Ignyta Inc. (RXDX) is a $500 million market cap biotechnology company focused on integrating molecular diagnostics and precision therapeutics to treat cancer. The company's lead candidate, entrectinib, a selective tyrosine kinase inhibitor, is currently undergoing phase 2 clinical study for patients with ROS1, ALK, and neurotrophin tyrosine kinase receptor (NTKR) gene fusions. On May 15, 2017 RXDX was awarded FDA Breakthrough Therapy designation for entrectinib for the treatment of "NTRK fusion-positive, locally advanced or metastatic solid tumors in adult and pediatric patients who have either progressed following prior therapies or who have no acceptable standard therapies". Its entrectinib registration-enabling phase 2 program is almost fully enrolled and will potentially support a broad TRK indication NDA submission.
Entrectinib is an orally available, CNS-active NTRK inhibitor targeting tumors that are positive for NTRK1/2/3, ROS1, or ALK gene fusions. Entrectinib function schematic animations are available in this informative video from the clinical trial information website. The mechanism of entrectinib is inhibiting the kinase domain of its target class, which is especially important for gene fusion mutants which undergo unchecked cell division control and leads to cancer. There is preclinical and early-stage clinical evidence that entrectinib can cross the blood brain barrier and exhibit anti-tumor effects in the central nervous system. In the phase 2 STARTRK2 clinical study, interim data from 32 patients positive for ROS1 gene fusion in NSCLC, 24 (75%) demonstrated ORR with 17.2 months DOR. Additionally, in data from 11 patients positive for ROS1 gene fusion NSCLC with CNS metastasis, 7 confirmed ORR. The safety profile for entrectinib (including phase 1 studies) indicates that it is well tolerated. This implicated entrectinib as a promising candidate for non-small cell lung cancer, which highly correlates to gene fusions in tyrosine kinases of its target class (which may likely broaden its indication label). The small molecule tyrosine kinase inhibitor, crizotinib (Xalkori, Pfizer (PFE)), was approved for treatment of NSCLC fairly recently, and serves as a treatment and regulatory model for RXDX. The company recently announced FDA orphan drug designation for entrectinib for NTRK fusion-positive solid tumors. The company plans to submit dual NDAs for TRK and ROS1 in 2018 if supported by FDA, with US commercial launch in both indications tentatively slated for 2019.
The global market for cancer drugs is expected to reach $111 billion by 2020. Getting a bead on how much of that market share applies to RDRX requires some work. Gene fusion has long been known to be associated with promoting cancer, including resultant constitutive kinase activity or tumor suppressor inhibition. But more recent developments in next generation sequencing, gene fusion detection tools, and large scale computational bioinformatic screening was necessary to gain a foothold on gene fusion population prevalence. Gene fusions have been estimated to have as high as 20% morbidity consequence in prostate cancer. Oncogenic gene fusions now number over 10,000, with most discovered in the past five years.
Gene fusion prevalence varies between cancer types and gene types, with 90% of lymphomas carrying them, 50% of prostate cancers, and about 33% of soft tissue sarcomas. ALK and ROS1 fusions are among the top 20 in prevalence in NSCLC and solid tumor studies. Review articles report ALK-EML4 fusion occurs at a rate of 6% in lung adenocarcinoma, while KRAS and EGFR are more common at 25% and 23% respectively. Demographic studies on ROS1 fusion incidence is only in the 1.5-1.7% range. NTRK3 gene was found to be expressed in human secretory breast cancers, a rare but clinically distinct subtype of breast cancer, with 92% incidence. NTRK1 gene fusions are prevalent in a diverse group of cancer tissues, and is a most-promising target for the NTRK group. Fusions between the kinases ALK, BRAF, MET, NTRK1, NTRK2, RAF1 and RET were found to be high in thyroid cancers, and fusions were mutually exclusive. So a great deal of variability makes putting a market number on this select tumor targeting model fairly complicated. But the market was estimated at $1.2 billion for the NTRK subset in this SA article by Stock Doctor. Because of the high success rates of treatments that target kinases, it would be expected that development of these gene targeting treatments will be worth the investment. FDA endorsement serves as a validation of this argument, with entrectinib's broad potential for TRK-positive tumors likely to serve a group of patients at any age with clear unmet medical cancer needs.
RXDX is also developing early stage candidates, including RXDX-105, a selective RET inhibitor that does not inhibit VEGF. It is currently being examined in a phase 1b "basket" study to examine its best potential cancer targets. Taledagib, another early stage pipeline candidate, is a hedgehog/smoothened inhibitor being developed to prevent stem cell transformation which leads to some forms of brain, skin, and pancreatic cancers. The company has a license partnership with Eli Lilly (LLY) for its development and commercialization of taladegib. Taledagib demonstrated clinical proof-of-concept and a Phase 2 dosing regimen based on results from early-stage clinical studies was elucidated. RXDX-106 is a (reversible non-covalent binding) inhibitor of the TAM (TYRO3, AXL, and MER) tyrosine kinase class currently in late preclinical development. It is showing signs of long-lasting tumor suppressor activity (even beyond when it is detectable in the blood) and immune system potentiation as reported to AACR 2017. This group of early stage candidates is likely to add benefit to other combination therapy models, according to company statements.
The company was able to raise $88 million in a public offering in early May 2017 at $6.15 per share. As of end Q1 2017 the company reported $108 million in cash. Net loss was reported for Q1 2017 at $40 million, but the company reports a cash burn of $22 million in the quarter. RXDX has approximately $32 million in long-term debt. With roughly $190 million on hand its cash runway would last until mid to late 2019. Three analyst consensus target is over $20 per share. Other analysts have stated that this company is undervalued in terms of its peers. Strong Bio regards this stock as worthy of initial positioning on any pullbacks, with a target of $6.50 per share being regarded as a nice pickup.
Risks for investment in Ignyta include risks that FDA approval, even with Breakthrough Therapy designation, is not automatic and can be delayed, with as many as 15% of such candidates required second attempts to gain approval. If the company pushes forward too quickly with its pipeline candidates that are not partnered with Lilly, it may have to dilute to fund them and a commercial launch of its lead candidate entrectinib, FDA willing. Competition for entrectinib is both already on the market in some indications (as for Xalkori), and entering late clinical stage trials at other companies. Moreover, peer evaluation in cancer is not always a good indicator of future performance. Some stocks are manipulated for buyout, especially by foreign suitors. Others seem to achieve monstrous multi-billion dollar valuations for markets that are likely to be in the low hundreds of millions at the most, making it highly variable and unreliable to analyze classes of biotechnology companies. It is more useful in evaluation of companies with large pipelines, however.
