Leap Therapeutics: Waiting For One More Leap

Feb. 18, 2022 8:57 AM ETLeap Therapeutics, Inc. (LPTX)1 Comment5 Likes

Summary

  • I bought LPTX stock expecting a quick profit after a spike following data.
  • The spike did happen, but I bought a little too high.
  • I am expecting part B data to be strong enough for me to make a profit and exit.
  • Looking for more investing ideas like this one? Get them exclusively at The Total Pharma Tracker. Learn More »

Hot air balloons flying over the Botan Canyon in TURKEY

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Leap Therapeutics (NASDAQ:LPTX) took a leap in December like I predicted in my October article, but before that, it took two steps back - and I am left holding a few hundred shares and a 33% loss as a result. I had said that LPTX stock has a tendency to leap up on good data like a tree frog running from a snake, and so it did. But in life and in investing, timing is everything - so now I am left to figure out if LPTX will provide me an opportunity to get rid of it at a profit any time soon.

Recall that Leap Therapeutics has only one asset called DKN-01, a humanized monoclonal antibody targeting the Dickkopf-1 (DKK1) protein. I discussed the science in my earlier article, so you may want to refer to it for background. Long story short, DKN-01 produced data from the phase 2 DisTinGuish trial with DKN-01 in combination with Tislelizumab and Chemotherapy as a First-line Therapy in unselected patients with Advanced Gastroesophageal Adenocarcinoma (GEA). The data showed that,

DKN-01 + tislelizumab + CAPOX was well tolerated and has encouraging response rates as first-line treatment for advanced GEA § Improved ORR outcomes in the overall population compared to current standard of care in an unselected PD-L1 population § Efficacy driven by enhanced ORR in the DKK1-high patients, an aggressive subpopulation § All 9 RE mITT DKK1-high patients had partial responses § Response correlates with DKK1 expression and is independent of PD-L1 expression.

Duration of response and progression-free survival data were not yet mature, and were expected in the first half of 2022. That was where we had left off in October.

In January, LPTX stock took that second leap when the company announced updated data from the phase 2 trial.

Lead investigator for the trial was Dr. Samuel Klempner of Harvard Medical School and Massachusetts General Hospital. The trial is being done in two parts, A and B, with the difference that Part B patients must have DKK1-high (H-score ≥ 35) G/GEJ adenocarcinoma (pre-screen biopsy) and must have had only 1 prior systemic therapy for locally advanced/metastatic disease (platinum + fluoropyrimidine-based therapy; ±HER2 therapy if applicable). On the other hand, Part A is restricted to patients who have not had prior systemic therapy for locally advanced or metastatic disease. Part A patients will get IV DKN-01 (300 mg) on Days 1 and 15, IV tislelizumab (200 mg) on Day 1, IV oxaliplatin (130 mg/m2) on Day 1, and oral capecitabine (1000 mg/m2 twice daily [BID]) on Days 1-15 of each 21-day cycle. Part B patients will get either IV DKN-01 300 mg or 600 mg on Days 1 and 15 and IV tislelizumab (200 mg) on Day 1 of each 21-day cycle. Part A patients will receive chemotherapy; part B patients won't.

Part A data, announced in January, showed that there was a 10.7 months PFS in the overall first-line population, with a higher 11.9 months PFS in DKK1-high patients.

"The combination of DKN-01 with tislelizumab continues to demonstrate encouraging results in patients with gastric and gastroesophageal junction cancer, especially those in the DKK1-high subpopulation," said Samuel Klempner, MD, Associate Professor at Harvard Medical School who leads the gastric and esophageal cancer program at Massachusetts General Hospital Cancer Center and is a principal investigator on the DisTinGuish study. "The updated front-line results are encouraging in a difficult to treat cohort of primarily PD-L1 low patients, who are less likely to benefit from anti-PD-1 therapy. Together with encouraging initial findings from Part B, where DKN-01 and tislelizumab are used as a chemo-free second-line treatment of DKK1 high-expressing tumors, these results continue to support the therapeutic potential of DKN-01 and warrant exploration in a randomized clinical trial in first-line gastric and gastroesophageal junction patients."

Earlier, data presented at ESMO had shown the following:

A first-line study in patients with gastric or gastroesophageal junction cancer testing DKN-01 on top of Beigene's anti-PD-1 MAb tislelizumab generated an ORR of 68.2%, which climbed to 90% in patients with high DKK-1 expression. Responses were independent of PD-1 expression, with ORR remaining high even in low PD-1 expressers; data was only generated in 25 patients, however.

The company presented comparison data at J.P.Morgan in January:

Leap data

Leap data (investors.leaptx.com/static-files/688104e8-d87e-4cbc-824c-a31a528949d5)

Source

The data here shows that not only is the combo beating its peers in broad ORR, but in DKK-1 high patients, the ORR was better beyond comparison. Although the trial was small, the combo's independence from PD-1 expression is another arrow in its quiver.

Part A data is now complete, Part B is enrolling patients and has so far shown acceptable tolerability and early signs of clinical response. Study will be completed by this year at the latest. This data readout should be an important catalyst, hopefully allowing me to exit the stock at a good profit.

Financials

LPTX is a nanocap with a market cap of $203mn and a cash reserve of $124mn. The market, clearly, isn't giving much value to the pipeline. The company completed $106mn of public offering in the Q3 last year, which helped boost its cash reserve. Research and development expenses were $10.1 million for the third quarter 2021, while General and administrative expenses were $2.4 million. At that rate, they have cash for a few quarters; however later stage trials will need more cash. I am hoping that positive part B data will take the stock up, which can then be a good time to raise cash from a position of strength.

Bottom line

I went into the stock because I liked how it moved strongly with data. I am taking a loss now, but I am happy with the investment. The leap last year proved my thesis, although I could have bought a little lower. I am going to hold on to the stock until the part B data readout, then take a call.

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