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Humanigen COVID-19 Lenzilumab Trial Is Designed For Success, Data In March

Mar. 06, 2021 8:55 AM ETHumanigen, Inc. (HGEN) Stock93 Comments
Wunderkind Research profile picture
Wunderkind Research


  • Humanigen will release P3 clinical data for Lenzilumab in COVID-19 in late March.
  • We believe that based on the pathophysiology, existing clinical data with GM-CSF blockage and the trial design, the study is more likely to be a success than not.
  • In case of a positive trial readout, the stock could appreciate very substantially (potentially >500%).
  • Please be mindful of the risk ahead of this binary. We believe that the stock could decline as much as 80% if the trial fails.

We think Humanigen (OTC:HGEN) stock ($15/sh; $820MM market cap) is a buy ahead of its phase three clinical trial of lenzilumab in COVID-19-associated respiratory distress in late March. Lenzilumab is an anti-GM-CSF monoclonal antibody with low picomolar affinity. Multiple lines of evidence suggest GM-CSF blockade (achieved with lenzilumab) improves survival outcomes in critically-ill COVID-19 patients. Specifically:

GM-CSF is the catalyst for a cytokine storm positive feedback loop

  • GM-CSF blockade inhibits macrophage migration/activation which prevents further inflammation

Existing clinical data show GM-CSF blockade improves ventilator-free survival

  • A peer-reviewed, double-blinded study with a related antibody (mavrilimumab) has already shown GM-CSF blockade improves ventilation-free survival in COVID-19 (published in Lancet).
  • An open-label lenzilumab trial suggests >90% ventilator-free survival at day 14.
  • Interim analysis of Humanigen's lenzilumab trial showed 37% improvement vs SoC in a related metric (time-to-recovery).

Humanigen's trial is enrolling the patient population that receives greatest benefit from GM-CSF blockade

  • Elderly patients are at greatest risk of ventilation/death
  • 45% of participants in Humanigen's lenzilumab trial are elderly patients
  • GSK's recent study with a related antibody (otilimab) recently showed a treatment difference of 19% in freedom from respiratory failure in elderly patients (22% of GSK trial population)

Lenzilumab dose is 20x greater in HGEN COVID-19 trial than otilimab dose in GSK COVID-19 trial

What follows is a detailed scientific explanation of the facts above. The reader can skip to the conclusion without loss of continuity.

GM-CSF blockade and hyperinflammation

Granulocyte macrophage colony-stimulating factor (GM-CSF) is an inflammatory signaling protein that plays a key role in host defense to viral infection. Alveolar epithelial cells secrete GM-CSF in response to viral infection. GM-CSF acts both locally to stimulate mature myeloid cells (macrophages, neutrophils, etc.) as well as systemically to mobilize immature myeloid cells. The protein binds its cognate receptor (GM-CSF-R) and signals via JAK2-STAT3/5 to activate genes involved in

This article was written by

Wunderkind Research profile picture
MD, MBA. Professional experience in clinical research and at a top-tier management consulting firm, advising clients in the pharmaceutical and healthcare PE industry. Successfully invested in biotech for over a decade with a value-based approach

Analyst’s Disclosure: I am/we are long HGEN. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (93)

markets seem to think there are reasons for optimism today
value1m profile picture
Brillanta is one of med they use for covid coagulation and so is a need for antidote as well.
The Chief Scientist for the company has sold approximately $20M worth of the stock this year plus last quarter’s loss was huge, management states this quarter’s loss will be as big and these 2 quarter’s put a big dent in the company’s cash. More dilution coming? I want to be very clear, I have barely begun DD on this very interesting company, in a very interesting position but the foregoing greatly concerns me. I’ve read the comments below and there are people in these comments that have extensive knowledge of the science and this company. I would be very interested in their insight/responses to my above questions.
Downtown10 profile picture
@charles1222 Starting with the quarterly loss, the company, like any clinical stage biotech without much in the way of revenues, will see losses due to expenses. The big dent in the company’s cash is explained in the ER:

“Net loss for the three months ended June 30, 2021 was $70.8 million or $1.20 per share as compared to $24.0 million or $0.79 per share for the three months ended June 30, 2020. The net loss for the six months ended June 30, 2021 was $136.4 million or $2.45 per share as compared to $26.5 million or $1.00 per share for the six months ended June 30, 2020. The increase in net loss for both periods was largely due to an increase in total expenses, mainly Research and Development (“R&D”) expense which rose significantly as the company accelerated its efforts to manufacture lenzilumab for potential commercialization upon a regulatory authorization. R&D expense increased $41.9 million from $21.1 million for the three months ended June 30, 2020, to $63.0 million for the three months ended June 30, 2021, and increased $101.1 million from $21.8 million for the six months ended June 30, 2020, to $122.9 million for the six months ended June 30, 2021. The manufacturing expense included in R&D was $57.1 million for the second quarter of 2021 as compared to $17.1 million for the prior year quarter, and $107.1 million for the six months ended June 30, 2021, as compared to $17.4 million for the prior year period. The costs incurred to produce lenzilumab will continue to be included in R&D expense until lenzilumab is authorized or approved for commercial use, at which point the amounts expended for production would be reclassified as inventory. A meaningful portion of these expenses are associated with initiation of manufacturing processes on a site-by-site basis.”

So their cash is being used to manufacture Lenzilumab, as they would not get an EUA without having an adequate supply of the drug.

They raised cash for this purpose earlier this year, and if an EUA is gotten, no further dilution will likely occur as they would start turning their supply of Lenz into revenues. If, on the other hand, the FDA wants a new trial, yes, capital might need to be raised.

As for Chappell’s stock sales, no one really know why this is occurring. Some have speculated that he is getting his ownership % down to make a buyout easier. Or that he is just being cautious because no one can be sure how the FDA will rule and he has a huge amount of shares. The fact that no other manager seems to be selling is a good sign, and in any case, if Chappell was selling on any inside info, he could end up in jail.

The latest theory that the delay in the FDA issuing an EUA is because there is an ongoing trial that the NIH is running that treats Covid patients with Lenz and Remdesivir. Since it is a double blind trial that is still enrolling, patients will either get Lenz or a placebo. If an EUA were issued the NIH trial would have trouble enrolling, as patients would not want to risk getting a placebo when they could be guaranteed of getting Lenz via the EUA. If true, then the FDA will issue the EUA once the trial is fully enrolled. I think this trial was expanded from 200 to roughly 400 patients recently. They are enrolling at 60 locations, I believe, so hopefully they can achieve full enrollment soon.
@Downtown10 great information. I get early stage biotec burns cash. I was concerned about the company running low on cash with its high burn rate vs its cash reserves resulting in dilution. It sounds like the cash is positioning the company to be ready to go if it gets the EUA. If the rumor is correct when is the NIH trial expected to end?
Downtown10 profile picture
@charles1222 No clue as to when the trial will become fully enrolled. Many locations enrolling, but there are pretty numerous inclusion/exclusion criteria.

Downtown10 profile picture
Latest PR outlining an oversized benefit for hospitalized black patients using Lenz.


If anyone lives in a district/state being represented by a black Rep/Senator sending a link to this PR along with an explanation of our status of awaiting an EUA from the FDA might benefit us shareholders by ensuring a fair shake by the FDA through some Congressional oversight.

Why don’t I do it? I would, but you can only contact those in Congress by e-mail if you are a resident of their districts/states and mine are all white.
Downtown10 profile picture
@Downtown10 Decided to send the link and a brief explanation of Lenz to the Congressional Black Caucus whose website e-mail contact is open to anyone. Don’t know if anything will come of it but worth 15 minutes of my time.
pro8 profile picture
@Downtown10 Interesting... 1st time for any drug to treat CV 19 working better for one racial group over another I have seen .... caveat though as I see only a total of 520 treated but no breakdown of race from there... How many blacks? How many whites? How many Asians etc strange that they leave that pertinent data out... suspicious to say the least with a race based result....
Downtown10 profile picture
@pro8 I think the racial info was in this presentation:


Looks like 51 black participants.
value1m profile picture
Now Im long in disney and phase bio. I think disney will be at least a little bit more close to netflix and phase bio has new trials amd patent at a cheaper price.
value1m profile picture
I sold out and calculate my loss. To many odds against the stock
the buyers when it was 3 bucks per share already cashing out. Institution shorting on news. Insider selling and the last straw is Actemera and nih guidelines about gsf factor. I sold and loss my AMC gain cause of this piece of shit company!
Why haven’t they filed EUA yet in USA? It was supposed to be in May, then June. I’m getting disillusioned like I did with CYDY, a real loser.
@Downtown10 thanks. I either missed it or I already forgot it. So, Downtown 10, you seem to know a lot about this stuff. When do you expect the next news to come out, either approved or not?
Downtown10 profile picture
@Lakehighlandsmomma Since HGEN is one of my biggest spec stocks, I try to keep up and so hopefully I know a little. I’m not a medical guy so many know a lot more than I. I do know that it’s hard to know when a decision comes down. I have a few cheap July call options I bought a few weeks ago just in case the decision comes down by this Friday. But I have many more August option call spreads. I’m banking on a decision (hopefully positive) at least by the 20th of August.

With the FDA you just never know. Lenz is currently in a Phase 2 trial run by the NIH (ACTIV-5/BET-B) with Remdesivir. In a worst case, the FDA could decide they want to wait until they see some data from that trial before making a decision. Since data is at least a few more months away I hope they won’t wait, but the FDA does whatever it wants, so again, you never know. But I do expect that most likely a decision will come down by the end of July. In a perversely beneficial way, the recent rise in Covid cases should help us shareholders, by giving the FDA motivation to make Lenz available to patients.

As for what the FDA decision will be, since I believe that the trial was sufficiently powered, if a decision was based on efficacy alone, I think an EUA would be very likely. But EUA submissions require more than just that and I have seen submissions denied for reasons other than the efficacy of a drug (manufacturing problems, assay deficiencies, defects in the structure of the trials, other issues in the clarity or completeness of the submission, etc). Some of these are easily fixed, some not. Smaller biotechs run into these issues more than Big Pharmas do, but I’m hoping that HGEN management, with their extensive industry experience, can successfully navigate the EUA approval process. And I hope the flack the FDA is getting about the Biogen Alzheimer’s drug doesn’t make the FDA gun-shy on approvals.
value1m profile picture
Information on this page was last updated on 7/8/2021.

Dale Chappell Insider Trading History at Humanigen
Transaction Date Buy/Sell Number of Shares
7/8/2021 Sell 48,010
6/25/2021 Sell 1,000,000
6/23/2021 Sell 133,126
6/18/2021 Sell 402,480
6/16/2021 Sell 158,486
6/4/2021 Sell 127,084
6/2/2021 Sell 76,126
2/27/2018 Buy 32,028,669
value1m profile picture
credit suise outperform at 28
HGEN up almost 5% today to $22.74. Does anyone know why?
Downtown10 profile picture
@Lakehighlandsmomma No news. If I had to guess I would say that we saw that the stock was rising over the last few weeks in anticipation of the EUA filing. The stock was then held down to finish last week at $20 (I believe because of options expiry). We have resumed the rise this week with maybe a bit of a catch-up included. Maybe some short covering and/or institutional buying as well. Management indicated that the EUA would be filed by the end of May. It will be interesting to see if the EUA filing gives us a pop or a “sell on the news”.
Downtown10 profile picture
@Downtown10 Looks like “Sell on the news” in the early going.
Looks like EUA filing and breaking out to the top of the range... for days then I'll predict a retreat to $20, that magnet is strong :)
Downtown10 profile picture
No surprise that HGEN finished at almost exactly $20 Friday (expiration of the May options). With no news recently this stock is easily manipulated and if a big player wants to sell puts and calls, they can direct the stock price so that neither pays off. We’ll see if the shorts drive the stock back down now. Hopefully this week we will get notice of the EUA filing. Filing will probably result in an immediate SP pop, though it’s debatable on how long lasting any pop will be as it’s widely expected.
I've been selling monthly $20 Cs every month (against only a quarter or so of my position, want a lot unhedged), whether ITM or OTM - it's been working so far :)
Downtown10 profile picture
@canyon Good call. You may have sold a few of those to me. Had a modest loss on my May 20/30 call spreads. Hoping the June 20/30s do better.
I'm not sure those Jun's will do better, this seems stuck at $20 range (until it's not, and I have to roll or risk being called away lol).
Downtown10 profile picture
So HGEN apparently received a $6M milestone payment today from their licensing deal in S. Korea, due upon publishing positive results from their Phase 3 trial. You can’t find anything on their website about this, though they did post the following tweet:


The tweet doesn’t even specify what the payment was (though it links an article in Korean, for whatever that’s worth). Compare and contrast with CYDY. Nader would have been screaming from the rooftops about this, and HGEN can’t even manage to put out a PR? I certainly don’t want HGEN to mimic CYDY, but still, when you have valid good news at least put out the info somewhere that people can see it!

As much as I detest NPs carnival-barking style, HGEN could be a little more active in letting the world know about positive developments regarding Lenz. It might help support the SP somewhat.
The Blue Baron profile picture
Congrats to the team at Humanigen for a job well done! It’s quite a stark contrast listening to an HGEN CC compared to CYDY. No B.S.-Only clear communication. I did not sell out into today’s frenzy of share activity. Obviously, many retail investors were only interested in the COVID bump and nothing else. We still have news to hear on the potential for reduced hospital stay along with the combo treatment with remdesivir, of which lenzilumab has already proven itself. Then we also have upcoming trials in GVHD, cancer, along with improving the safety of CAR-T therapies.


If you invested your money based on words composed on SA and many blogs, all your money would be invested in CYDY. I look forward to more positive articles about HGEN!
FiXu Research profile picture
Congrats longs, this is just the beginning. I hold about quarter million worth of shares right now and not selling till we see 3 digits.
Downtown10 profile picture
@FiXu Research The confidence in your DD was well deserved. You were correct on meeting the primary endpoint and even the day of delivery of the top line data. I’m a bit disappointed with today’s price action as I thought we would be higher, but not being a well known stock I will not be surprised if we drift higher as the weeks go on and our story becomes more well known. Maybe a few analyst upgrades in price targets wouldn’t hurt either.
FiXu Research profile picture
@Downtown10 I'm also disappointed with todays action but I'm not planning selling anytime soon. If it actually goes under 20$ I will probably buy more. My bear case price target is 60$, bull case $240(1 year horizon). I expect around $1.5billion revenues this year, and $500million afterwards.

Lot's of catalysts ahead:
- some high double/triple digit price targets from analysts
- production agreements
- EUA application/approval
- NIH trial results
- Licensing/Commercialization for US and oversees

- Big pharma buyout is definitely on the table now. Humanigen's portfolio is a good fit for Gilead.
Downtown10 profile picture
@FiXu Research Your price and revenue targets are more optimistic than mine (a lot depends on how quick an EUA is gotten), but I’m generally in agreement. Under $20 is also where I will consider adding shares, as I agree with your catalysts. Agree on Gilead being a good match, though BP almost never pays more than a 100% premium, (Allergan buying Tobira being one of the few exceptions that I can remember) and I doubt an offer of $45-$50 gets it done.
@Anthony Cataldo
Or drug approval and revenue stream? One is temporary, the other is not.
gjackoh profile picture
@Anthony Cataldo Don't think it is a short squeeze. There were maybe 3.5 Million shares shorted at the beginning of the day. As of right now there have been over 54 Million shares traded (Float is 53.5 Million). This is being driven by momentum traders. I am in for the long haul. But momentum is carrying this stock up and momentum will carry it down again. Don't wait too long if you want to take profits. But the fundamental good news won't go away and the the potential for the company is great.
FiXu Research profile picture
@Wunderkind Research Thanks for the article. You wrote: "We think Humanigen can charge a premium for a product that has a demonstrated survival benefit ($50,000)."
Do you have any data to support this price estimate?
Downtown10 profile picture
The SP drop from $24 has got me a little concerned going into getting the trial data. So over the past week and a half I’ve sold most of my shares and replaced them with an options spread; buying the Apr 20 call and selling the Apr 7.5 put. My sold shares averaged just under $16 and the above spread cost just about $3. (If anyone knows what the name is for a spread that buys an OTM call and sells an OTM put, please let me know.)

This limits my downside somewhat compared to owning the shares, though my upside doesn’t kick in til $20 (I’m expecting that good trial results should drive the SP well over $20). If I get the shares put to me at $7.50 that’s OK as I am fine owning shares at that level with a Covid trial failure.

Still long but I’d be lying if I said my confidence has not been shaken. The history of Covid therapeutics trial results have been largely uninspiring.
FiXu Research profile picture
@Downtown10 If it's any comfort, I did extensive due diligence in other gm-csf trial results and statistical analysis on humanigen's interim results. I'm quite confident they will hit their primary endpoint. I just bought more shares today. I'm expecting topline results on Monday morning.
Downtown10 profile picture
@FiXu Research I agree it has the best science and the best crafted trial of any therapeutic, and excellent management for a pre-revenue biotech. Though it seems like treating the severe/critical Covid patient has been a tough nut to crack. A few weeks ago I never would have believed the stock would trade with a 12 handle again. Makes me wonder what the sellers think they know?  

I actually did buy a few additional calls (beyond stock replacement) over the last 2 days as they have gotten ridiculously cheap. The options get cheaper with the SP going down, even though I think the SP going into the report day matters little to where the SP rises to with a successful trial.  

Glad to hear your confidence remains solid. Monday morning sounds about right to me. Best of luck.
I've heard it called a risk reversal (selling puts to buy calls, both OTM).
I've been overwriting a third of my position since it retreated to around $20 (not helping with 2/3s of my position, but that's for upside).
any explanation for today's move?
NDHT profile picture
Not sure if I would agree with the following:

First, the author stated, "Lenzilumab is an anti-GM-CSF monoclonal antibody with low picomolar affinity."

It is my understanding that if a molecule has better affinity, its dose should be lower than a similar molecule to achieve a similar effect.

Then, the author said, "...Humanigen's trial is administering roughly 20x the dose as GSK's trial. Both lenzilumab and otilimab are roughly the same size so the difference in dose translates directly into a difference in GM-CSF binding capacity."

So, instead of using lower dose than otilimab (if it has better affinity), lenzi actually has to be dosed 20 times higher to achieve a similar effective binding capacity.

One may draw a conclusion that lenzi actually has a worse affinity than otilimab.

Further, lenzi has to be dosed at 600 mg each three times within one day, while otilimab is dosed as a single intravenous infusion at 90 mg for an hour only.

If each dose of lenzi is for one hour, then its regimen needs three hours, another weakness, I'd say.
aaronr89 profile picture
@NDHT if you are already hospitalized then amount of time to infuse doesn’t really matter cause you have to be there anyway.
FiXu Research profile picture
@NDHT Nowhere in the article the author claims this:
"lenzi actually has to be dosed 20 times higher to achieve a similar effective binding capacity."

He is just saying that in the trial lenz dose is 20 times higher than otilimab. Therefore he thinks the effect will be more pronounced.
Downtown10 profile picture
Humanigen gets debt financing.


I don't know much about corporate debt finance, but those terms are certainly better than what CYDY always received.
@cat2005 why does everyone compare HGeN to CYDY all the time? Is that the level you feel the company is at?? Let’s give them more credit than that.
Downtown10 profile picture
@cat2005 Like you I’m not that knowledgeable about debt financing. The terms seem OK to my untrained eyes. I certainly like this better than doing a large dilution at this SP. It backs up the view that management feels that the trial will be successful and our SP will be higher going forward. But I’m not sure why they are doing this now, when they probably could have gotten better terms from better lenders after an EUA. Having said that, I do have trust in HGENs management (unlike CYDY) so I’ve got to believe that they know what they’re doing. Whether the financing is good or not, it won’t really matter with an EUA, but if the trial is a bust then the debt may weigh on the stock going forward.
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