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BCTX: Game, Set and Match: HLAs Score Success

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By John Vandermosten, CFA



We are initiating coverage of BriaCell Therapeutics Corp. (NASDAQ:BCTX). This value is based on our estimates for a successful development and commercialization of Bria-IMT for advanced breast cancer. The candidate is expected to be submitted to the FDA in 2024 and receive approval in 2025. We forecast pivotal studies and commercialization to be initiated with a partner in the United States and around the world. BriaCell has demonstrated efficacy in its Bria-IMT treatment for advanced breast cancer. The agent has shown a meaningful benefit especially in human leukocyte antigen (HLA)-matched patients with disease control in 75% of patients with two or greater HLA matches.

BriaCell has completed one Phase I/II study investigating Bria-IMT and has launched a second that is now underway. The active study is evaluating Bria-IMT in combination with a checkpoint inhibitor. So far 11 patients have been enrolled with an average of five prior lines of treatment. Trial data shows that there is a strong correlation between HLA type, lower grade cancer and response. Over the next months, additional subjects will be added in order to generate sufficient data to justify an End of Phase II (EOPh2) meeting with the FDA. The outcome of the meeting will guide the design of the pivotal trial. BriaCell expects either a smaller 100 patient single arm study with a synthetic control arm or a larger 300 patient randomized controlled trial that will use Bria-IMT in conjunction with checkpoint inhibitors.

Breast cancer is the most common type of cancer with an estimated 282,000 cases per year in the United States and 2.3 million annually around the globe. While survival rates for this type of cancer are around 90% and higher if caught early, with such a large population, there remain many patients that fail treatment and require second and later lines of therapy. Bria-IMT is now being considered for third line therapy as there is no approved treatment for this group. Bria-IMT has shown success in many patients that have specific HLA genotypes, and/or with Grade I/II disease, which may eventually justify moving up to earlier rounds of treatment.

BriaCell’s immunotherapy has broader applications than the narrow HLA-matched subset of breast cancer. The company is now working on another product designated Bria-OTS (Off-the-Shelf). This approach will expand the number of HLA genotypes that are expected to respond to the immunotherapy to capture nearly 99% of all third line patients. Prostate, non-small cell lung and other cancers are also being considered for the cell-based targeted immunotherapy.

Based on the strong data generated to date and favorable capital markets, BriaCell was able to raise a net $65 million in funding to support further advancement of its pipeline. As of October 31, 2021, the company held $55.5 million in cash on its balance sheet and has indicated that another $5 million in proceeds were added after the end of the quarter from warrant exercises. With multiple years of cash available, BriaCell is able to fund the continuation of its Phase I/IIa and launch a pivotal trial, which is expected in 2023. Depending on the outcome of the EOPh2 meeting with the FDA, we anticipate that either the smaller 100 patient or larger 300 patient study could cost anywhere from $10 to $50 million depending upon the trial design.

The EOPh2 meeting is targeted for 2H:22 and should lead into a 2023 pivotal study for Bria-IMT. Following the start of the pivotal trial, we estimate that it will take 30 months to enroll, complete treatment and generate the data package necessary for regulatory submission. These assumptions support a late 2025 approval and first sales in 2026. We anticipate BriaCell will start working with a partner on the pivotal trial that will assume global commercialization responsibilities. If successful, Bria-IMT will enter an addressable market of near 70,000 in the United States and almost 500,000 around the globe.

Key reasons to own BriaCell shares:

➢ Phase II asset to treat third line metastatic breast cancer

➢ Pivotal trial to be conducted next year, possibly with a partner

◦ Combination with a checkpoint inhibitor

➢ Bria-IMT offers favorable treatment effect in specific patient groups

◦ HLA match between patient and Bria-IMT cell line

◦ Grade I/II Breast cancer

➢ Bria-OTS may be able to HLA match >99% of the overall advanced breast cancer population

◦ 15 unique HLA types

◦ Will express GM-CSF and other immune stimulators

◦ Will provide a personalized match of off the shelf (OTS) alleles

➢ Similar safety profile to other approved cancer drugs in early clinical development

➢ Global rights to intellectual property

In our initiation, we describe immunotherapy and immuno-oncology (IO) and the many sub-therapies that it encompasses. We then take a look at breast cancer and discuss the prevalence and incidence of the disease and the many types of breast cancer that exist. We end the section with an assessment of the diversity of drugs and classes of drugs that are used for different types of breast cancer. After a discussion of BriaCell’s lead candidates, our initiation explores relevant preclinical and clinical data, trial design and development history for Bria-IMT in breast cancer. An examination of peers and competitors in the oncology space ensues along with a listing of the most relevant companies and their stock market value. The next section reviews recent financial and operational history for the company followed by an introduction to the management team and a summary of risks. Our valuation discussion enumerates the assumptions used to determine our target price. We expect first sales in 2026 for Bria-IMT after a favorable trial outcome conducted with a partner and successful submission of a BLA. Bria-OTS is expected to follow three years later serving an expanded third line breast cancer market.

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