Since November of 2019 MS Money Moves has been following DelMar Pharmaceuticals (Nasdaq: DMPI) closely through a number of key value inflection points. In my initial article I discussed the transformational changes enacted by President and Chief Executive Officer Saiid Zarrabian resulting in DelMar’s improved operational efficiency and the concentration of its financial, as well as intellectual resources, on advancing VAL- 083 as a front-line treatment for Glioblastoma Multiforme (GBM). GBM is an extremely resilient and aggressive form of brain cancer with dismal survival rates. All patients eventually relapse and with currently approved therapies only 3% of patients survive 5-years. Those classified as MGMT unmethylated face even greater odds because the MGMT enzyme can repair DNA damaged by Temozolomide (TMZ, Temodar), the current standard of care in combination with radiation therapy. The clinical rational for using VAL-083 in this patient population over TMZ is that double-stranded DNA breaks made by VAL-083 are inaccessible to the MGMT enzyme. The limited benefit of chemotherapy with TMZ in the 60+% of GBM patients with an unmethylated MGMT gene is reflected by updates in the National Comprehensive Cancer Network (NCCN) guidelines in 2017.
Nearly a year ago DelMar shared promising Phase 2 clinical data at the 2019 American Society of Clinical Oncology (ASCO) conference demonstrating a significant treatment effect by VAL-083 as a first-line therapy in newly diagnosed MGMT-unmethylated GBM patients. In this now fully enrolled, and ongoing open-label Phase 2 study, 53% of the 15 evaluable patients had achieved complete response (CR) and 47% had achieved stable disease (SD). As discussed in my last article, these robust response rates were reaffirmed in August of 2019 and again at the Society for Neuro-Oncology 2019 Annual Meeting (SNO) in November 2019. Moreover, 80% and 70% of the patients were still alive at these time-points, respectively, 5-months after the 2019 ASCO data update. VAL-083 is concurrently being investigated in the recurrent and adjuvant settings for GBM at the MD Anderson Cancer Center (MDACC). This gives the company three shots on goal to empower the design of a Phase 3 study with the greatest chances of success. In the rest of this article I will review the current state of DelMar amid an unprecedented global health crisis and discuss near-term milestones investors, doctors, patients, and their families can look forward to in 2020.
Clinical Progress Continues Despite COVID-19
On March 11th, 2020 the World Health Organization (WHO) declared the COVID-19 outbreak a pandemic. As a result, many clinical-stage biopharma companies had to pause their clinical trials and or delay enrollment. DelMar has managed to avoid this problem and has enrolled 90% of the patients in the adjuvant arm of its ongoing Phase 2 study at MDACC. The recurrent arm similarly is on track with the final patients expected to be enrolled before the end of the year. Furthermore, in February 2020 DelMar announced that the final patient was enrolled in the newly-diagnosed study being conducted at the Sun Yat-sen University Cancer Center in Guangzhou, China. On top of this, DelMar remains on track to provide a data update in all three settings of the Phase 2 study at ASCO (May 29th-31st) and AACR (June 22nd-24th). In light of these unique and unprecedented times DelMar’s’ follow through and ability to maintain its pre-COVID-19 timelines merits applause.
Financials Remain Entact
Mr. Zarrabian has continued to exercise fiscal discipline and stewardship with respect to DelMar’s capital resources. As of 3/31/20 DelMar had approximately $5M in cash compared to $3.7M on 6/31/19. The company reiterated in its 3Q20 earnings report that its cash position should be sufficient to fund operations through the fourth quarter, at which time DelMar anticipates reporting top-line Phase 2 data in the newly diagnosed front-line, recurrent, and adjuvant treatment arms.
Looking at the other selected financial data everything appears to be in relatively good shape. Research and development, as well as general and administrative expenses, have been kept in check with only marginal increases compared to the same period ending on 3/31/19. Net-loss increased 17% to approximately $2M vs. $1.7M which seems appropriate considering that the costs of conducting the Phase 2 study increase as more patients are enrolled. Of note, DelMar’s working capital increased to $3.7M from approximately $2M on 6/31/19.
In our view, DelMar is in good shape considering that many of its peers are struggling to maintain timelines and forward their clinical programs. While we acknowledge Mr. Zarrabian’s hard-work to keep DelMar on-track, there is a much more significant underlying implication. Even in the face of a global pandemic MDACC continues to recruit, enroll, and dose patients in DelMar’s study. To us, this speaks volumes about the investigator’s perception of VAL-083 as a treatment for MGMT unmethylated GBM patients. Despite tight travel restrictions where many states are still ordering citizens to shelter-in-place, MDACC is allowing patients to travel from across the country to partake in the study. In the past year investors and medical professionals have been encouraged by VAL-083’s performance in all three treatment settings (newly diagnosed, recurrent, and adjuvant). Unfortunately, during this time DelMar’s shareholders have not been rewarded by a sustained appreciation in share-price. We feel it is important to realize that DelMar’s story does not end here and much can change as we approach critical milestones discussed in this article. Although nothing has been stated publicly, we imagine that Mr. Zarrabian is constructing a plan to advance VAL-083 into Phase 3, and ultimately position it for FDA approval. Plenty of companies are working on developing GBM treatments. Many have failed such as Tocagen (Nasdaq: TOCA) and Bristol-Myers Squibb (NYSE: BMY) while others are still early in the developmental process. Considering the urgent need for MGMT unmethylated GBM patients for an alternative to the standard of care (TMZ+ radiation therapy), VAL-083 appears to be the best option on the dashboard. We look forward to the upcoming data readouts and following the DelMar story through 2020 inflection points.
I am/we are long DMPI. MS Money Moves, I, or its affiliates were not compensated to write this article.