Chimerix: Searching For Clarity

Summary

• Today, we put Chimerix, Inc. in the spotlight for the first time.
• The company recently received an FDA approval and has several other promising compounds in development.
• A full investment analysis is provided in the paragraphs below.
• I do much more than just articles at The Biotech Forum: Members get access to model portfolios, regular updates, a chat room, and more. Learn More »

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Without a full understanding of the harm caused by war, it is impossible to understand the most profitable way of conducting it”― Sun Tzu, The Art Of War

Today, we take an in-depth look at a small biotech/biopharma company that gets little coverage called Chimerix Inc. (NASDAQ:CMRX). However, analyst commentary has notably picked up over the past few weeks. A full analysis follows in the paragraphs below.

Company Overview:

Chimerix is based in Durham, NC. Its evolving pipeline is targeting numerous indications across several disease areas. The company has one recently approved product on the market and others in development. The stock currently trades just north of $7.00 a share and sports an approximate $550 million market capitalization.

Recent Events & Pipeline:

Source: August Company Presentation

The company has one product on the market call TEMBEXA, which is also called brincidofovir. This drug is an oral antiviral approved by the FDA last June in tablet and oral suspension formulations for the treatment of smallpox disease in adult and pediatric patients.

Source: August Company Presentation

The company is benefiting from the government's increasing focus on preparedness for potential future virus outbreaks thanks to the Covid pandemic of the last two years.

Source: August Company Presentation

TEMBEXA has a different mechanism of action and a higher barrier to resistance than TPOXX which has some large contracts with both the United States and Canadian governments to supply this product to stockpile in case of emergencies, which hopefully neither country will ever experience. It does appear the company is line to receive a request for proposal or RFP from BARDA sometime during the first half of this year.

Source: August Company Presentation

Another late asset in Chimerix's pipeline is ONC201, which was acquired when the company purchased privately held Oncoceutics for $78 million in cash and stock as well as future potential milestones a year ago. ONC201 has garnered Fast Track Designation for the treatment of adult recurrent H3 K27M-mutant high-grade glioma as well as Rare Pediatric Disease Designation for H3 K27M-mutant glioma, and Orphan Drug Designations for the treatment of glioblastoma and malignant glioma.

Source: August Company Presentation

The company recently presented positive top line results from its blinded independent central review, or BICR of ONC201 in the treatment of recurrent H3 K27M-mutant glioma at the Society for Neuro-Oncology Annual Meeting in Boston in November. The company has closely engaged with the FDA to ensure this will be a registrational success that leads to a successful NDA sometime in 2022. Some of that data was recently disclosed as the following

• Overall response rate (ORR): 20% (95% CI: 10 – 34%); including one complete response
• Median duration of response: 11.2 months (95% CI: 3.8 – not reached)
• Median time to response: 8.3 months (range: 1.9 – 15.9)
• Disease control rate: 40% (95% CI: 26 – 55%)
• Progression-free survival: 35% (95% CI: 21 – 49%) at 6 months; 30% (95% CI: 17 – 44%) at 12 months.
• Response Assessment in Neuro-Oncology Criteria for Low Grade Gliomas criteria: ORR 26% (95% CI: 15 – 40%)
• Among evaluable patients (those receiving at least 4mg of dexamethasone daily at baseline), 46.7% achieved at least a 50% confirmed reduction in corticosteroid dose
• Overall survival was 57% at 12 months and 35% at 24 months.
• One serious adverse event was attributed by an investigator as possibly related to ONC201.

Given the challenges other firms have had with the government agency over the last year, one has to have some skepticism on this front. Those that want to get a better feel around this development effort, might want to read trough the company remarks on this topic on its last conference call.

Chimerix also has Dociparstat sodium, also known as DSTAT in late stage development. This is a glycosaminoglycan derivative of heparin with known anti-inflammatory and chemo-sensitizing properties. DSTAT provides a substantially reduced risk of bleeding complications compared to commercially available forms of heparin. The company is investigating this drug candidate as a treatment for hematologic malignancies, including newly diagnosed acute myeloid leukemia (AML) in combination with standard chemotherapy.

Source: August Company Presentation

Enrollment in a Phase III clinical trial of DSTAT in newly diagnosed AML patients has been complicated by the impacts of Covid and associated hospital staffing shortages. Chimerix does expect to complete enrollment of the first 80 evaluable patients for this study sometime in the second half of this year.

Source: August Company Presentation

DSTAT does have Orphan Drug status for this indication and earlier trial results seem promising.

The company has a couple of earlier stage compounds in development that are not germane to this analysis.

Source: August Company Presentation

Analyst Commentary & Balance Sheet:

Over the past six weeks, five analyst firms including Jefferies and Wedbush have reissued Buy ratings on Chimerix. Price targets proffered have ranged from $14 to $24 a share. The company ended the third quarter of 2021 with just over $25 million of cash and marketable securities on its balance sheet after posting a net loss of $18.6 million during the quarter, which was significantly above the $11.4 net loss in the same period in the prior year. The combination of these data points sent the shares sliding following quarterly results being disclosed.

It should be noted on the conference call that followed quarterly results, management did state the following around its balance sheet.

We remain well capitalized and ended the third quarter with approximately $125 million in capital to fund operations. We are adequately funded to achieve our upcoming milestones, and we expect a possible addition of nondilutive funding from a potential BARDA procurement contract will further strengthen our balance sheet."

There was very little insider activity (either buying or selling) in the shares in 2021.

Verdict:

Source: August Company Presentation

The company has several 'shots on goal' and could eventually be a good 'sum of the parts' story. The company does seem to be banking on a government contract this year around TEMBEXA to help fund development of its pipeline. There is a lot to potentially like about Chimerix as its proceeds on three distinct fronts. However, there are several unknowns here as well (Balance sheet, when government contract will be secured for TEMBEXA, is data sufficient around ONC201 for NDA, the actual trial start date for DSTAT). It's hard to be that enthusiastic about the shares until more clarity is provided, hopefully in the months ahead. It is a name I will probably circle back on after that happens sometime in 2022.

Fortune favors the bold. One doesn't win glory by hiding behind the lines.”― Allison Pataki

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 stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such 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.