The First Look At Checkmate Pharmaceuticals

Summary

• Today, we become the first Seeking Alpha contributor to put Checkmate Pharmaceuticals in the spotlight since its IPO last summer.
• The company is focused on harnessing the power of one’s immune system to fight cancer.
• A full analysis on Checkmate Pharmaceuticals follows in the paragraphs below.
• I do much more than just articles at The Busted IPO Forum: Members get access to model portfolios, regular updates, a chat room, and more. Learn More »

Photo by SolStock/E+ via Getty Images

"Cure the symptoms, cure the disease."― Michael Critchton

Today, we take a look at a 'Tier 4' developmental concern focusing on new treatments for cancer. The firm came public in August, and has yet to be reviewed here on Seeking Alpha. Our first take on this small cap name is presented below.

Company Overview:

Checkmate Pharmaceuticals (CMPI) is a Cambridge, Massachusetts-based clinical-stage biopharmaceutical company that IPO'd in August of 2020. The company is seeking to harness the power of one's immune system to fight cancer. How exactly do they do this? Well, Cytotoxic T lymphocytes are effective at fighting cancer, but they are suppressed by immune checkpoint proteins that are produced by tumors. As a result of this understanding, checkpoint inhibitors were created and played a role in the immuno-oncology revolution. However, despite releasing the brakes on the immune system, these checkpoint inhibitors are often ineffective at attacking tumors. This is where Checkmate comes in.

It is believed that the activity of checkpoint inhibitors may be radically increased by combining these drugs with an immune activator to stimulate T cell activity. The most effective immune activator that has been investigated is called the Toll-like receptor 9 agonist CpG oligonucleotide. Thus, it's Checkmate's view that by combining a mechanism to stimulate a T cell response to attack the tumor, along with checkpoint inhibition to release the tumor's suppression of the immune system, you will get a substantially more effective therapeutic. The company's vision is materialized in their lead product candidate CMP-001, which is the entire focus of the pipeline. Checkmate Pharmaceuticals currently has a market capitalization of approximately $225 million and trades for around $10.50 a share.

Source: March Company Presentation

Pipeline:

Source: Company Website

CMP-001:

CMP-001 is a differentiated Toll-like receptor 9 agonist delivered as a biologic virus-like particle, utilizing a CpG-A oligonucleotide as a key component. When injected into the tumor, CMP-001 is designed to activate the body's innate immune system, altering the tumor microenvironment and directing activated anti-tumor T cells to attack both the tumor and the tumors throughout the body. More specifically, the drug works by activating TLR9 in plasmacytoid dendritic cells. Plasmacytoid dendritic cells are the only immune cells that produce large quantities of type I interferons. When activated, pDCs increase their expression of important co-stimulatory molecules and tumor antigen presentation to T cells, resulting in an effective anti-tumor T cell response. The drug is currently being tested as a therapeutic for head and neck squamous cell carcinoma and melanoma.

Source: Company Website

In December of 2020, Checkmate announced a clinical collaboration with Bristol Myers Squibb (BMY) to evaluate CMP-001 in combination with nivolumab, a PD-1 blocking antibody. The companies will collaborate on two Phase 2 melanoma trials. For both trials, Checkmate Pharmaceuticals will be the sponsor, and Bristol Myers Squibb will supply nivolumab.

Source: March Company Presentation

On January 4th, the company announced the appointment of Robert F. Dolski as Chief Financial Officer. Mr. Dolski has over 20 years of experience in the industry and he holds an MBA from The Wharton School and a BS in civil engineering and strategic management from the University of Pennsylvania. His experience includes Vice President, Finance at Akcea Therapeutics; Vice President, Head of Financial Planning & Analysis for Moderna Therapeutics; and he was Senior Director, Finance at Forum Pharmaceuticals.

Source: March Company Presentation

On the clinical front, the company has multiple trials underway. In the melanoma program, the company currently has two Phase 2 trials in the works. Both trials will evaluate CMP-001 in combination with nivolumab, but one trial is for the refractory indication and one is for first-line treatment. The patient dosing for the first-line melanoma trial began in March. For HNSCC, the trial will study CMP-001 in combination with pembrolizumab as a first-line treatment. Trial sites have been activated and patient screening is underway. Initial data from the trial are expected by the end of 2021.

Source: March Company Presentation

Analyst Commentary & Balance Sheet:

As of December 31st, 2020, Checkmate Pharmaceuticals had cash, cash equivalents, and investments of roughly $125 million. Research and development expenses for the year were $26.7 million, compared to $24.2 million in 2019. General and administrative expenses for 2020 were $10.1 million, compared to $4.6 million in 2019. The company didn't book any revenue in 2020. Overall, the company had a net loss of $36.9 million for the year, compared to a net loss of $28.2 million in 2019.

The company is sparsely followed on Wall Street. Except for the obligatory analyst buy ratings that usually come out within a month of a company's IPO, there has been only one analyst firm to chime in on Checkmate since. That was Jefferies on March 19th. The firm lowered its price target from $23 a share to $19 a share, but they maintained their buy rating. Interestingly, the lowered price target comes not as a result of what Checkmate did or did not do. The analyst at Jefferies lowered his price target after Idera Pharmaceuticals' pivotal registration trial of tilsotolimod in combination with ipilimumab versus ipilimumab alone in patients with anti-PD-1 refractory advanced melanoma did not meet its primary endpoint of objective response rate. The analyst views the results as casting a cloud over the entire TLR9 class. However, he did point out that he still has a positive outlook on Checkmate's drug as it is differentiated in important ways.

The company Chief Scientific Officer has added more than $300,000 in stock to his holdings since December in over a half dozen transactions, which is always encouraging.

Verdict:

It is not surprising to see the shares of Checkmate Pharmaceuticals sell below their IPO price. This is usually the case and why I rarely take a position in any new public company for at least 18 months to allow analyst hyperbole to ebb and lock up expirations to happen.

The company is well funded and its pipeline holds some promise. It is too early in the development cycle to have much certainty whether their efforts will bear fruit. Outside a very small 'watch item' holding within a well diversified biotech portfolio, there is no investment recommendation that seems prudent here. However, this is an interesting enough name to check back in after initial trial results are out later this year.

"Truth is the cure to many diseases."― Omar Cherif

Bret Jensen is the Founder of and authors articles for the Biotech Forum, Busted IPO Forum, and Insiders Forum

Analyst’s Disclosure: I/we 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.

Comments

[Bret Jensen]

ACR
Checkmate Pharmaceuticals (NASDAQ:CMPI) presents new translational data from its Phase 1b trial of vidutolimod (CMP-001) in combination with pembrolizumab in patients with advanced anti-PD-1 refractory melanoma.
Response rates to vidutolimod in combination with pembrolizumab were similar across baseline patient characteristics including BRAF mutation, LDH level, number of prior systemic cancer treatments, best response to prior PD-1 blockade therapy, and prior ipilimumab.
All patients showed the expected rapid induction of anti-Qb antibodies to the virus-like particle, which facilitate the pharmacodynamic response to vidutolimod, and the antibody titers were not associated with clinical response.
Clinical activity of vidutolimod + pembrolizumab was associated with serum CXCL10 induction magnitude, induction of an inflammatory gene expression profile, and CD8+ T cells in injected and noninjected tumors.
The data was presented at AACR 2021.

[takinstocknsichuashun]

Thank you for this article on CMPI. I like their science.

I remember that CMPI went public about the same time as PAND, and so their lockup expirations were close in time. I waited until the lockup exp to buy the names. PAND did not go down at that time, which I took as a buy signal and started buying. Unfortunately, I didn't get a chance to buy much. I was waiting for a pull-back, which, of course, never came.

I have started to buy CMPI. They are down due to general BT blues.