CytoDyn's Lofty Promise
Summary
- CytoDyn bills Leronlimab as some kind of wonder drug.
- Leronlimab's benign safety profile sets it far in advance of other therapies which attack dread diseases like HIV, cancers and autoimmune diseases.
- CytoDyn's management has fallen into counterproductive practices that are holding the company back.
- CytoDyn is definitely hot stuff; yet its finances present a significant ongoing challenge.
CytoDyn (OTCQB:CYDY) promotes its Leronlimab as some kind of wonder drug, a virtual pan-therapeutic. This article discusses such claims, while also cautioning investors to check it out carefully before jumping on the promotion. Due diligence is certainly necessary here. This article will describe the promise and point out concerns.
CytoDyn bills Leronlimab as some kind of wonder drug
Initially, CytoDyn acquired Leronlimab from Progenics (PGNX) because of its potential as a potent therapy to attack HIV. Serendipitously, CytoDyn has found its potential to attack a host of other diseases. In my most recent article on the company, "CytoDyn's Big Bang", I recounted how it was being evaluated in 26 different indications - 22 different cancers and four others.
In preparation for this article, I double-checked CytoDyn's latest (1/21/20) investor presentation. I noticed the following sub-panel to slide 13 which had previously escaped my notice:
Adding this to the mix of 26 possible indications notches a cool 36, making Leronlimab potentially one of the top dogs in all pharma, especially if it should pan out on even just a few.
That is the rub - can it pan out? CytoDyn bulls are convinced that "the science" underlying Leronlimab's favorable prognosis is solid. The company thumbnails the scientific rationale for such optimism as follows:
How Monoclonal Antibodies Came to Be
CytoDyn’s monoclonal antibody, Leronlimab (PRO 140), is an investigational humanized IgG4 mAb that blocks CCR5, a cellular receptor that appears to play multiple roles with implications in HIV infection, tumor metastases and immune signaling. Leronlimab (PRO 140) has successfully completed nine Phase 1/2/3 clinical trials with over 800 patients, including a successful pivotal Phase 3 trial in combination with standard anti-retroviral therapies in HIV-infected treatment-experienced patients.
It is the italicized trifecta that makes Leronlimab so potentially exciting. Its advantages are further emphasized in CytoDyn's latest presentation slide below:
Leronlimab's benign safety profile sets it far in advance of other therapies which attack dread diseases like HIV, cancers and autoimmune diseases
In order to pass muster through the FDA, a monoclonal antibody such as Leronlimab must demonstrate "safety, purity and potency of the product". CytoDyn emphasizes Leronlimab's superior safety profile in its numerous clinical trials to date as illustrated in the company's presentation slide below focusing on its safety profile in treatment of HIV:
If the FDA were to grant Leronlimab a label reflecting this safety profile, it would be superior to Gilead's (GILD) label for its top-selling HIV therapy, Genvoya. Genvoya's label includes several warnings of potential adverse reactions plus the following black box warning:
On the other hand, if the FDA were to borrow safety labelling excerpts from SELZENTRY (maraviroc), a CCR5 coreceptor antagonist, based on a class labelling rationale, any labelling advantage would be less clear cut.
At this point, it is likely foolhardy to anticipate details of Leronlimab's label should it be approved by the FDA. CytoDyn's current job is to get its BLA for Leronlimab as a combination therapy in treatment of HIV actually filed with the FDA.
If CytoDyn is ever able to complete its filing, its prospects should be boosted by its superior safety characteristics. While such a filing would not solve all of the company's issues, it would go a long way towards boosting investor confidence and potentially nudge the stock back up towards its highs. Unfortunately, based on CytoDyn's 2/28/20 press release as discussed below, the filing timeline appears to have hit a glitch.
CytoDyn's CEO is proving adept at piling on new indications for its single therapy Leronlimab, but is failing to move its lead indication forward
CytoDyn's CEO and guiding light is one Nader Pourhassan. A sympathetic article recounts the unusual circumstance surrounding Pourhassan's initial foray into biotech. Back in 2008, Pourhassan, an immigrant with a PhD in mechanical engineering, was teaching in a charter school in Oregon.
He was also dabbling in various business projects. One of his partners owned 0.75 million shares in CytoDyn, which was trading for $0.05. The partner talked Pourhassan into taking over as COO of the company. At the time, Pourhassan protested he didn't even know what biotech meant. Nonetheless, in 2008, CytoDyn and Pourhassan entered into (p. 11) a seven-year Personal Services Agreement.
When CytoDyn's then lead HIV molecule, cytolin, ran into roadblocks with the FDA, Pourhassan got wind of Progenics' decision to liquidate PRO140 (Leronlimab). Despite considerable opposition, Pourhassan convinced CytoDyn's board to refocus its efforts from cytolin to Leronlimab.
He negotiated a 2012 deal (p.11) for CytoDyn to acquire:
... proprietary HIV viral-entry inhibitor drug candidate PRO 140 (“PRO 140”), a humanized anti-CCR5 monoclonal antibody, as well as certain other related assets, for ... $3,500,000 ... cash and milestone payments and royalties... to Progenics... in addition to payments due under... [a prior] Agreement... between... AbbVie [predecessor]... and Progenics...
He subsequently took over as CEO (p. 13) at CytoDyn; now, a decade since his first participation, Pourhassan has worked tirelessly to manage Leronlimab, and CytoDyn stands on the cusp of filing its BLA.
When Pourhassan got involved, he considerably improved the situation for CytoDyn. It had been having chronic deficits in filing its 10-Qs and 10-Ks (per pre-2011 records in the Edgar database where CytoDyn's filings can be found under a previous name, "RexRay").
There can be no doubt that Pourhassan has followed through on his vision for PRO140 and taken it further than would ever have seemed possible. For that, I acknowledge his will and perseverance. Yet, this situation is fraught with risk.
For all his accomplishments in moving PRO140 through the paces, it has been the work of a highly persistent amateur. CytoDyn has had investors on the lookout for its BLA filing since 2018.
In early 2019, the company published a slide deck with the following slide:
This looked promising - a first step in a rolling submission in February 2019, then a complete filing by later in 1H2019. Such was not to be; targets have come and they have gone. Recently, after missing its January 2020 target, we heard that the FDA imposed new data requirements that moved the filing back to late February. As late as Pourhassan's 2/23/20 Red Chip Money Report presentation, he held to this February deadline.
Noting Leronlimab's rolling submission, he reiterated the 1/3 already complete, affirming "... 2/3 will be submitted this month and we will be done". Yet, with CytoDyn promises are cheap; instead, there is always a breathless new announcement - a partner in China for retrovirus, a breakthrough therapy filing in breast cancer, a basket trial for cancer indications, and of course, again and again, "Next Superstock Presentations".
The company seems to be following the exact letter of W.C Fields' excellent dictum, "If you can't dazzle them with brilliance, baffle them with bull*&!@." A perfect case in point is CytoDyn's 2/28/2020 press release. Instead of announcing that it has filed its BLA for HIV as a combination therapy as promised, less than a week later the company filed the following:
This release sets out nine agenda items, an obscene wrapping of promotion and busywork that serves one purpose: obfuscation of the third bullet point above. It appears as if there will be no BLA filing in February; instead, there will be a status report in March.
CytoDyn has serious financial impediments
The company suffers from the same liquidity deficits that plague all biotechs who have yet to secure key FDA approvals and then pass successfully through the danger zone of commercialization. Actually, in this regard, CytoDyn is an extreme case.
It has scraped for every dollar it has found. It was never a beneficiary of a proper IPO such as launch so many biotechs with tidy purses in the tens of millions of dollars. The company's 10-Q issued on 1/9/20 shows it having an accumulated deficit of >$260 million.
CytoDyn has assembled the resources to generate this deficit despite a share price which has stagnated at ~$1.00 for much of its history. With annual expenses rising at a healthy clip, the company is in desperate need of some solid revenue sources.
Data by YCharts
At some point, promises and glitz of the sort to be forthcoming on 3/6/20 are not going to be enough. Think of it - nine subjects and very little that shows any near- / mid-term revenue impact without the addition of blind optimism. CytoDyn's currency, its shares, warrants, and options are starting to look awfully stretched.
Conclusion
Despite his best efforts, CEO Pourhassan failed to get CytoDyn's BLA filed by the end of February. Instead of simply issuing a press release with an explanation, the company filed its above-cited nine-point hydra.
If Leronlimab actually obtains a breakthrough designation in breast cancer, it will be a cause for celebration by patients, their family and doctors, by investors, and by management. The fact that CytoDyn has requested such a designation has very little independent significance, particularly since the company has already issued a press release announcing it.
Roping such announcements of requests for breakthrough therapy into Friday's (2/28/20) press release takes attention away from the other points. It is particularly counterproductive when CytoDyn is working to position Leronlimab in the conversation as a potential therapy for coronavirus.
If Leronlimab's coronavirus aspirations are serious, in today's environment they could certainly impact the company's stock favorably. As such, they deserve a more focused approach, rather than nesting with other claims that highlight CytoDyn's predilection for advancing Leronlimab as a therapy for so many of humankind's diverse bodily ailments.
CytoDyn has clinical support for two propositions that could make Leronlimab a serious contender as a therapy for COVID-19: its benign safety profile and its success in treating HIV infection. If the company truly believes Leronlimab can position itself as an effective therapy for COVID-19, its most effective strategy is clear.
CytoDyn should focus its meager resources and public attention on completing its BLA and its coronavirus potential. So long as it continues on its current scattershot approach touting itself as a pan-therapeutic, I will continue to view it as always a bridesmaid, never a bride.
This article was written by
Analyst’s Disclosure: I am/we are long CYDY. 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.
I may buy or sell shares in CytoDyn over the next 72 hours.
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Comments (494)
Gilead suspends access to remdesivir amid flood of requests
Mar. 23, 2020 7:22 AM ET|
Citing "overwhelming demand," Gilead Sciences (NASDAQ:GILD) has temporarily halted patient access to its experimental antiviral remdesivir, adding that it is transitioning its compassionate use program to expanded use programs as "rapidly as possible." It will make exceptions for severely ill pregnant women and children under the age of 18 with confirmed COVID-19 infections. Almost the entire investment world expects the FDA to conditionally approve the nucleotide prodrug for COVID-19, originally being developed for Ebola virus disease, any day.
1: it is administered intravenously which requires hospitalization.
2: as an antiviral medication it most likely will be most effective in the very early stages of the covid 19 disease process.
These two factors combined while not unsurpassable certainly complicate the delivery of this medication on a large scale and in a timely manner. If leronlimab proves effective in the current trial, the fact that it is administered subcutaneously as well as in potentially later stages of the disease process would bode well for it also being a valuable medication in this setting.Here's to hoping both medications, as well as many others, prove effective.
Tantalus has a lot in common with those counting on Leronlimab to save their health/portfolio...lets hope one of the tree's branches dips lower
maybe I'm off base, someone smarter than me chime in.
www.globenewswire.com/...
The rubber meets the road for Leronlimab.
www.nasdaq.com/...
Thank you for reading and commenting.
..."One subject that you are not entirely correct on is when NP started to make promises on completing the BLA filing."
Can you expand on this?
www-proactiveinvestors-com.cdn.ampproject.org
This constant onslaught of videos is beyond irritating.
Some people who invest in CytoDyn can actually read and would prefer a concise written report to verbal bloviating...just an idea.
I wouldn't bother to mention this except your screen name includes "rookie".
The fact that participant "7342341" in an open message board writes that that they have "got your back" is creepy at best.
