Immix Biopharma — Expanding portfolio into CAR-T cell therapy

In December 2022, Immix announced the in-licensing of NXC-201, a potentially novel CAR-T cell therapy under clinical development for the treatment of MM and ALA. The therapy targets a clinically validated target, B-cell maturation antigen (BCMA), which is overexpressed in MM. This new asset has already shown high response rates in the Phase Ib/II NEXICART-1 trial (NCT04720313), initially sponsored by the Hadassah Medical Organization in Israel. However, Immix’s subsidiary Nexcella (of which Immix owns 98%) will now assume sponsorship and funding of the study.

Interim clinical data have demonstrated NXC-201’s encouraging safety profile with a potentially lower dosing regimen than currently approved CAR-T cell therapies that may reduce the risk of toxicity. Additionally, the company believes NXC-201 has the potential to be the first out-patient CAR-T cell therapy, which could potentially provide market differentiation. NXC-201 is the most clinically advanced asset in Nexcella’s pipeline (Exhibit 1).

CAR-T cell therapies harness the natural function of T cells (or T lymphocytes, a type of white blood cell crucial for our immune systems). T cells work by detecting foreign materials that do not naturally occur in the body (foreign, viral, cancer). More specifically, they can recognize unusual proteins expressed on the surface of cells (antigens), which initiates an immune response to destroy the targeted cell. However, tumors can develop techniques to prevent this natural process by disguising the surface proteins and suppressing the function of certain T cells. CAR-T cell therapies involve the genetic engineering of a patient’s T cells to span the cell membrane and bind to specific structures at the surface of cancer cells. Once bound, natural T cell activity is activated, enabling the targeted destruction of the cancer cells. There are currently six approved CAR-T cell therapies, which have, to date, found application in the treatment of hematological malignancies (Exhibit 2).

As discussed in our Edison thematic on cell and gene therapies, there are many advantages to the use of gene-modified cell therapies such as CAR-T cell therapies, which enable effective treatments for challenging diseases. For example, durable responses are often achieved after a single administration, which may improve patient compliance. CAR-T cell therapies also offer a targeted mechanism of action, making them an attractive alternative to aggressive chemotherapy drugs that often lead to extreme side effects. In addition, CAR-T cell therapies have been associated with improvements in immunological memory that may provide a continuous surveillance system against cancer cells.

However, the limitations associated with CAR-T cell therapies include the absence of off-the-shelf therapies, time-consuming and costly manufacturing, and challenges associated with treating solid tumors for which no CAR-T cell therapy has yet been approved. To address these limitations, we anticipate continued interest in the field and for the technology to mature. It is estimated that more than 20,000 people have received CAR-T cell therapies and there are more than c 500 ongoing clinical trials assessing this therapeutic approach. With a projected CAR-T cell therapy market size of US$4.5bn in 2023 and US$27.2bn in 2028 (according to Evaluate Pharma), we believe there is significant opportunity for companies to garner market share.

MM, a type of bone marrow cancer, is the second most common hematological malignancy after lymphoma, for which relapse after initial remission is still a common problem. There are c 36k new cases of MM diagnosed each year in the United States. The current standard of care for MM typically includes a combination of chemotherapy (such as proteasome inhibitors), immunomodulatory agents and steroids as a first-line treatment for newly diagnosed patients. However, more targeted therapies have now emerged as later-line treatment options after disease relapse. These technologies include monoclonal antibody therapies such as Johnson & Johnson’s (J&J’s) Darzalex, a second-line CD38 targeting antibody. Additionally technologies include CAR-T cell therapies such as J&J’s Carvykti, and Bristol Myers Squibb’s (BMS’s) Abecma have also been approved. Both of these approved CAR-T cell therapies target BCMA, a clinically validated and important target for which overexpression is associated with MM (Exhibit 3).

However, manufacturing bottlenecks have somewhat constrained the wider use of the approved CAR-T cell therapies. Further, both Carvykti and Abecma are associated with high-grade CRS, an acute inflammatory syndrome sometimes associated with CAR-T cell therapies and characterized by fever and organ dysfunction, as well as neurotoxicity side effects. With a projected market size for MM treatments of US$23bn in 2023 and US$33bn in 2028, according to Evaluate Pharma, we believe there is significant opportunity for Nexcella in this space, provided it can offer differentiation with regard to either efficacy or safety (Exhibit 4).

Clinical results, to date, for NXC-201 have been encouraging, demonstrating a favorable safety and efficacy profile from the NEXICART-1 trial (NCT04720313). The study is an ongoing, open-label, Phase Ib/II trial assessing NXC-201 in adults with relapsed or refractory MM, which as of October 2022 were triple-class refractory (to at least one immunomodulatory drug, one proteasome inhibitor and one anti-CD38 antibody). The Phase Ib portion of the study demonstrated safety and tolerability while identifying the recommended Phase II dose (RP2D) of 800m cells.

In the Phase II portion, as of the 23 October 2022 data cut-off date, 29 patients had received the RP2D, out of 42 enrolled to date. These 29 patients achieved an ORR of 90%. Furthermore, 17 of 29 patients (59%) reported a CR or stringent CR (sCR). Importantly, there were no cases of high-grade CRS, but just one instance (3%) of grade 3 CRS at the RP2D. Generally, CRS occurrences were deemed to be manageable, with a median CRS onset of one day, and a median CRS duration of only two days; there were also no reports of neurotoxicity.

In our view, these results are particularly encouraging for NXC-201. Management may look to offer differentiation within the CAR-T cell therapy market with NXC-201’s favorable safety profile shown to date. We believe that the latest data are supportive of this and looks to slightly improve on the side effect profiles exhibited by Carvykti and Abecma (Exhibit 5). Additionally, patients receiving currently approved CAR-T cell therapies often have a risk/recovery period of approximately 2–3 months, during which they must be closely monitored at the medical center for potential CRS and neurotoxicity. The company suggests the data so far show that NXC-201-associated CRS episodes, whenever they occur, tend to develop more quickly than with existing approved CAR-T cell therapies. With a fast CRS onset, management believes that NXC-201 could potentially be used as an outpatient treatment where patient monitoring over multiple months may not be required, as any side effects that might occur following NXC-201 treatment would occur quickly making them more manageable, according to the company. We anticipate future NXC-201 clinical data may provide more granularity on the timing of treatment-associated side effects, as well as possible mechanistic explanations as to why the timing of such adverse events may differ from those of currently approved CAR-T cell therapies.

Nexcella has announced that, as of end-February 2023, 50 patients have been dosed with NXC-201 in the NEXICART-1 trial. This is consistent with a robust patient enrolment of up to five patients a month and the company intends to share the data from the 50-patient cohort at a premier scientific forum in CY23. Management anticipates a total enrolment of 100 patients (open label), and clinical data for this population to have been assessed, before seeking a Biologics License Application approval from the US Food and Drug Administration (FDA), provided the clinical data are positive.

In February 2023, it was announced that Nexcella has entered into a manufacturing agreement with an undisclosed US Good Manufacturing Practice cell therapy manufacturer that will supply the biological drug products to potential US sites as part of its ongoing Phase Ib/II clinical trial of NXC-201 in MM and ALA. Nexcella plans to arrange a pre-IND meeting with the FDA in coming months, and submit an IND application to support its objective to expand the ongoing trial (operating in Israel) to the United States. This manufacturing agreement is designed to support the application to the FDA.

NXC-201 has also demonstrated encouraging responses in ALA, a rare but serious multisystem disease affecting kidneys, heart, liver, intestines and nerves, with c 4k new cases diagnosed in the United States each year. ALA is one of five main types of amyloidosis and lacks treatment options. While there is no known cause, it is often linked with MM (15% of cases) and hence, potential treatments for addressing the disease are typically based on those used for MM. The current standard of care for ALA is a four-drug combination of subcutaneous Darzalex with bortezomib, cyclophosphamide and dexamethasone. Alternative treatment approaches also include BCMA-targeting CAR-T cell therapies. A key challenge with this approach, however, remains the fact that CAR-T cell therapies can be too toxic for patients with ALA. We view this as an opportunity for Nexcella, since NXC-201 appears to have demonstrated a favorable safety profile in initial clinical trial results to date. However, we note that this has been with a very low population of patients with ALA (n=5) and data with more patients will be required to fully support this finding.

The Phase Ib/II NEXICART-1 trial includes a patient subset to assess NXC-201 as a CAR-T cell therapy for ALA. Although initial results have only involved a small patient population (n=5), NXC-201 has shown a 100% ORR, a 100% organ response rate and a 100% CR at all dose levels. Further, for this subset, cases of low-grade CRS were manageable with a short median CRS onset of two days, a median CRS duration of only two days, supporting NXC-201 as a potential outpatient CAR-T cell therapy. These results also offer an improvement in efficacy over J&J’s Darzalex, which is used as an antibody therapy for both MM and ALA (Exhibit 6).

While we recognize that NXC-201 has only been assessed in a small ALA patient population, we view the initial results as encouraging for the therapy in this indication, potentially offering improvements over approved treatment options. Currently, the duration of response has not yet been reached for this subset of the trial at a median follow-up of 5.2 months. We anticipate an update from this study in CY23.

In addition to Immix’s expansion into CAR-T cell therapies, the company also announced reaching a significant clinical milestone in February 2023 with the dosing of the first two patients in a new Phase Ib/Iia study, investigating the use of IMX-110 in combination with tislelizumab (BeiGene/Novartis’s anti-PD-1 antibody) in solid tumors. Importantly, rolling data readouts from the new trial are expected to begin in H123, which could help expedite the development process. Tislelizumab is currently not approved for any indication in the United States; however, we believe the IMX-110/tislelizumab combination could offer potential differentiation in the highly competitive immune checkpoint inhibitor market if clinical data are positive. Additionally, novel combinational therapies will be critical to establish more efficacious treatment regimens in oncology, so we view the initiation of this study as a highly encouraging sign for the company’s development program.

The trial represents Immix’s second clinical program for IMX-110, which is also being investigated in a separate Phase Ib/Iia trial for the treatment of STS. The Phase Ib arm has, to date, recruited 17 patients and intends to recruit up to 30 patients in total. The first of the trials rolling data readouts is expected in Q123 with top-line data expected by end-FY24.

We reinstate our valuation of Immix and value the company at US$61.5m or US$4.4 per share (previously US$55.4m or US$4.0 per share) based on a risk-adjusted NPV for IMX-110 in STS and solid tumor indications and incorporates a net cash position of US$16.9m at end-September 2022. Our model applies a discount rate of 12.5%. We note that Nexcella is independently financing the clinical development of NXC-201, and such future financing initiatives could dilute Immix’s ownership interest in the subsidiary. Altogether, we will await further NXC-201 clinical data and additional communication on its development plan before including it in our valuation. Our latest valuation is little changed overall and reflects the effects of rolling forward our model forward four months. Our valuation assumptions remain unchanged and are further detailed in our initiation report. A breakdown of our rNPV valuation is shown in Exhibit 8.

With a net cash position of US$16.9m at end Q322 and based on our projected cash burn rates, we estimate Immix’s operations are funded into early Q424. We anticipate the need to raise additional capital in FY24 of c US$10m (shown as illustrative debt) to support operations past top-line data readouts in Q424 until a licensing deal is found, which we estimate to be in mid-2025. If a licensing deal in line with our estimates can be realized, we believe this could bring the company to operating sustainability from mid-2025. We note that if clinical timelines are delayed or the company begins new clinical development programs, our cash requirement forecasts may need to be increased.

Alternatively, if the funding is realized through an equity issue instead (assuming at the current trading price of c US$1.95/share), Immix would have to issue 4.5m shares, resulting in our per-share valuation coming down to US$3.3/share from US$4.4 currently (shares outstanding would increase from 13.9m to 18.4m).