline used is daunorubicin.
There are about 15,000 new cases of AML every year, and almost one third of these cases are considered "secondary". Secondary AML (sAML) is actually caused most often by therapies that are used to treat other types of blood cancers and precancers. sAML is a bit more aggressive, and usually more difficult to treat. AML patients have a median overall survival (OS) rate of about 8-10 months, while sAML patients have median OS closer to 6-7 months.
Newly diagnosed AML patients are given intense chemotherapy, which is effective in most cases. However, some patients don't respond well to this type of treatment due to the presence of certain mutations (we can generally determine the potential effectiveness of chemo by determining the presence (or absence) of certain mutations associated with AML).
Elderly AML patients often cannot tolerate standard dose chemotherapy regimens due to their high toxicity. While reduced-intensity regimens have been designed for use in certain elderly patients, they sacrifice therapeutic efficacy for tolerability. Because of this, some researchers have been keenly on improving the efficiency of chemotherapy.
So while CPX-351 will not attack AML through a new mechanism, it greatly improves the efficiency and tolerability of the "tried and true" combination of cytarabine and daunorubicin. Because these cytotoxic agents are encapsulated within a liposome, they are less likely to reach the liver before doing damage to leukemic cells.
CPX-351 Data So Far
Celator determined the ideal dose (the MTD) of CPX-351 in a 48-patient Phase I dose escalation trial, and demonstrated the safety of the liposomal formulation of cytarabine and daunorubicin. The MTD was determined to be 101 units/m^2. Yes, CPX-351 dosage is measured in "units" - and they consist of 1 mg of cytarabine and .44 mg of daunorubicin each.
In a Phase IIB trial, CPX-351 was compared directly to the 7+3 regimen in a larger patient population (126). The primary endpoint, which was defined as a statistically significant improvement in complete remission rate (CRR), was achieved with the sAML population. The 7 + 3 arm achieved a CRR of 31.6% while the CPX-351 arm achieved a CRR of 57.5% (p=.01).
This means that 58% patients treated with CPX-351 went into remission, while only 32% in the 7 + 3 arm went into remission. This difference was achieved with a statistically significant p-value, which proves that this was not just a fluke.
This basically gives CPX-351 the green light for Phase III in the sAML indication. This means that after FDA approval, Celator can market an improved version of the standard 7+3 chemo to about 5,000 patients every year. Chemo is very expensive, so CPX-351 would probably be able to have a price of about $40,000 per patient. That means that Celator could generate about $200 million in sales from this FDA approval alone. See more data and information from Celator on their website.
The company has about $30 million in cash, and a net worth of about $27 million. They are spending about $2 million per quarter on research, and about $4 million per quarter overall. They should have enough cash to finish the Phase III trial for CPX-351 but they might need more funding after.
There are 26 million shares of CPXX, and the stock is $3.75 as of January 16th, 2014. This makes the market capitalization $98 million. A lot of companies that are entering Phase III trials have market capitalizations closer to $500-750 million. In my opinion, this provides Celator with a ton of upside if the Phase III is successful. See more details on sec.gov
I am not even adding the potential value of CPX-1 and the potential for Combiplex to be applied in other indications with different chemo or drug combinations. It is a high risk play, but I think Celator is the type of company that could reach a multibillion dollar valuation within the next five years if things go smoothly.
While CPX-351 might not succeed in Phase III, the comparison between the upside and the downside makes this company a pretty good bet. Still, it is a pharmaceutical company and anyone buying CPXX should realize that the FDA might deny the company after it submits an NDA about 3-4 years from now. The company might also need another Phase III trial before getting a CombiPlex product on the market. This would happen if the FDA is unhappy with the results of the upcoming Phase III, although the difficulty of treating sAML does lower the bar for this indication.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.