Immix Biopharma — A quarter focusing on a CAR-T strategy

Amyloid light chain (AL) amyloidosis is a rare disease characterized by the abnormal buildup of toxic light chain (LC) proteins called amyloid fibrils. These deposits are found to gather in critical organs such as the heart, kidney and liver, leading to progressive organ damage and ultimately organ failure. It is estimated that c 4,000 new cases of AL amyloidosis will be recorded in the United States each year. The current first line standard of care (SoC) for AL amyloidosis is a four-drug combination of subcutaneous Darzalex (Daratumumab) with bortezomib, cyclophosphamide and dexamethasone. The major goal of treatment is to achieve a hematological response (HR) by reducing the levels of circulating LC proteins, which should translate into an organ response, an improvement in organ function to prolong patient survival. However, limited therapeutic options currently exist in the relapse/refractory AL amyloidosis setting. Hematological ORRs of 55% have been reported although this figure is comprised of patients (n=31) treated with various protocols including re-treatment with Darzalex combinations, venetoclax and proteasome inhibitor (bortezomib) based regimes. Additionally, organ response rates in relapsed/refractory (r/r) AL amyloidosis continue to be relatively low, sitting at only 29%.

As part of its ongoing NEXICART-1 study, Immix is investigating the application of its BCMA targeting autologous (patient-derived) CAR-T therapy, NXC-201, for the treatment of r/r MM or r/r AL amyloidosis. Immix reported the most recent clinical data from the study at the 26th Annual Meeting of The American Society of Gene and Cell Therapy (ASGCT), which reflected eight r/r AL amyloidosis patients who had disease progression following Darzalex based treatment and were subsequently treated with NXC-201. A hematologic ORR of 100% was observed, consisting of five complete responses (63%), two very good partial responses (25%) and one partial response (12%), Exhibit 1.

This hematologic ORR translated into an organ response rate of 71%, a significant improvement over the previously reported organ response rate of 29%.

In our view, a notable feature of the NXC-201 data in r/r AL amyloidosis patients is the positive safety profile the treatment has demonstrated, to date. While we caveat that the current clinical data only represents a smaller patient population (n=8), the initial results appear encouraging. In seven out of eight (87%) evaluated patients, the pathology of their AL amyloidosis has progressed into the heart with patients having previously received a median of six prior lines of therapy. Of these, five patients had New York Heart Association (NYHA) functional classifications of grade III or IV and could be considered a highly compromised patient cohort whose cardiac function may be extremely sensitive to further treatment exposure. Additionally, one of the most reported and toxic side effects of CAR-T therapy is inflammatory cytokine release syndrome (CRS), a response that can potentially trigger orthostatic hypotension and, depending on the severity of the response, may require patients to receive an antihypotensive (vasopressor) agent. The risks of CAR-T related CRS are further heightened in patients with already weakened cardiac function where the sudden onset of hypotension could potentially be fatal. As such, many AL amyloidosis patients with NYHA ≥ grade 3 are often excluded from clinical studies due to the potential dangers associated with further treatment. However, to date, no serious adverse events have been reported from the AL amyloidosis patients enrolled in NEXICART-1. The most severely cardiac compromised patients in the study (n=3) with an NYHA grade of 4 did not experience a CRS grade >2 and did not need to receive any vasopressor treatments. Additionally, each of these NYHA grade 4 patients saw a reduction in NYHA stage, with one patient reporting a reduction to NYHA grade 2.

Patient recruitment for the NEXICART-1 study is currently ongoing in Israel; however, Immix intends to expand the study and to activate the first trials sites in the United States in Q423. Management has also communicated it plans to submit a biological license application (BLA) for FDA approval in AL amyloidosis once 30–40 patients are treated with NXC-201 in the NEXICART-1 study.

Based on the lower than anticipated R&D run rate in the Q123 results, we have revised our financial estimates. We anticipate an FY23 operating loss of $10.9m (previously $15.8m), with net cash outflows from operating activities of $10.4m (previously $15.6m). Q123 operating expenses continued to be split c 50% between R&D ($1.3m) and SG&A ($1.2m). We note that of the Q123 R&D expenses, c $0.63m (53%) were attributed to the in-licensing of NXC-201 where, under the terms of the agreement, Immix’s subsidiary Nexcella (of which Immix owns 94%) is required to make quarterly payments amounting to a total of c $13m, along with an annual license fee of $50k, through to September 2026 to the licensors (Hadasit Medical Research Services & Development and BIRAD).

While the size of the payments may vary from quarter to quarter across the licensing period, for the purposes of our model we have forecast R&D expenses associated with NXC-201 of c $865k/quarter or $3.5m/year. The $13m associated with the licensing fee will be used to fund clinical trials in Israel over four years. According to its annual filings (10-K) Immix is currently planning to extend the NEXICART-I study to clinical trial sites in the United States and expects to activate the first site by end Q423. We therefore anticipate a steady quarterly burn rate in FY23 associated with the NEXICART-1 Israel trial costs before the impact of the trial expansion into the United States on operating expenses is realized in FY24. Immix believes that the NEXICART-I Phase Ib/IIa study will cost c $20m, which we estimate corresponds to c $13m to support Israel trial costs and c $7m for the US trial site expansion. A summary of the changes to our estimates is shown in Exhibit 1.

In March 2023 Immix entered into an at-the-market (ATM) sales agreement with ThinkEquity (the sales agent), which will allow Immix to issue and sell up to $5m of the company’s common stock in sales deemed to be ‘at-the-market’ offerings. In Q123 Immix reported that it raised c $0.1m from the sale of common shares under the ATM facility. As of May 2023, the company reported that (post-period) it has raised net proceeds of $2.5m under the ATM facility. With Immix’s net cash position of $11.5m at end-March 2023, we estimate the company is funded into Q224, in line with management guidance.

We estimate that Immix and Nexcella together will need to raise $20m in FY24 before the company secures a global licensing deal in FY25, following trial readouts of IMX-110 in soft tissue sarcoma (STS), which the company expects by end FY24. We assume Immix receives licensing milestones associated with STS and NXC-201 in FY26 and FY27. We account for this $20m funding requirement as illustrative debt in our model. Alternatively, if funding is realized through an equity issue instead (assumed at the current trading price of $1.75/share), Immix would have to issue 9.7m shares, resulting in our per-share valuation decreasing to $3.5 from $5.5 currently (the number of shares outstanding would increase from 15.0m to 24.7m). However, we do not expect Immix to be fully revenue generating and self-sustaining until the commercial launch of its first product (IMX-110), which we estimate will be in FY28.

We value Immix at $83.3m or $5.5 per share (versus $77.1m or $5.5 per share previously), based on a risk-adjusted net present value (NPV) for IMX-110 in STS and solid tumor indications, NXC-201 in MM and ALA and a pro-forma net cash position of $14.0m. Our valuation has been adjusted due to the company’s higher pro-forma cash position of $14.0m, rolling our model forward and lower estimated total R&D expenses for the development of NXC-201. Our per share valuation is slightly offset by the increased share count (15.0m from 13.9m). A breakdown of our rNPV assumptions is displayed in Exhibit 3.