Lion Biotech: An Emerging Biotech Company Focused On TIL Therapy for Cancers
OTC:LBIO Management Change Will Accelerate the Development of Clinical Programs In December 2014, Lion Biotechnologies (LBIO) named Elma Hawkins, PhD to serve as its new president and chief executive officer, effective January 1, 2015. Dr. Hawkins is a veteran in the biopharmaceutical industry. She has more than 30 years of experience in biotechnology drug development, corporate development, fundraising and general management, with a special focus on oncology. Dr. Hawkins has served as Lion’s president and chief operating officer since August 2014. From February 2014 until her appointment as president, Dr. Hawkins served as Lion’s head of clinical development. For eight years prior to joining Lion, she consulted for various biotechnology companies and financial institutions and also served as president of Viridian Pharmaceuticals. Previously, Dr. Hawkins was president and CEO of Advanced Viral Research, vice chairman of Antigenics and director of corporate development at Genzyme Corporation. Earlier in her career, she held preclinical, clinical and regulatory positions at Warner-Lambert/Parke-Davis Pharmaceuticals and at the Center for the Study of Drug Development at Tufts University. She holds multiple degrees, including a PhD in organic chemistry and an MBA. In June, 2014, Lion appointed Laszlo Radvanyi, PhD, as its chief scientific officer (CSO). Dr. Radvanyi has been conducting clinical research on TILs for ten years, and has more than 25 years of experience studying cellular and molecular immunology. In this new position, Dr. Radvanyi will be responsible for developing novel technologies to produce next-generation TILswith higher therapeutic potency and reduced manufacturing costs. These technologies will be based on two different platforms: one will use clinically sorted TILs to enhance tumor response, and the other will utilize genetically modified T-cells to modulate expression of specific checkpoint receptors on the cell surface. As CSO, Dr. Radvanyi will also research additional tumor indications for TILs, including lung, cervical and breast cancer, as the Company continues to advance its clinical programs in metastatic melanoma. With a strong background and rich experience in multiple areas, especially in the immunology and oncology area, we believe the appointment of Dr. Elma Hawkins and Laszlo Radvanyi will accelerate the clinical development of TILs for the treatment of melanoma and expand its clinical utilization for other solid tumors. With a deep knowledge of oncology drug development, as well as the strategic acumen, it's our belief that Dr. Elma Hawkins is the right person to lead Lion to the next level. Balance Boosted by New Financing The company’s balance sheet remained strong. As of September 30, 2014, LBIO held $17.2 million in cash and cash equivalents. On December 22, 2014, Lion closed an underwritten offering of 6,000,000 shares of its common stock at $5.75 per share. The company received gross proceeds from the offering of $34.5 million before relevant expenses. We estimate Lion should have approximately $45 million in cash at hand now. Current cash can last into calendar 2017 according to our financial model. This financing not only boosts the company’s balance sheet, but also validates the clinical results to-date and the potential for tumor-infiltrating lymphocyte technology. With the increased cash, Lion should be able to take the lead T-cell program into a Phase III clinical study for metastatic melanoma as well as sponsor several additional combination studies of check point inhibitors and T-cells. Positive New Data from Lead TIL Melanoma Program Presented at ASH In December 2014, Lion’s collaborator Dr. Steven A. Rosenberg from NCI presented positive, new data from a Phase II clinical trial of TIL therapy in metastatic melanoma at the American Society of Hematology (ASH) annual meeting in San Francisco, CA. NCI is conducting with Lion the Phase II clinical trial under a collaborative research and development agreement. The randomized Phase II clinical trial was conducted at NCI in a total of 101 patients with advanced metastatic melanoma, who were equally divided between two treatment groups. Both groups were treated according to standard TIL protocol using chemoablation, but the second group also received total body irradiation. Following are the summary of the new data presented at the ASH meeting: - ORR was 54%, representing a significant improvement over data from recent clinical studies of ipilimumab (ORR 10-15%) and anti-PD-1 therapy (ORR 31-41%) - Fourteen patients had complete responses, 13 of which are ongoing beyond two years; - Of the 41 partial responders, 22 are ongoing beyond one year and 15 are ongoing beyond two years; - Additionally, Dr. Rosenberg noted, TILs produced objective response rates in 19/45 (ORR 42%) patients who were ipilimumab refractory, and 5/10 (ORR 50%) patients who had previously progressed on anti-PD1. We think these data are very impressive, which confirm the results from previous Phase II studies of TILs and underscore the potential of TILs to significantly improve survival and tumor response in patients with advanced metastatic melanoma. We are especially impressed with the findings that TILs have demonstrated meaningful objective response rates in patients who were refractory to Yervoy and checkpoint PD-1 inhibitors. Recent clinical experience has shown that Yervoy and checkpoint inhibitors are quickly becoming the standard of care for metastatic melanoma, but there are still 50 to 60% percent of patients who do not respond to these agents. The new data from TILs also suggest that TILs in combination with Yervoy or checkpoint inhibitors may further benefit patients with melanoma and other solid tumors. Next Step for TIL Development Lion Plans to Conduct Phase II Study of LN-144 in Metastatic Melanoma Based on the positive physician-sponsored Phase II data, earlier in January 2015, Lion submitted an IND application with the FDA to conduct a Phase II clinical trial of LN-144 for the treatment of patients with refractory metastatic melanoma. LN-144 is Lion’s lead cancer candidate which is a cell product of autologous tumor infiltrating lymphocytes (TIL) derived from the patient’s tumor. We expect the company to initiate the Phase II trial in 2Q2015. This will be an important milestone for Lion as the company continues to advance its clinical programs in metastatic melanoma. Lion also plans to conduct trials to treat metastatic melanoma in the frontline setting, combining TILs with CTLA-4 antibodies, such as ipilimumab (Yervoy®), or PD-1/PD-L1 antibodies, such as nivolumab. TILs Clinical Trial Status In addition to metastatic melanoma, the company intends to investigate and develop TIL therapy for the treatment of other cancers. Lion plans to engineer a better manufacturing process for therapeutic TILs, which will generate an automated manufacturing process with minimal cellular manipulations and closed systems for manufacturing. This will increase the potency of TIL and reduce cost of goods significantly. Lion is also working with National Cancer Institute to develop next generation therapeutic TILs for the treatment of cancers. There are two strategies for developing next generation TILs. First strategy is to develop genetically engineered TILs by increasing potency, increasing persistence, and shortening manufacturing. Second strategy is to develop pre-sorted TILs by picking higher potency TILs. Both strategies lead to cheaper and better product. Current Share Price Does Not Reflect Value We maintain our Outperform rating on LBIO shares and our 12-month price target is $15.00 per share. We believe current share price does not reflect the value of the Company. Lion is an emerging biotech company focused on developing and commercializing TIL therapy for cancers with initial target of metastatic melanoma. TIL therapy is an emerging treatment regimen for cancer indications and has demonstrated compelling efficacy and safety profile for the treatment of melanoma. TIL therapy is so far the most effective treatment for patients with metastatic melanoma. With higher response rates than Yervoy (ipilimumab) or IL-2, and longer durations of response than Zelboraf (vemurafenib), TIL therapy carries the potential to transform current outcomes in melanoma, while also defining the way cell-based immunotherapy gets incorporated into mainstream cancer treatment. TIL therapy also has the potential to be applied to other solid tumors. Lion has cooperation agreement with prestigious National Cancer Institute (NCI) to develop TIL therapy for melanoma and other cancers. As the company continues advancing its current clinical programs, it is also developing next generation TILs and an optimized manufacturing process that will enable the production of highly potent, engineered cells at a significantly reduced cost. With unique and versatile technology, promising clinical programs, strong intellectual property, high-profile collaborations and seasoned leadership, we believe Lion has the potential to create meaningful value for its stakeholders. In terms of valuation, we think Lion’s shares are undervalued at current market price. Currently, Lion’s shares are trading at about $8.9 per share, which values the company at $294 million in market cap based on 33 million outstanding shares. We think this is a discount to its peers considering the relatively strong fundamentals. We understand that valuing a development stage biotech company is not easy. Lion is no exception. Most small biotech companies of development stage are valued from $100 million to $1 billion depending on how advanced the pipeline is and which indications the company is targeting. Lion is a middle stage development biotech company. TIL has finished multiple physician sponsored Phase I/II clinical trials and another PI sponsored Phase II trial is ongoing. Lion expects to start pivotal Phase III trial of TIL for metastatic melanoma in 2015. Market is huge for TIL even for melanoma alone. If we consider other solid tumor indications for TIL, the market for TIL will be significantly bigger. Our price target of $15 values Lion at $495 million in market cap, which we think is still conservative. READ THE LATEST FULL RESEARCH REPORT HERE SUBSCRIBE TO ZACKS SMALL CAP RESEARCH to receive our articles and reports emailed directly to you each morning. Please visit our website for additional information on Zacks SCR and to view our disclaimer.
