Kintara Therapeutics (Nasdaq: KTRA) is a newly-formed, late-stage, oncology-focused pharmaceutical company resulting from the strategic acquisition of Adgero Biopharma by DelMar Pharmaceuticals (Nasdaq: DMPI) in August 2020. As a company that is less than 6-months old, very few biotech investors know about KTRA and even fewer understand it. This article will hopefully help change that by educating and informing the investment community about KTRA’s potential to create significant value for shareholders at a pivotal time in its evolution. Kazia Therapeutics (Nasdaq: KZIA) is another up-and-coming, late-stage oncology company that along with KTRA is one of only a few companies with a Phase 3-ready drug candidate (Paxalisib) for Glioblastoma Multiforme (GBM), the most aggressive form of brain cancer.
As I highlighted in my original article on DMPI “Introducing the New and Improved DelMar Pharmaceuticals (Nasdaq: DMPI)” in November 2019, DMPI’s prior operational strategy involving a high cash burn and an insufficient focus on value accretion priorities had sullied investor sentiment. And as I argued in that same article about what would unfold has happened; DMPI/KTRA President and CEO Saiid Zarrabian has successfully transformed DMPI from a company trading below enterprise value and burdened by uncertainties into a new entity (KTRA) that is fully-funded through several major developmental inflection points over the next 12-months. The first of which includes top-line data from Phase 2 studies later this quarter evaluating KTRA’s lead asset (VAL-083) in newly-diagnosed frontline, newly-diagnosed adjuvant, and recurrent GBM. Furthermore, KTRA expects to start enrolling patients in the pivotal Global Coalition for Adaptive Research (GCAR) GBM AGILE study this month.
KTRA is one of only three companies selected to participate in this Phase 3 registrational study with the other two being Bayer Pharmaceuticals (OTCMKTS: BAYRY) and KZIA. Whereas the Phase 2 studies conducted thus far by KTRA have been open-label and compared with historical data for the standards of care (SOCs) (TMZ for newly-diagnosed and Lomustine for recurrent), the GCAR study will have an active control arm using these SOCs running in parallel with the treatment arms. Importantly, the FDA has signed-off on GCAR’s study design and protocol.
Essentially, if all goes well and an efficacy signal is confirmed in Stage 1 of the GCAR study, VAL-083 will advance to Stage 2 of the program in 1Q22 followed by a new drug application (NDA) by late 2023. Similarly, KZIA could advance Paxalisib into Stage 2 around the same time. Because there is such a treatment gap for GBM patients compared to other cancer types, and given that their respective drugs have different mechanisms of action, there seems to be ample market share for both players.
Through the Adgero acquisition, KTRA inherited a new chemical entity REM-001 which is a photodynamic compound in the late stages of development for cutaneous metastatic breast cancer (CMBC). In Phase 2/3 studies consisting of 148 patients, investigators observed compelling results in CMBC patients who previously failed radiation therapy. In approximately 80% of the evaluable tumor sites, therapy with REM-001 achieved complete responses. KTRA is advancing REM-001 into a 15-patient confirmatory and dose optimization study slated to readout top-line data in 4Q21.
The meaningfulness of DMPI/KTRA’s accomplishments over the past year are validated by the year-over-year (YoY) change in market capitalization (“market cap”). When I wrote my original article on 11/3/19 DMPI had a market cap of $7M compared to a ~$35M market cap for KTRA as of 12/21/20 (+388% increase). Considering the aforementioned upcoming milestones, and KTRA’s latest Phase 2 data presented at the Society for NeuroOncology (SNO) 2020 Annual Meeting in November 2020, we feel the company is poised to deliver shareholders robust returns yet again in 2021 with multiple shots on goal (3 shots for GBM and 1 shot for CMBC) to submit a new drug application in 2023 and tap into a $1.3B+ combined market ($800M GBM + $500M CMBC).
KTRA and KZIA Delivered Robust GBM Data At AACR and SNO 2020
For the second consecutive year we have covered KTRA/DMPI through key data updates at major medical conferences including the American Association for Cancer Research (AACR) annual meeting in June and the Society for Neuro-Oncology (SNO) annual meeting in November. These updates have been robust and consistent YoY which adds to our confidence level in that treatment with VAL-083 translates to a better clinical outcome than TMZ. The most recent readout at SNO 2020 was especially exciting because we received an encouraging update on patients from all three GBM treatment settings (recurrent, newly-diagnosed adjuvant, and newly-diagnosed frontline) in KTRA’s Phase 2 studies. KTRA’s peer KZIA also presented positive Phase 2 data from its study investigating paxalisib in newly-diagnosed and recurrent GBM patients reinforcing data observed earlier this year at AACR 2020. As peers not only in the GBM space but also in GCAR’s ADAPTIVE GBM study I decided to include a side-by-side data comparison of their respective datasets presented at AACR and SNO 2020 relative to the SOCs.
Historical Data For The SOCs (TMZ and Lomustine)
As we can see in Figures 1 and 2, data reported at AACR and SNO 2020 by KTRA and KZIA showed robust and consistent trends in mortality benefits for newly-diagnosed GBM patients treated with VAL-083 and Paxalisib in their respective Phase 2 studies compared to historical data for the SOCs (Figure 3). In particular, there was between a 1.8 and 3.4 month progression-free survival (PFS) benefit for newly-diagnosed GBM patients treated with VAL-083 relative to the historical data for TMZ (depending on which historical stat is used).
Paxalisib performed similarly well posting a PFS benefit at AACR and SNO 2020 between 1.5 and 3.1 months compared to the TMZ reference data. This same trend was seen in overall survival (OS) data shared by KTRA and KZIA which outperformed historical data for TMZ and Lomustine in newly-diagnosed and recurrent GBM patients by between ~+1.3 to 5.5-months, respectively. It may not seem like much but in GBM it is a huge deal to boost PFS and/or OS rates by a few months without compromising safety. Of note, all patients included in the studies done thus far by KTRA and KZIA have unmethylated promotors which makes them unlikely to respond to the SOCs.
On December 23, 2020, another Phase 3 GBM study bit the dust. Bristol-Myer Squibb’s (NYSE: BMY) reported last month that its CheckMate-548 trial comparing its blockbuster targeted cancer therapy OPDIVO (nivolumab) plus radiotherapy to the SOC in newly-diagnosed GBM patients with a methylated MGMT promoter status was deemed unlikely to meet its primary endpoint (overall survival) by an independent data monitoring committee (DMC). Sadly, a number of late-stage GBM studies have failed in the past few years leaving only a handful of late-stage drugs in clinical trials, two of which being KTRA and KZIA.
Given the $500M+ market opportunity for KTRA if it succeeds in the Phase 3 GCAR study (three shots on goal with patient subtypes of newly-diagnosed methylated, newly diagnosed unmethylated, and recurrent settings) relevant to its $35M market cap we feel that the stock is still significantly underappreciated. We are also bullish on the commercial prospects for KZIA in the GBM space if Paxalisib succeeds in GCAR (two shots on goal with patient subtypes of newly-diagnosed unmethylated, and recurrent GBM).
We recognize that KZIA has the potential to secure a priority review voucher having been awarded Rare Pediatric Disease Designation (RPDD) for Paxalisib for the treatment of Diffuse Intrinsic Pontine Glioma (DIPG) (a rare and highly aggressive childhood brain cancer). Vouchers like these have a market value between $63M and $350M and warrant inclusion when valuing the company. In addition to its clinical program in DIPG, KZIA is testing Paxalisib in different types of brain cancer and has a second anti-cancer drug (Cantrixil) in development for Ovarian cancer (Phase 1). Taken together, we feel that KTRA with two Phase 3 ready oncology assets at a $35M valuation and fully funded for 12-months is underappreciated to its peers in the space including KZIA.
I am/we are long KTRA