ESSA Pharma: Why I Remain Bullish

Nov. 10, 2021 5:00 PM ETESSA Pharma Inc. (EPIX), EPI:CAALPMF, BAYRY, BAYZF57 Comments
Steven Goldman profile picture
Steven Goldman
2.9K Followers

Summary

  • ESSA Pharma developed a novel mode of action drug, EPI-7386, for the treatment of metastatic castrate-resistant prostate cancer. Pre-clinical and early Ph 1 results are promising.
  • ESSA's share price crashed in mid-Aug when a change in the Ph 1 trial protocol was announced, and a delay in the expected Ph 1 monotherapy trial data release. I believe the market overreacted.
  • ESSA's EPI-7386 combination Ph 1/2 trial with Astellas' enzalutamide now recruiting. Combination trials with Janssen and Bayer expected to begin soon.
  • ESSA has presented additional supportive evidence on EPI-7386 mode of action on the N-Terminal of the AR. Liquid biopsy collaboration (RNA & DNA analysis) with Caris to help identify more precisely which prostate cancer patients most responsive to EPI-7386.
  • I remain bullish on ESSA which may be a buyout target in 2023 if EPI-7386 show promising clinical results in monotherapy and combination trials. I recently added to my position.

Prostate cancer
Hailshadow/iStock via Getty Images

ESSA Pharma logo

Based in Vancouver, B.C., with offices in Houston, Texas and South San Francisco, California, ESSA Pharma Inc. (NASDAQ: EPIX) lead investigational drug EPI-7386 is a novel treatment for prostate cancer with an initial focus on men with metastatic castration-resistant prostate cancer ("mCRPC") whose cancer is progressing despite receiving standard of care therapy treatments including second-generation anti-androgen drugs.

EPI-7386 is currently in Phase 1 monotherapy trials and has recently begun recruiting for Phase 1/2 combination trials with Astellas/Pfizer's anti-androgen drug enzalutamide (commercially known as Xtandi). There are three additional combination trials with both Janssen and Bayer, testing their anti-androgen drugs, which are expected to begin recruiting late this year or early next year.

EPI-7386 was granted Fast Track designation by the FDA (announced on September 14, 2020).

Pfizer's $10,000,000 investment in ESSA in the summer of 2020 under its Pfizer Breakthrough Growth Initiative has provided Pfizer with a right of first access to certain clinical data from ESSA's EPI-7386 clinical program subject to an agreement that Pfizer and its affiliate not to acquire ESSA for a period of 1 year after the "first access" clinical data is provided.

My previous articles on ESSA include:

February 1, 2021, ESSA Pharma: Update including Clinical Collaboration with Janssen

August 19, 2020, ESSA's Novel Prostate Cancer Treatment in Clinical Trial: Pfizer is New Lead Investor

October 10, 2019, ESSA Pharma: Promising Novel Therapy for Treatment of Prostate Cancer

ESSA's Pipeline

Source: Slide below taken from ESSA's October 2021 corporate presentation (available on Essa Pharma - Next Generation of Treatments for Prostate Cancer)

EPIX pipeline

ESSA's Corporate and Financial Summary

EPIX financial position & capitalization

Source: Slide above taken from ESSA's October 2021 corporate presentation

ESSA pharma price chart
Data by YCharts

ESSA pharma price chart
Data by YCharts

Symbol: (NASDAQ: EPIX)

Outstanding shares and pre-funded warrants: 43,984,346 common shares issued as well as 3,234,750 pre-funded warrants (Source: page 44, Form 10Q filed August 16, 2021).

Outstanding stock options: 2,694,688 options currently exercisable and 4,108,532 options not yet exercisable (Source: page 44, Form 10Q).

Share price: $11.00 close on Friday, November 5, 2021

52 Week Share price range: $5.75 to $36.00

Cash: $202 million as of June 30, 2021, no debt

Market Cap: approximately $520 million.

Institutional and Significant Shareholders include Pfizer, Soleus Capital, Biotechnology Value Fund, RA Capital, Blackstone Group, Omega Fund, Eventide Asset Management, Orbimed, Avidity Partners, CAM Capital, Point72, Ridgeback Capital, Sphera Healthcare, Vivo Capital, and others.

Patents: ESSA has 16 pending and maintained patent families, as well as pending patent applications in the U.S. and other countries, which have expiry dates, if the patents are formally granted, ranging from 2036 to 2040. (Source: ESSA's Form 10-Q)

Background on the Androgen Receptor, Prostate Cancer and EPI-7386 role in engaging the N-Terminal Domain

N-Terminal vs. Current AntiAndrogens target only the Ligand Binding Domain of the Androgen Receptor

Source: Slide above taken from ESSA's October 2021 Corporate Presentation

Prostate cancer is primarily driven by the androgen receptor ("AR") composed of:

  1. the ligand-binding domain (sometimes referred to as the "LBD") of the AR, shown on the right-hand side of the cartoon in the slide above;
  2. the DNA binding domain is shown as the middle portion of the cartoon above which binds to DNA; and
  3. the N-terminal domain (sometimes referred to as the "NTD") (shown in the left-hand portion of the cartoon), necessary for AR gene transcription.

At present all currently approved anti-androgen treatments for prostate cancer target the ligand-binding domain ("LBD") of the AR.

EPI-7386 is ESSA's second-generation drug which focuses on the N-terminal domain of the androgen receptor which is a novel first-in-class approach.

Anitens: According to ESSA's Form 10-Q (at page 25), ESSA believes that EPI-7386 is one of a group of novel investigational compounds called Anitens which inhibit "...androgen-driven gene transcription by using a unique mechanism involving the NTD and thereby bypassing these known mechanisms of resistance to current anti-androgens..." and thereby have the potential to be effective "where current therapies have failed".

The problem with current anti-androgen treatments for advanced CRPC prostate cancer is that, over time, genetic changes occur and prostate cancer becomes resistant to anti-androgen therapies which all involve the LBD end of the AR. As a result, PSA levels rise again and the tumour continues to grow and metastasize. EPI-7386 bypasses these LBD-focused mechanisms of resistance entirely.

EPI-7386 Pre-Clinical Data: EPI-7386's anti-tumour effect was very promising, as seen in pre-clinical EPI-7386 data in a VCaP Xenograft prostate model in mice, compared to both the vehicle group and standard of care anti-androgen enzalutamide (Xtandi) (referred to as "ENZ" in the diagram below). The VCap Xenograft model, derived from a vertebral metastatic growth of prostate cancer, is often used in preclinical prostate cancer trials as it has many characteristics of clinical prostate carcinoma.

As seen in the slide below, when enzalutamide was losing its anti-tumour effectiveness over time in this preclinical trial, EPI-7386 maintained its anti-tumour effect. Even more impressive, the pre-clinical combination of EPI-7386 with enzalutamide showed a deeper, more durable anti-tumour response compared to either enzalutamide or EPI-7386 alone.

EPI-7386 exhibits excellent anti-tumor response

Source: Slide above taken from ESSA's January 6, 2021, Corporate presentation.

In my view this promising pre-clinical combination effect of enzalutamide and EPI-7386 led to Astellas (Pfizer), Janssen (J&J), and Bayer, to enter into collaboration agreements with ESSA to test their respective anti-androgen drugs with ESSA's EPI-7386.

AR-V7 Variant: One reason that current anti-androgens begin to lose their effectiveness over time is that a large percentage of these tumours begin expressing the androgen receptor variant 7 (AR-V7) which does not respond well to currently approved anti-androgen treatment but which does respond to EPI-7386.

EPIX targeting the AR NTD

Source: Slide above is taken from ESSA's October, 2021 corporate presentation

Pre-clinical evidence presented by ESSA in a poster presentation last October 2020 at ENA-32nd Symposium demonstrated EPI-7386's showed potent activity in both full-length AR and in splice variants.

More recently additional pre-clinical data was presented by ESSA on October 7, 2021, as well as in a presentation on October 28, discussed in more detail below, provided additional evidence explaining why EPI-7386 continued to be effective in pre-clinical studies when the current standard of care anti-androgens ceased being effective.

As described in my earlier article, and according to a literature review study published in Medicine in May 2019, the AR-V7 variant is generally not expressed in men who don't have prostate cancer while it is present in approximately 18% of men with CRPC before being treated with anti-androgens. Interestingly, the percentage of men exhibiting the AR-V7 variant increases significantly after being treated with anti-androgens. According to ESSA, an estimated 75% of men with advanced mCRPC may exhibit the AR-V7 splice variant making them generally unresponsive to approved anti-androgen drugs, but potentially responsive to EPI-7386.

Additional Pre-Clinical Data Presented on October 7, 2021, on the Mechanism of Action of EPI-7386

On October 7, 2021 ESSA issued a press release announcing the presentation of additional pre-clinical data, titled, "Comprehensive preclinical characterization of the mechanism of action of EPI-7386, an androgen receptor N-terminal domain inhibitor" at the 2021 American Association for Cancer Research (AACR), National Cancer Institute (NCI), and European Organisation for Research and Treatment of Cancer (EORTC) Virtual International Conference on Molecular Targets and Cancer Therapeutics.

ESSA's October 7th, 2021 slide presentation can be found here.

The pre-clinical data included nuclear magnetic resonance ("NMR") studies confirming the binding of EPI-7386 to the N-terminal domain of the AR, and studies "confirming EPI-7386's inhibition of AR-driven biology in both full length and splice variant-driven prostate cancer models."

CEO David R. Parkinson is quoted in the October 7th press release as saying,

... Through this unique mechanism of AR inhibition, EPI-7386 can inhibit AR-driven biology in both full length and splice variant-driven prostate cancer models. Additionally, the data demonstrate that the combination of EPI-7386 with enzalutamide results in complete inhibition of genome-wide androgen-induced AR binding, supporting the rationale for our upcoming Phase 1/2 combination trials of EPI-7386 with approved antiandrogens in patients with metastatic castration-resistant prostate cancer."

Based upon pre-clinical data, ESSA believes that the combination of EPI-7386's inhibition of the NTD with current and second-generation LBD inhibiting anti-androgens will result in substantially deeper and broader suppression of the AR-driven biology, which should result in a deeper, longer-lasting and more durable response in treating prostate cancer.

EPI-7386 Phase 1 Dose Escalation Trial:

Initial Exciting Phase 1 Monotherapy Dose-Escalation Results at ASCO-GU on February 11, 2021

The Phase 1 monotherapy dose-escalation trial was originally designed with 5 cohorts in a standard 3 x 3 dose-escalation design beginning oral dosing at 200 mg/kg, and increasing to 400 mg, 600 mg, 800 mg and eventually 1,000 mg. The patients recruited in the Phase 1 trial had very advanced mCRPC who were no longer responding to treatment including second-generation anti-androgens. In short, the patients enrolled were very sick men with stage 4 mCRPC.

On February 11, 2021, approximately 8 months following first dosing at the lowest 200 mg/kg levels of EPI-7386, ESSA announced very encouragingly, albeit very early, first cohort (200 mg/kg) results at ASCO-GU.

One of the three patients treated at the lowest 200 mg/kg cohort dosing, showing a reduction in PSA levels in excess of 50%, after progressing with mCRPC.

The promising early Phase 1 trial results caused ESSA's share price to rocket into the mid-$20 range, allowing ESSA to raise nearly $150 million at $27.00 per share in an oversubscribed offering in mid-February, 2021.

By May, 2021, ESSA's share price peaked at about $36.00, its market cap was over $1.5 billion, and investors were anticipating that ESSA would announce continued promising Phase 1 results in the fall of 2021 as Phase 1 as dosing levels had increased into the 400 mg, 600 mg, 800 mg and 1,000 mg/kg range.

It had been anticipated that the recommended dose levels would be in the 600 mg to 800 mg/kg range.

August 16, 2021 Announcement of Change in Phase 1 Trial Protocol and Delay in Releasing Phase 1 Results:

Instead, on August 16th, 2021 ESSA issued a press release announcing both its fiscal third-quarter results ending June 30, 2021, but also that it would be amending its Phase 1 clinical trial protocol to enroll earlier stage mCRPC patients and that its Phase 1 monotherapy results would not be released until H1 2022.

No earnings call was held following the August 16 press release so management did not have an opportunity to explain its position publicly to the retail market.

The market was not pleased with what was perceived as a delay in the release in Phase 1 monotherapy results (creating suspicions that there were problems). ESSA's share price plummeted, losing approximately 2/3 of its value during 5 days of trading from Monday, August 9 to Monday, August 16. The shares are now trading in the $11.00 range after trading for a few months in the $8.00 to $9.00 range.

Liquid Biopsy Collaboration: On October 7, 2021, ESSA and Caris Life Sciences announced a liquid biopsy profiling collaboration under which Caris will test patient blood samples, assessing all 22,000 genes in both DNA and RNA in patient's cancer,

...to assess genetic profiles utilizing Caris' Whole Transcriptome Sequencing (WTS) and Whole Exome Sequencing (WES) platform. ESSA will utilize these liquid biopsies, including longitudinal data from serial samples, to better characterize the tumor biological profiles of patients in the ongoing monotherapy clinical trial of EPI-7386 in mCRPC patients."

It is anticipated that the liquid biopsy profiling will identify genetic biomarkers in those patient tumours most responsive to EPI-7386, to help understand the patient's tumor biology including "relevant patient tumor biological subpopulations".

For further information about Caris Life Sciences, you can find in its website. It is a very impressive company with impressive science, collaborations, management and scientific advisory team. Dr. Parkinson is a member of its scientific advisory board.

Zoom Calls with CEO Dr. Parkinson on August 23 and October 15

To try to get some additional insights, I had Zoom calls with ESSA's CEO, Dr. David Parkinson, on August 23 and more recently on October 15, 2021.

Dr. Parkinson explained that when ESSA initially enrolled its Phase 1 mCRPC patients in the dose-escalation trial, the patients had very advanced disease and had undergone years of treatment (generally 7 or more different treatments etc). Those patients were no longer responding to treatment and their stage 4 mCRPC was progressing.

ESSA did not prescreen these Phase 1 dose-escalation patients, some of whom may have had Neuroendocrine types of very advanced prostate cancer (which occurred because of genetic mutations in very advanced prostate cancer patients), which they had already known would likely not be responsive to AR-type therapies such as EPI-7386.

Based upon the literature Dr. Parkinson indicated that ESSA expected about 15% of the enrolled patients to have these Neuroendocrine type tumours. However, when ESSA looked at the Phase 1 data from the patients enrolled in the Phase 1 trial this past summer, 7 of the 12 had neuroendocrine type prostate tumours, which were no longer androgen driven. Naturally, those patients would not likely respond to EPI-7386.

In my own research on this topic I found an article published in Translational Cancer Research, February, 2017, with the title, Neuroendrocrine differentiation in prostate cancer: key epigenetic players," in which the authors write that,

... Neuroendocrine prostate cancer (NEPC) is a subtype of castration resistant prostate cancer associated with aggressive clinical features and poor overall survival (Wang et al., 2014). Mounting evidence suggests that NEPC evolves from prostate adenocarcinoma as one mechanism of resistance to androgen receptor (AR)-directed therapies (e.g. abiraterone or enzalutamide). Data from metastatic biopsies obtained from patients progressing on abiraterone or enzalutamide suggests that at least 10% of patients with late stage castrate resistant prostate adenocarcinoma (CRPC) eventually develop small cell NEPC (Small et al., 2016). NEPC tumors share common genomic alterations with CRPC. ..."

According to Dr. Parkinson, about 80% of men with CRPC develop metastatic CRPC (mCRPC) in which the CRPC has metastasized to other organs including the lymph nodes and bone (with a smaller percentage metastasizing to the liver, lung and elsewhere). Those patients with very advanced mCRPC and whose prostate cancer had metastasized to the bone and/or lymph nodes also responded to EPI-7386, and in fact were shown to have mCRPC which were still AR driven.

On the other hand, those men whose mCRPC has metastasized to the liver and lung (indicating that their mCRPC has mutated to become neuroendocrine driven) were generally non-responsive to EPI-7386. Accordingly one of the additional amendments to the Phase 1 protocol was to only include those patients whose mCRPC had metastasized to the lymph nodes and bone and exclude those whose tumours had metastasized elsewhere.

Not surprisingly the patient from the initial 200 mg cohort that responded positively to EPI-7386 (announced back in February 2021) was shown to have mCRPC that had metastasized to his bone and lymph nodes. As publicly disclosed, as of September 1, 2021, that patient remained on treatment with EPI-7386 albeit at a 400 mg, or perhaps higher dose.

ESSA has also reported that the Phase 1 cohorts of patients have already been dosed at 600 mg, 800 mg and 1000 mg without any dose-limiting safety issues. However, Dr. Parkinson indicated that because higher doses of EPI-7386 such as 800 mg/kg., already shown to be safe, may be better absorbed if divided into twice-daily ("BID") dosing. Accordingly, the Phase 1 trial amendment will include an 800 mg BID dosed cohort.

The genetic changes in very advanced mCRPC into a neuroendocrine type tumour is apparently not an issue in the upcoming combination trials (ie. EPI-7386 and the various 'Lutimidies). Those mCRPC patients will be enrolled at an earlier stage when presumably far fewer of the prostate cancer tumors have undergone changes to become a neuroendocrine type tumour.

As well, it may be possible to pre-screen patients using liquid biopsies or other methods or at least test these patients after the trial has begun with liquid biopsies.

Phase 1 Monotherapy Dose-Escalation Amendments:

EPI-7386-CS-001 Monotherapy phase 1

Source: Slide above taken from ESSA's October 2021 corporate presentation

EPIX status of clinical development of EPI-7386

Source: Slide above taken from ESSA's October, 2021 corporate presentation

According to ESSA's filing on September 20, 2021, on clinicaltrials.gov, ESSA has now amended its protocol for its Phase 1 dose monotherapy escalation trial of EPI-7386 in mCRPC in a number of ways:

  1. it has increased the number of patients from 40 to 64;
  2. the patients being recruited can only have a maximum of 3 prior approved systemic therapies for mCRPC, effectively treating an earlier stage mCRPC patient (where it is expected that there will be far fewer patients with a neuroendocrine driven mCRPC).
  3. it will include only patients whose mCRPC tumours have metastasized to either lymph nodes and bone lesions on bones, and exclude those patients where the metastasize has spread to the liver and lung;
  4. a 6th cohort was added at 800 mg/kg, orally dosed BID (twice per day) (400 mg/kg per dose). The other 5 cohorts in the Phase 1 trial remain dosed once per day.

During our October 15th call, Dr. Parkinson indicated that in the animal models on which their drug EPI-7386 was tested pre-clinically, the animals had earlier stage mCRPC prostate cancers, which showed a significant clinical advantage of EPI-7386 over enzalutamide. As the patients enrolling in the Phase 1 monotherapy trials have much more advanced tumours, ESSA is considering testing EPI-7386 at even higher doses (given that the drug has been shown to be safe) which will also require twice-daily dosing because of the high doses involved.

ESSA expects to release additional Phase 1 monotherapy data in H1 2022, likely at ASCO in June, 2022 reflecting the amended protocol.

We talked briefly about the three new additional Phase 1 clinical trial sites including Memorial Sloan Kettering Cancer Centre in NY, Massachusetts General Hospital in Boston, and Windship Cancer Center of Emery University in Atlanta, all recruiting, disclosed in ESSA's August 11, 2021 filing on clinicaltrials.gov. There are now 7 clinical sites recruiting in the Phase 1 monotherapy dose-escalation trial, six in the U.S. and one in Vancouver, Canada.

Clinical Collaborations With Astellas, Janssen and Bayer

EPIX clinical collaborations

Slide above taken from ESSA's October, 2021 corporate presentation

During my October 15th conversation, Dr. Parkinson indicated that all three of ESSA's partners (Astellas/Pfizer, Janssen (a J&J subsidiary) and Bayer) remain very enthusiastic about their upcoming combination trials with EPI-7386 and all are moving forward.

EPIX rationale for the combination of EPI-7386 with antiandrogens

Source: Slide above taken from ESSA's October 2021 corporate presentation

ESSA's clinical collaboration agreements to clinically test EPI-7386 with Janssen, Astellas and Bayer with their respective approved anti-androgen drugs in CRCP and mCRPC patients underscores large pharma's interest.

1. Janssen: On January 13, 2021 ESSA announced that it had entered into a,

...clinical collaboration and supply agreement with Janssen Research & Development, LLC (Janssen) to evaluate ESSA's first-in-class N-terminal domain androgen receptor inhibitor, EPI-7386, in combination with apalutamide as well as the combination of EPI-7386 with abiraterone acetate plus prednisone in patients with metastatic castration-resistant prostate cancer ("mCRPC").

Under the terms of the agreement, Janssen may sponsor and conduct up to two Phase 1/2 studies evaluating the safety, tolerability and preliminary efficacy of the combination of EPI-7386 and apalutamide as well as the combination of EPI-7386 with abiraterone acetate plus prednisone in patients with mCRPC who have failed a current second-generation antiandrogen therapy. Janssen will assume all costs associated with the studies, other than the manufacturing costs associated with the clinical drug supply of EPI-7386. The parties will form a joint oversight committee for the clinical studies, which are planned to start in 2021. ESSA will retain all rights to EPI-7386. ..."

ESSA anticipates that the combination trial with Janssen will begin before year-end or early next year.

2. Astellas (Pfizer): On February 25, 2021 ESSA announced that it had entered into a,

...clinical collaboration and supply agreement with Astellas Pharma Inc. ("Astellas") to evaluate ESSA's lead product candidate, EPI-7386, a first-in-class N-terminal domain androgen receptor inhibitor, in combination with Astellas and Pfizer Inc.'s androgen receptor inhibitor, enzalutamide, in patients with metastatic castration-resistant prostate cancer ("mCRPC").

Under the terms of the agreement, ESSA will sponsor and conduct a Phase 1/2 study to evaluate the safety, tolerability and preliminary efficacy of the combination of EPI-7386 and enzalutamide in mCRPC patients who have not yet been treated with second-generation antiandrogen therapies. Astellas will supply enzalutamide for the trial. ESSA will retain all rights to EPI-7386...."

According to an October 22, 2021 filing by ESSA on clinicaltrials.gov, ESSA's Phase 1/2 combination trial with Astellas/Pfizer‘s anti-androgen drug enzalutamide is now recruiting patients. According to this filing, this combination trial is expected to enroll 150 patients involving multiple cohorts, testing EPI-7386 in doses ranging from 600 mg to 1000 mg in combination with enzalutamide at either 120 mg or 160 mg, and compared against enzalutamide alone.

I anticipate that ESSA will announce a first patient dosing for this Phase 1/2 combination trial this month, or next.

3. Bayer: On April 28, 2021, ESSA announced a clinical trial collaboration and supply agreement with Bayer to evaluate ESSA's EPI-7386 in combination with Bayer's androgen receptor inhibitor, darolutamide, in patients with metastatic castration-resistant prostate cancer.

Under the terms of the agreement, Bayer may sponsor and conduct a Phase 1/2 study to evaluate the safety, pharmacokinetics and efficacy of the combination of EPI-7386 and darolutamide in mCRPC patients. ESSA will supply EPI-7386 for the trial and will retain all rights to EPI-7386. The clinical study is expected to start in 2021.

Prostate Cancer Market Opportunity

EPIX initial monotherapy market opportunity

Source: Slide above taken from ESSA's June 4, 2020 presentation at Jefferies

According to ESSA's presentation on June 4, 2020 at Jefferies, the market opportunity for EPI-7386 in monotherapy in mCRPC patients was close to $3.3 billion for the U.S. and Europe. Since the release of that slide, the fact that a percentage of those patients have prostate cancers that are neuroendocrine driven, I am discounting the potential monotherapy. Even assuming that the monotherapy market figure is discounted by 40%, that still leaves a very sizeable $2 billion-plus market for EPI-7386 in monotherapy alone in treating very advanced mCRPC patients.

US prostate cancer market opportunity is large

Source: ESSA's October 2021 corporate presentation

However, the combination market of EPI-7386 with current anti-androgens is many times larger than the monotherapy market as it can potentially be used in the treatment in earlier stage mCRPC, CRPC and high-risk patients with earlier-stage prostate cancer.

According to Dr. Parkinson, the four most common anti-androgen therapies on the market today generate annual sales in the $8 billion range, including:

(1) Zytiga (abiraterone acetate) owned by Janssen;

(2) Xtandi (enzalutamide) owned by Pfizer and Astellas (OTCPK:ALPMF)

(3) next-generation Erleada (apalutamide) owned by Janssen; and

(4) next-generation Nubeq (darolutamide) owned by Bayer (OTCPK:BAYZF).

As discussed in my initial article on ESSA, Janssen lost Zytiga's 2027 patent in January 2018 after a court challenge from Argentum Pharmaceuticals. Janssen's appeal was unsuccessful. Janssen is hoping that its next-generation Erleada will help replace Zytiga's sales now that a generic version is available.

If EPI-7386 is clinically found to result in substantially deeper and broader suppression of the AR driven biology that should translate in a deeper and more durable response in treating prostate cancer potentially both in monotherapy in very late stage mCRPC patients as well as in combination with all the current anti-androgen therapies (about to enter into clinical trials). If so, ESSA could become a very valuable company in the next couple of years.

Prostate cancer clinical treatment model

Source: Slide above taken from ESSA's October 2021 corporate presentation

While ESSA is initially targeting EPI-7386 in late-stage mCRPC, its goal is to use EPI-7386 as part of the standard of care anti-androgens, in combination in all stages of mCRPC as well as in patients at an earlier CRPC stage, with the largest potential market. The potential market for EPI-7386, in ESSA's best-case scenario, could be multiple billions.

Upcoming Milestone/Catalysts

ESSA upcoming milestones

Source: Slide above taken from ESSA's October, 2021 corporate presentation

ESSA's upcoming catalysts include:

  1. Announcement of the initial patient being dosed in the ESSA's combination Phase 1/2 combination trial of EPI-7386 with Astellas (Pfizer's) enzalutamide (expected this month, or next).
  2. Announcement of initiation of two additional ESSA's Phase 1/2 combination trials of EPI-7386 with Janssen and Bayer (late 2021 or early 2022);
  3. Establishing Phase 2 recommended dose ("RP2D) of EPI-7386 (H1 2022), and expanding Phase 1 trial at RP2D dosing (my estimate, H1 2022);
  4. Reporting EPI-7386 Phase 1 monotherapy trial results, including results from amended Phase 1 protocol (H1, 2022 likely at ASCO in June, 2022);
  5. Reporting by ESSA of initial Phase 1/2 combination trial results of EPI-7386 and enzalutamide (my estimate late 2022/H1 2023);
  6. Reporting by Janssen and/or Bayer of their pre-clinical combination data as well as initial Phase 1/2 combination trial data of EPI-7386 in combination with their respective anti-androgens

Analyst Share Price Target for ESSA

Of the 5 analysts who updated ESSA's share price target following ESSA's August 16th, 2021 announcement of the change in the Phase 1 trial protocol.

Jefferies' report dated August 17, 2021 - $42 share price target

Bloom Burton (Dr. David Martin) report dated August 17 - $35 target

Oppenheimer's report dated August 16 - $22 target

Piper Sandler's report dated August 16 - $50 target

Zacks Research report dated August 24 - $40 share valuation.

Could ESSA be a takeover target in 2023?

In my last article published on ESSA on February 1, 2021, I speculated whether ESSA could be a take-over target in H2 2022. Since that article, there were some delays caused by the Phase 1 trial protocol amendments. However, additional pre-clinical data has now been presented by ESSA showing a much greater understanding of EPI-7386 mechanism of action and the pinpointing of biomarkers to help target those prostate cancer patients most likely to benefit from EPI-7386. ESSA's recently announced liquid biopsy collaboration with Caris Life Sciences to test patient blood samples and identify genetic biomarkers in patient tumours (assessing all 22,000 genes in both DNA and RNA in patient's cancer) should also help more precisely identify genetic biomarkers in those patient tumours most responsive to EPI-7386.

It is still my view that if the clinical trial results are promising, both in monotherapy and in combination trials, and provided EPI-7386 can further demonstrate clinical proof of concept especially in a combination setting, ESSA will be a natural takeover target for Pfizer/Astellas, Johnson & Johnson's Janssen, Bayer and perhaps others.

In my view, it is no accident that ESSA negotiated a deal term with Pfizer that Pfizer agrees not to buy out ESSA for 1 year as part of the right of first access to clinical data to EPI-7386 clinical trial.

EPI-7386 commercial attractiveness (if proof of concept in monotherapy and combination Phase 1/2 proof are promising) include:

  1. being a novel first-in-class drug candidate addressing the N-terminal of the androgen receptor to treat mCRPC (and potentially earlier stage prostate cancers) with this novel mode of action;
  2. having received Fast Track approval from the FDA, EPI-7386 has significant commercial monotherapy potential in 2nd and 3rd line mCRPC with the possibility of obtaining accelerated approval to treat the AR-V7 variant in the event clinical results are strong;
  3. the enormous commercial value and potential therapeutic fit combining EPI-7386 with the current standard of care anti-androgen drugs; and
  4. the potential to extend IP protection for the combination treatment of EPI-7386 and standard of care anti-androgen until 2038 to 2040.

Based upon my estimates set out in ESSA Upcoming Milestones below, the full results of the Phase 1 monotherapy trial, as well as the Phase 1/2 combination studies, could be known by late-2022 or H1 2023 although we should learn of additional Phase 1 monotherapy trial results in H1 2022 (potentially at ASCO in June, 2022).

ESSA's current cash position of approximately $200 Million (as of June 30th), should be sufficient to finance ESSA until the end of 2023 or early 2024. Note that ESSA Phase 1/2 combination trials with both Janssen and Bayer are fully financed and led by those two entities.

While I am speculating, if the clinical trial results are as good as the pre-clinical results and the early Phase 1 results (at least of a single patient) released in February suggests, ESSA could become a buyout target or be the beneficiary of or a major licensing deal for EPI-7386 in 2013 and potentially as early as H1 2023.

If so, the purchase price of a buyout in those circumstances (particularly if there are multiple potential large pharma buyers bidding) could be a substantial multiple of today's $11.00 share price. Given that ESSA already traded at a high earlier this year at over $36.00 based upon early promising results from a single mCRPC patient, a potential buy-out in 2023 at a price of $35.00 or higher would not be surprising.

Of course, if ESSA's EPI-7386 shows unremarkable clinical results or is otherwise considered a failure, ESSA's share price could plummet to cash value or less.

Investment Risks

ESSA should be considered a high-risk/high reward early-stage biotech investment in which an investor could do very well if the clinical trial results are very promising but alternatively could lose all or part of his or her investment if the trial results are disappointing.

ESSA's focus is on a single clinical-stage drug candidate EPI-7386. The company has some earlier stage drug candidates in development but little is known about those discovery stage drugs at this stage. The company is without any current or predictable revenues.

Investment risks include, but are not limited to, the possibility of clinical trial failures, competition, inability to obtain certain patents, IP infringements and challenges, loss of key personnel, share dilution, and general market risks.

For further details of the potential risks involved, see the risk factors set out in the company's most recent regulatory filings including the Company's Form 10-K filed.

Before investing ESSA, you should do your own due diligence and obtain professional advice to determine whether it is an appropriate investment for you and the sizing of such an investment.

This article was written by

Steven Goldman profile picture
2.9K Followers
Steven H. Goldman, biotech enthusiast. Steven is a commercial litigation lawyer, retired from active practice in January 2021, and was a founding member of the Toronto law firm of Goldman Hine LLP. He graduated with a B.A., President's Medal recipient (1976, Carleton University, Ottawa, Ontario) and J.D. (1980, Queen's University, Kingston, Ontario). He is also the President and CEO of Comstock Metals Ltd. (TSX.V: CSL.V) a mining exploration company with a gold deposit in Saskatchewan, Canada. Steven is a member of the board of directors and audit committee of Select Sands Corp. (TSX.Venture: SNS.V and OTCQX: SLSDF). He is an advisor to E3 Lithium Limited (TSX. Venture: ETL.V) (OTC: EEMMF), an emerging lithium developer and lithium extraction technology innovator based in Alberta, Canada. He is currently a member of the Law Society of Upper Canada, an Executive member of the Ontario Bar Association, Franchise Law Section as well as a member of the American Bar Association, Franchise Forum (Associate Member). Steven was President & CEO of Speedy AutoService and Minute Muffler from December 2007 to December 31, 2009 (with approximately 160 locations across Canada). He was also a former director of Tribute Pharmaceuticals for approximately 10 years where he served on the audit committee as well as the M&A committee.

Disclosure: I/we have a beneficial long position in the shares of EPIX 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.

Additional disclosure: Last month I increased my position in EPIX by 80% when the shares were trading in the $8.00 to $8.40 range.

Recommended For You

Comments (57)

To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.