Gamida Cell: Recapping A Tough Year

Summary

• Today, we revisit an intriguing Israeli-based biotech concern called Gamida Cell for the first time since March.
• The shares have seen declines in 2021, like most small biotechs this year, even as the company continues to march to its first FDA approval.
• Time to buy the dip? A full investment analysis follows in the paragraphs below.
• Looking for a portfolio of ideas like this one? Members of The Biotech Forum get exclusive access to our model portfolio. Learn More »

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Never lose hope. Storms make people stronger and never last forever.”― Roy T. Bennett

2021 had been a rough year so far for small developmental concern Gamida Cell (NASDAQ:GMDA), as it has been for most of the small biotech space. A record number of IPOs in the sector has taken some demand away from the stocks of existing firms. An inconsistent FDA that has hit myriad small cap firms at the last minute with complete response letters after sitting on marketing applications for many months including recently on Omeros (OMER) and Eyenovia (EYEN), hasn't been helpful for sentiment on the sector either. Obviously, company-specific news always determines the course for shares as well.

A lot has happened since we last highlighted this name this Spring, so it's time to revisit this interesting concern. A full analysis follows below.

Company Overview:

Gamida Cell is focused on developing treatments for blood cancers and serious blood disorders. The company is based in Israel and currently is in clinical stage, something it hopes to change in 2022 as it marches toward hopefully its first FDA approval. The stock currently trades around $4.50 a share and sports an approximate market capitalization of $240 million.

Source: August Company Presentation

The company has a proprietary developmental platform 'NAM Platform Technology' that allows it to expand multiple cell types - including stem cells and natural killer or NK cells - while maintaining their original phenotype and potency. The furthest along of these efforts is a candidate called Omidubicel.

Source: August Company Presentation

Omidubicel is an advanced cell therapy under development as a potential life-saving allogeneic hematopoietic stem cell (bone marrow) transplant solution for patients with hematologic malignancies. It is first such bone marrow product to have received both Orphan Drug Designation in the U.S. and EU as well as Breakthrough Therapy status in the U.S.

Source: August Company Presentation

In May of last year, the company announced topline results from a Phase 3 clinical study in 125 patients. Data demonstrated that omidubicel showed that the median time to neutrophil engraftment was significantly shorter for patients who were randomized to omidubicel than those in the comparator group.

Source: August Company Presentation

Five months later, Gamida reported that the study had met all three of its secondary endpoints related to platelet engraftment, infections, and hospitalizations. Further results were published recently (see section below).

Source: August Company Presentation

Recent Events:

The company's primary focus since we last looked into it has been advancing its primary asset which has a planned BLA (Biologic License Application) submission to the FDA in the fourth quarter of this year. These activities include making sure that both its company owned facility in Israel and another run by its contract manufacturing organization Lonza to produce omidubicel meet all requirements before submission of the BLA.

Source: August Company Presentation

This also means the company further conducting both market and health economic and outcomes research (HEOR) to support planned market entry and market access activities. They are also in the process of setting up Gamida Cell Assist. An effort to ensure all supply chain and logistics programs to facilitate positive patient and transplant center experiences are in place at the time of the launch of omidubicel. The company also recently published the latest results of the international, multi-center, randomized Phase 3 clinical study of omidubicel in the official journal of the American Society of Hematology named appropriately 'Blood'.

Source: August Company Presentation

On the NAM-Enabled NK Cell Pipeline front, the company is in the late stage planning stage for a Phase 1/2 clinical trial of allogeneic, cryopreserved GDA-201 in patients with follicular and diffuse large B-cell lymphoma. This trial should initiate before year end. It also plans to file another Investigational New Drug or IND application with the FDA in the near future for GDA-201.

Source: August Company Presentation

GDA-201 is described as the following on the company's website:

An innate natural killer (NK) cell immunotherapy for the treatment of hematologic and solid tumors in combination with standard of care antibody therapies. When combined with targeted antibodies, GDA-201 has shown enhanced antibody-dependent cellular toxicity, or ADCC."

The candidate is currently being evaluated in a Phase 1 clinical study in patients with refractory non-Hodgkin lymphoma and multiple myeloma.

Source: August Company Presentation

The company expanded its NAM-enabled NK cell pipeline targeting solid-tumor and hematological cancers as it recently advanced four new development programs that involve modifications intended to direct NK cells against specific tumor markers to improve their cancer killing capabilities into early stage development.

Source: August Company Presentation

Analyst Commentary & Balance Sheet:

Analyst commentary has gotten more positive since the back end of October. Over that time, four analyst firms including JMP Securities have reissued Buy ratings on the stock. Price targets proffered have ranged from $14 to $27 a share. Earlier this week Alliance Global Partners initiated the shares as a new Buy with a $11 price target. The analyst at Alliance sees

An auspicious entry point into the stock" after share weakness in 2021, arguing that investors may be able to take advantage of "a perfect storm of high and low expectations colliding in one company." 2022 catalysts include Gamida Cell being "on the verge" of a potential approval for omidubicel in the hematologic malignancy HSCT setting while also being in the early days of clinical testing with its pipeline of four "and counting" natural killer, or NK, cell therapy assets."

The company ended the first half of 2021 with right around $150 million in cash and marketable securities on its balance sheet after posting a net loss of $21.3 million for the second quarter. In February of this year, the company sold $75 million of 5.875% exchangeable senior notes due in 2026 to certain funds managed by Highbridge Capital Management.

Verdict:

Source: August Company Presentation

Despite the poor performance of stock since we last looked in on Gamida in March of this year, the company has continued to advance its pipeline. 2022 could be an 'inflection year' for Gamida if FDA approval is granted. This seems likely on results, but the FDA has been anything but consistent recently in its decisions.

The company also has some earlier stage 'shots on goal' in its pipeline. I do expect Gamida to raise additional capital at some point on the near term horizon. Quite possibly, shortly after it files its BLA for omidubicel. This is a speculative name, but it seems to continue to have a favorable risk/reward profile. I plan to maintain my small 'watch item' position in GMDA and hope for a brighter 2022.

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 a beneficial long position in the shares of GMDA 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.

Comments

[Busted IPO Forum]

The U.S. Food and Drug Administration (FDA) granted priority review to Gamida Cell's (NASDAQ:GMDA) application seeking approval of stem cell therapy omidubicel to treat patients with blood cancers in need of an allogenic hematopoietic stem cell transplant.
The FDA accepted the company's Biologics License Application (BLA) and is expected to make a decision by Jan. 30, 2023. Under priority review, the FDA's goal is to take action within six months, compared to 10 months under standard review.
Gamida said the FDA is not planning to hold an Advisory Committee meeting as part of the BLA review.
The company noted that the BLA was backed by data from a phase 3 trial.

[OwenAndrew]

any further commentary on GMDA?

[FJBLGB]

Tried looking for a catalyst. Do you (Brett) think they will need either a debt or stock offering to get the marketing going?

[Bret Jensen]

@t3536gj Hard to tell which route they will go. Based on burn rate, it looks likely at some point in 2022. If they get FDA approval, still should be up year for stock imho

[Reading61]

@Bret Jensen Some good news. I think it might finally start to move up. Thanks. Gary

[Bret Jensen]

@Reading61 Crossing fingers. Best