Corvus Pharma: Soquelitinib’s Big Stakes in PTCL Therapy (NASDAQ:CRVS)

Introduction

Corvus Pharmaceuticals (NASDAQ:CRVS) is a clinical-stage biotechnology company advancing cancer therapy. Their lead, soquelitinib, is an ITK inhibitor tested in peripheral T-cell lymphoma (PTCL). The company plans to initiate a phase 3 study for soquelitinib soon.

Here are some future catalysts for the company:

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The following article will focus on soquelitinib for the treatment of PTCL.

The potential of soquelitinib in the PTCL treatment landscape

Soquelitinib (IND 2021) is a small molecule inhibitor of interleukin-2-induced T-cell kinase (ITK). ITK is essential in signaling pathways that regulate T cell activation, proliferation, and cytokine production. Although other kinase inhibitors targeting BTK or JAK kinases are popular, ITK is still a relatively new area of ​​research, and soquelitinib is one of the first to be tested in clinical trials. In PTCL, soquelitinib seeks to differentiate itself from current therapies that target broader aspects of lymphoma cells or immune modulation. As the name suggests, PTCL is a result of T cell proliferation, and soquelitinib aims to suppress the growth of malignant T cells and promote a more robust anti-tumor immune response.

Here is the current treatment landscape for PTCL:

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Corvus’ Phase 1 study, conducted in China, focused on patients with relapsed or refractory PTCL who had already undergone an average of three prior lines of therapy. So this is a very sick population that has yet to respond to standards of care. Last December, Corvus presented new interim data, stratifying two different populations based on planned eligibility requirements for their Phase 3 study.

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By focusing on “eligible” patients, response rates are encouraging and durability is evident. The 2-year OS rate of 77% is impressive, especially in such a difficult-to-treat population. The company notes that the 2-year OS data “includes all 36 patients enrolled.” It begs the question: why show OS data in all 36 patients while showing other data (eg, ORR, DCR, etc.) in only 32 “eligible” and “ineligible” patients? Finally, the data support the novel mechanism of action of soquelitinib.

As always with phase 1 studies, there are some caveats to consider. The complete lack of response in heavily pretreated patients highlights a potential limitation in treating resistant forms of PTCL. We must also be aware of the small sample size (21 in the eligible group), which may limit the generalizability of the findings. finally, PTCL is a very heterogeneous diseasemaking cross-comparisons with other challenging treatments without considering specific subtypes and patient selection criteria.

Corvus describes its Phase 3 study as follows:

The clinical trial is designed to enroll a total of 150 patients with relapsed PTCL who have received ≥ 1 prior therapy and ≤ 3 prior therapies. The number of prior therapies in this range is selected for immunocompetent patients. Patients will be randomized 1:1 to soquelitinib 200 mg twice daily or one of the standard-of-care chemotherapy regimens. The standard care agent will be based on the physician’s choice of either belinostat or pralatrexate. The primary objective will be progression-free survival. Secondary endpoints will include objective response rate, overall survival and duration of response.

This is not an easy endeavor. Typically, Phase 3 oncology drugs have a 40% chance of moving to NDA/BLA. However, I would set the odds considerably lower for soquelitinib in PTCL. The complete lack of efficacy in heavily pretreated patients, as well as the relatively modest response rates in others, suggest that the success of soquelitinib may be determined by patient selection and disease biology. Competing with established therapies such as belinostat adds an additional layer of complexity. It is also worth noting that the phase 1 data were collected in China. The Chinese population may have different genetic, environmental, and health care factors than Western populations (PTCL is actually uncommon in the US compared to other regions).

As for a discounted cash flow analysisI will estimate 2,500 US patients (exact estimates vary by expert) and a price per course of treatment of $252,000, which is about twice the price of pralatrexate (if soquelitinib proves superior in the phase 3 trial, it will likely justify a higher price). ). Here are some other assumptions:

The final calculation assumes linear market share growth (0.6 market share * 1.0 penetration rate) until the peak year of sales, consistent drug prices, specified probabilities of success, fixed COGS and expense percentages of operation and a defined discount rate to calculate the present value. of future cash flows. Final risk-adjusted net present value (152 million dollars) is the sum of all discounted profits from the year of market entry to 2039.

Obviously, a lot of assumptions go into a DCF analysis for a phase 3 drug. In mine, there are some that are optimistic (eg, 100% penetration rate, 60% market share following first-line treatments line, price $252,000) and others that may need adjustment (soquelitinib could feasibly come to market before 2028).

Let’s play with my model. What if Phase 3 is successful? What, then, is soquelitinib NPV? It amounts to 760 million dollars.

Financial health

As of June 30, Corvus reported $14.841 million in cash and cash equivalents. Marketable securities totaled $32.4 million. Total current assets were $48.258 million while total current liabilities were only $13.335 million. Strangely, Corvus has no long-term obligations.

Also worth noting is Corvus’ foreign company, Angel Pharmaceuticals.

Together, while the balance sheet is healthy, the companies will need a considerable amount of cash to test soquelitinib in Phase 3 (possibly more than $30 million based on the AMA data), especially considering other ventures.

Since Corvus does not record revenue, I will estimate the cash ratio based on the company’s past financial data. In the first six months of 2024, Corvus used $10.638 million in operating activities. This involves a monthly cash burn of approximately $1.77 million. If we divide their cash and investments by that figure, it suggests that Corvus is just over two years old cash track. However, as Corvus advances soquelitinib in both PTCL and atopic dermatitis, investors should anticipate higher cash burn in the near future. The company’s forward-looking cash track extends “into the fourth quarter of 2025.”

Note: Cash track and burn estimates are based on historical data and my analysis and should be viewed as estimates only. The term “cash burn” can encompass various factors beyond cash flow, making these estimates somewhat subjective. If companies provide forward estimates in their earnings releases, I’ll include them to round out my analysis.

CRVS Stock: Risk/Reward Analysis and Investment Recommendation

To summarize, Corvus is a prime example of a purely speculative biotech play. Soquelitinib for PTCL is certainly worth testing in Phase 3, but investors should temper their expectations for success. Corvus has prospects beyond PTCL. Atopic dermatitis is a chronic condition that requires long-term, safe and tolerable treatments. Testing an ITK inhibitor makes sense, but whether it beats blockbusters like dupilumab remains to be seen. How about Corvus’ “adenosine receptor antagonist,” ciforadenant, which is in the same class as caffeinefor renal cell carcinoma? Again, definitely not something I’d bet the house on.

Corvus undoubtedly presents significant uncertainty and risk (both operational and financial). CRVS might fit into a barbell portfolio strategy, but it’s not for me. I will rate it”YOU,” but reads more like “waiting to buy.”

Investing in microcap stocks such as CRVS also present a higher level of risk due to their limited liquidity, which can lead to significant price volatility. Microcap shares are also more susceptible to market manipulation and may have restricted access to capital. Investors should limit their exposure to speculative stocks like CRVS. As always, maintaining a diversified portfolio limits idiosyncratic risks that could one day lead to ruin.