TCR2 Therapeutics: Trading Below Cash (NASDAQ:TCRR)

Summary

TCRR develops cell therapies for solid tumors.
The pipeline is in a very early stage, with some early safety scares.
The stock is trading way below cash.
Looking for more investing ideas like this one? Get them exclusively at The Total Pharma Tracker. Learn More »

Clear blue aqua marine ocean with turtle and plastic bottle pollution — lindsay_imagery/E+ via Getty Images

TCR2 Therapeutics (TCRR) develops solid tumor-focused TCR (T Cell Receptor) directed therapies. The company develops what it claims are first-in-class TCR Fusion Construct T cells (TRuC-T cells), which are designed to harness the entire TCR signaling complex. Of the 6 different signaling subunits of TCR, only one is used by existing CAR-T therapeutic approaches. The company’s fundamental hypothesis is the following:

Research over more than two decades has shown that each of the TCR subunits makes distinct contributions to the activation and regulation of T cells and the sum of the TCR subunits is required to optimally activate and control the function of T cells. We believe that engaging the entire TCR signaling complex is required to fully realize the potential of T cells in their fight against cancer.

The company describes the advantages of its TRuC-T cells as follows:

Source

A number of CAR-T therapies are available, but they face difficulty in solid tumors. TCR therapies need HLA (Human leukocyte antigen) to work, but HLA can be downregulated in many cancers. TCRR’s construct is claimed to be able to recognize tumors without HLA.

Their pipeline looks like this:

Source

Lead candidate, peculiarly named gavo-cel, formerly known as TC-210, also gavocabtagene autoleucel, has an ongoing Phase 1/2 clinical trial in non-small cell lung cancer (NSCLC), ovarian cancer, malignant pleural/peritoneal mesothelioma, and cholangiocarcinoma. The company estimates that there are 80,000 US patients for these four indications. TCRR has interim data from the phase 1/2 trial, where the therapy has shown “consistent clinical benefit, with every patient experiencing tumor regression and a 100% disease control rate (‘DCR).” Besides these, other key takeaways include:

Source

This also includes the first ovarian cancer patient to ever achieve a PR with an engineered cell therapy. Gavo-cel has an orphan drug designation for mesothelioma. Safety profile, so far, has been manageable; however, the stock slumped 30% in September on poor safety data:

In the trial, two dose limiting toxicities were reported: one Grade 3 pneumonitis at DL1 that resolved with supportive measures, and one Grade 5 bronchoalveolar hemorrhage at DL5, which along with the development of severe CRS in all 3 patients treated at the dose level.

Despite very interesting efficacy data in a very difficult cancer, Wedbush downgraded TCRR and cut the price target to $11 from $45.

To put that data in perspective:

Of the five patients, one had ovarian cancer and four had mesothelioma, a cancer of the mesothelium—the thin tissue that lines the lung, chest wall and abdomen—with a five-year survival rate in the single digits. Before the trial, the patients had undergone a median of five other treatments. Three had tried checkpoint inhibitors.

The company has discussed gavo-cel’s competitive positioning in the following diagram:

Source

Second lead candidate TC-110 is targeting hematological malignancies. This asset is also in a phase 1/2 clinical trial targeting adult acute lymphoblastic leukemia (aALL) and with aggressive or indolent non-Hodgkin’s lymphoma (NHL). In preclinical studies, this asset has shown good anti-tumor activity.

The company’s IP follows from the work of scientific founder Dr. Patrick Baeuerle, a German immunologist who developed the world’s first bispecific antibody, Blincyto. The original TRuC patent application was filed in 2015. They own five issued U.S. patents and eight issued foreign patents in all, and a number of pending patent applications.

Financials

TCRR has a market cap of $178mn, debt of $27mn, and cash balance of $295mn, therefore, the company’s enterprise value is negative. Research and development expenses were $20.3 million for the third quarter of 2021, and SG&E was $6mn. The company expects the cash on hand to last until 2023.

The stock has heavy institutional presence, with nearly 85% of the float held by smart money. Key holders are:

Source

Insider transactions are nearly non-existent, and the few that are there, are sells.

Source

The company recently leased a large manufacturing unit in Maryland. This is the company’s first in-house manufacturing unit; besides this, the company has a tie-up with Catapult UK for manufacturing, and a clinical manufacturing agreement with ElevateBio.

Bottom line

TCRR is a very early-stage company, which is yet to properly prove its claims. Those claims are interesting, and they have their logic. However, we are not too excited about cell therapies right now. These have a way of sprouting safety and manufacturing issues at the drop of a hat. We will continue to sit on the sidelines.

About the TPT service

Thanks for reading. At the Total Pharma Tracker, we offer the following:-

Our Android app and website features a set of tools for DIY investors, including a work-in-progress software where you can enter any ticker and get extensive curated research material.

For investors requiring hands-on support, our in-house experts go through our tools and find the best investible stocks, complete with buy/sell strategies and alerts.

This article was written by

Avisol Capital Partners

17.3K Followers

Avisol Capital Partners is made up of a team of medical experts, finance professionals and techies, all of whom invest their own money in the picks they share. They aim to help readers find the middle ground between value and growth investing, as they demystify the biopharma industry.

They lead the investing group Total Pharma Tracker where they offer a monthly updated catalyst database, an investability scoring system for quick reference ideas, and direct access in chat for dialogue and questions. Learn more.

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.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.