- CytoDyn continues to match leronlimab up against COVID-19. The company recently started two clinical trials in Brazil where the pandemic endures.
- If the Brazilian trials hit their endpoints, CytoDyn could file for EUAs in several countries. I expect these trials to produce better results than the U.S. trials.
- The company is moving leronlimab forward in HIV, oncology, NASH, and COVID-19. It is this potential that keeps me involved in the ticker, but Q4 is crunch time.
- I discuss a couple of downside risks and how I plan to manage my CYDY position as we head into Q4.
A lot has happened since my last CytoDyn (OTCQB:CYDY) article, including a nasty proxy fight and the start of Phase III COVID-19 trials in Brazil. What is more, the company just announced that they are hoping to submit the results from the CD16 study to U.S. FDA. Moreover, the company has signed an agreement with an academic institution for the use of leronlimab in oncology. These events have injected a huge shot volatility share price, with the bulls and the bears exchanging blows over the past month. This has encouraged me to step back and reevaluate my trading plan for the remainder of 2021.
I intend to review some of the recent events and I will provide my opinion on these developments. In addition, discuss some of the downside risks that investors should be aware of. Finally, I provide an update on my trading plan and how I intend to manage my CYDY position as we head into Q4.
CytoDyn has already publicized the first patient in their pivotal Phase III severe COVID-19 trial in Brazil has been treated. This trial is expected to be run in up to 35 clinical sites with 612 patients with the interim analysis to be performed 28 days after the enrollment of the 245th patient.
What is more, CytoDyn recently announced that Brazil has approved the start of an additional Phase III trial of leronlimab in critically ill COVID-19 patients. This trial is being conducted in 22 research centers with a target of enrolling 316 patients and the interim analysis after 127 patients have completed the 28-day trial. It is important to note, that the critical patients are being administered leronlimab via IV, rather than subcutaneous “SQ”, which will absorption in hours rather than days with the SQ route. In addition, these patients will be receiving four 700mg doses of leronlimab, where patients in the U.S. trial lonely received two. What is more, this trial’s primary endpoint will be time to recovery, vs. mortality in the U.S. trial.
Figure 1: Brazil COVID-19 trials (Source: CytoDyn Presentation)
My Thoughts on Brazilian Trials
Essentially, CytoDyn has a much better trial structure in Brazil compared to their severe/critical trial in the United States. Not only is leronlimab being administered in a better fashion, but these trials have the right size and endpoint that could help reveal leronlimab’s ability to help in severe and critically ill COVID-19 patients… this was the trial CytoDyn needed last year in the United States. Admittedly, the outcomes of the Brazilian trials are probably not going to immediately change the minds of the U.S. FDA. Perhaps it could be sufficient for other countries to consider leronlimab for an EUA. In fact, CEO Nader Pourhassen recently revealed that the MHRA in England will consider giving leronlimab an EUA if the interim p-value is significant. In addition, the company has been in contact with Health Canada and the Philippines. Maybe… the U.S. FDA would consider the data to be adequate to run a similar trial in the U.S., which could vindicate the company's efforts to continue their COVID-19 programs.
In addition to the Brazilian COVID-19 trials, the company is moving forward on several other fronts. Perhaps the most important effort is the oncology programs, including triple-negative breast cancer and their basket trial for 22 solid tumors. The metastatic triple-negative breast cancer “mTNBC” program has produced some impressive results through emergency use and compassionate use. First and foremost, the company reported that 73% of all 30 patients had reduced circulating tumor cells and 400%-660% improvement in PFS and 570%-980% in OS compared to standard-of-care. The company believes that they have a strong enough case to receive a breakthrough designation in mTNBC from the FDA.
CytoDyn also has hinted that they are looking to perform another COVID–19 Long-Hauler trial in the United States. There have been roughly 230M people that have been infected with COVID-19 and there is an estimated 20M-60M people with long hauler symptoms. At this point, there is no effective treatment for long-haulers, so there is a massive market waiting to be tapped. The company is waiting for guidance from the FDA and is ready to run a Phase II or Phase III trial in the United States.
Figure 2: Long-Hauler Overview (Source: CytoDyn Presentation)
Another pipeline update comes from the company’s efforts to test leronlimab in NASH patients. CytoDyn is moving forward and expects to run a two-part Phase II study, with part 2 being an open-label study.
Figure 3: NASH Study Overview (Source: CYDY Investor Presentation)
Last but not least, CytoDyn discussed their COVID-19 efforts in the Philippines where they have been sending leronlimab to be used in compassionate use situations. CytoDyn CEO, Dr. Nader Pourhassan, revealed that leronlimab orders are “flowing in” and they have received close to $300K worth of orders, with 85% of these orders are occurring in the last few weeks. What is more, he explained that these orders could produce $2M-3M worth of sales in the Philippines by the end of the year.
My Thoughts on the Proxy
Admittedly, I am not going to spend a lot of time on the proxy, nor am I going to disclose my opinion/position. I believe investors need to do their due diligence and come to their own conclusions about the two sides. I can tell you that I knew the proxy battle was going to be ugly and was going to have a significant impact on the share price. I don't know what the ultimate outcome is going to be and how the market is going to continue to tolerate it.
For every one of these I'm going trials and programs there will also be new downside risks. Although I am confident that leronlimab will show some efficacy with encouraging safety, it is still possible that leronlimab misses its primary endpoint and the share price gets pummeled into the ground.
Not only will there be additional regulatory risks, but also financial risks due to the need for additional vials of leronlimab required to run the studies. The company has an agreement with Samsung Bio to produce leronlimab at a minimum of 1M vials per year.
Figure 4: Samsung Biologics Overview (Source: CYDY Investor Presentation)
Unfortunately, it sounds as if the HIV BLA is a long way off from being resubmitted, so CytoDyn is most likely going to need to keep running clinical trials in order to retain their position with Samsung and prevent leronlimab from accumulating on the shelves. At this point, it looks as if the company is doing a great job of getting leronlimab out to other countries where the vials are being purchased for trials or compassionate use. But, at some point, we are going to need reoccurring orders of leronlimab to match the 1M minimum being produced by Samsung.
Essentially, CytoDyn really needs these current studies to produce an EUA in order to facilitate near-term sales in order to prevent them from losing their spot with Samsung or potentially asking investors to flip the bill.
I still have that "ditch list" ready that requires CytoDyn to receive FDA approval for leronlimab in HIV in combination with HAART, and CytoDyn starting the process of uplisting to a major exchange by the end of 2021. I don’t see these events happening in the next few months, so I am extremely perplexed about what I need to do with my CYDY position. The recent proxy fight and company updates have forced me to put my hands up slowly back away until we see where we are when the dust settles. On one hand, the company could be on the verge of reporting encouraging data that keeps the story going… on the other hand, I want to stick to my plan and keep my CYDY efforts in the green. Indeed, it is very likely that I am going to miss out on some opportunities, but I'm just not seeing an A+ setup on the charts that is enticing me to press the buy button at this time.
For those investors looking to establish or add to a position, finding an opportunity might be difficult as we move to close out 2021. I expect the potential for an update from the Brazil trial or the highly anticipated partnership/collaboration announcement will prevent a large sell-off over the next couple of months. Perhaps a retest of the $1.60-$1.70 support will provide an opportunity to click the buy button.
Figure 5: CYDY Daily (Source: TrendSpider)
Long-term, I still have some bullish sentiment on CYDY due to the company’s relentless efforts to expand leronlimab’s uses and its market potential (Figure 6).
Figure 6: Ongoing Programs and Milestones (Source: CytoDyn Presentation)
As a result, I am still going to hold some shares in anticipation the company is able to obtain approval in one of its endeavors. It is this potential that is going to continue to attract investors to support the share price, which in turn, allows me to remain involved in the ticker without worrying about small setbacks or delayed timelines.
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This article was written by
Biologics is a full-time healthcare investor who developed a passion for biotech and life saving therapies after working in the medical field for years. His trade focus is around innovative companies developing breakthrough therapies and/or pharmaceuticals with catalysts for potential acquisitions.He is the leader of the investing group Compounding Healthcare. Features of the group include: Several model healthcare portfolios, a weekly newsletter, a daily watchlist, and chat for dialogue and questions. Learn more.
Analyst’s Disclosure: I/we have a beneficial long position in the shares of CYDY either through stock ownership, options, or other derivatives. 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.
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