QLGN: Receives U.S. FDA IND Clearance; Phase 1 Trial to Initiate 2H23…
NASDAQ:QLGN
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Business Update
IND for QN-302 Cleared; Phase 1 Trial to Initiate in 2H23
On August 1, 2023, Qualigen Therapeutics, Inc. (NASDAQ:QLGN) announced that the U.S. Food and Drug Administration (FDA) had cleared the Investigation New Drug (IND) application for QN-302, the company’s lead cancer therapeutic development compound. We anticipate a Phase 1 clinical trial for QN-302 initiating in the second half of 2023. This is an important milestone for the company as it marks its transition from a preclinical to a clinical-stage entity.
The Phase 1 clinical trial will be a multicenter, open label, dose escalation study that will evaluate the safety, tolerability, pharmacokinetics, and pharmacodynamics of QN-302 in patients with advanced solid tumors. We anticipate approximately 24 patients will be enrolled and the study should be completed by the end of 2024. Qualigen has partnered with Translational Drug Development (TD2) as the contract research organization (CRO) to conduct the Phase 1 trial.
QN-302 is a G-quadruplex (G4)-selective transcription inhibitor that the company licensed from the laboratory of Professor Stephen Neidle at University College London (UCL). Stretches of nucleic acids with repetitive guanine (G)-rich sequences can form higher order quadruplex arrangements (G4s). G4s can occur in genomic DNA and are widely distributed in a non-random manner in the human genome (Huppert et al., 2005). These complexes are over-represented in numerous cancer-related genes (Siddiqui-Jain et al., 2002). In addition, G4s contribute to the genomic instability of cancer cells and may be involved in the regulation of transcription and replication (Wang et al., 2019; Varshney et al., 2020). Their enhancement in cancer cells is exemplified by one study showing approximately 10,000 G4 structures in an immortalized cell line in contrast to a noncancer cell line that exhibited only approximately 1,500 G4 structures (Hänsel-Hertsch et al., 2016).
G4s can be exploited by cancer therapeutics that stabilize the structures and inhibit various cellular processes. These types of compounds are particularly attractive when targeting “undruggable” proteins such as MYC, which is upregulated in approximately 70% of all cancers and controls the expression of a wide variety of genes associated with proliferation, differentiation, apoptosis, and oncogenesis (Dang, 2012).
QN-302 is a tetra-substituted naphthalene diimide (ND) derivative that exhibits low nM anti-proliferative activity against a panel of human cancer cell lines (Ahmed et al., 2020). In addition, it was shown to down-regulate a large number of genes including those in the TNF, NK-kappa B, and Wnt signaling pathways. Lastly, protein levels of MAPK11 (which is overexpressed in multiple human cancers) were reduced to undetectable levels following 2x-weekly dosing of QN-302 for 4 weeks in a PDAC xenograft model.
FastPack Business Divested
On July 24, 2023, Qualigen announced it had sold its FastPack diagnostics business to Chembio Diagnostics, Inc., an American subsidiary of the French diagnostics provider BIOSYNEX Group. AT the closing, Qualigen received $5.2 million in cash, which will be used to partially fund the Phase 1 clinical trial of QN-302. The sale of the FastPack business also helps to align the company’s resources more closely with its new mission of developing cancer therapeutics.
Financial Update
On August 15, 2023, Qualigen announced financial results for the second quarter of 2023. The company reported $1.6 million in revenues for the second quarter of 2023, compared to $1.4 million for the three months ending June 30, 2022. This represented a 14% year-over-year increase. The increase was primarily due to growth in sales volumes and higher average unit selling prices. Cost of product sales increased during the current quarter to $1.0 million, or 62% of net product sales, compared to approximately $1.1 million, or 77% of net product sales, for the three months ending June 30, 2022. The decrease was due to a reduction in force implemented in January 2023.
R&D expenses were $1.5 million for the second quarter of 2023 compared to $1.5 million for the three months ending June 30, 2022. Of the $1.5 million in R&D costs in the current quarter, $1.2 million (89%) was due to therapeutics and $0.2 million (11%) was due to diagnostics. Of the $1.5 million in R&D costs in the second quarter of 2022, $1.1 million (73%) was due to therapeutics and $0.4 million (27%) was due to diagnostics. The decrease in diagnostics R&D costs in the current quarter was primarily due to a decrease in stock-based compensation and payroll expenses partially offset by an increase in R&D expenses for NanoSynex. The increase in therapeutics R&D costs was primarily due to increased preclinical research costs for QN-302 partially offset by a decrease in preclinical research costs for QN-247. G&A expenses in the second quarters of 2023 and 2022 were both $2.7 million.
As of June 30, 2023, Qualigen had approximately $1.3 million in cash and cash equivalents. On July 25, 2023, the company received $4.7 million in cash from Chembio for the sale of the FastPack business, with another $450,000 being held in escrow to satisfy certain indemnification obligations. We estimate the company has sufficient capital to fund operations into the first quarter of 2024. As of August 10, 2023, Qualigen had approximately 5.1 million shares outstanding and, when factoring in stock options and warrants, a fully diluted share count of approximately 9.6 million.
Conclusion
We’re excited to see that the FDA has cleared the IND for QN-302 and we look forward to the initiation of the Phase 1 trial in the second half of 2023. We believe the divestiture of the FastPack business is a smart strategic move by the company as its priorities and resources can now be better aligned with the therapeutics business. The non-dilutive cash from the sale will also help to fund the Phase 1 clinical trial, which is advantageous given the current difficult funding environment. We have removed the FastPack business from our model and added in the cash received for its sale. Our valuation remains at $5.00 per share.
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