December 15, 2022
BIOINVEST NEWS: Celldex (CLDX)
Celldex (CLDX) — Urticaria Competitor Third Harmonic Discontinues Drug – BUY
After identifying troublesome liver enzyme elevations in patients in its lead program, newly public Third Harmonic (THRD) announced they are discontinuing development of the compound in urticaria. While earlier in development than Celldex’s barzolvolimab (“barzo” formerly CDX-0159), investors were optimistic that a pill version of a KIT inhibitor/mast cell blocker might be easier to take than an IV or subcutaneous version. We have always believed that “barzo” is the best-in-class compound in mast cells and with today’s announcement, coupled with the growing clinical data of CLDX’s drug, we are even more convinced that barzo is the early winner. BUY
Liver Enzymes Are A Death Blow
THRD made the decision to discontinue the ongoing Phase 1b study of its investigational drug candidate, THB001, after observing asymptomatic liver transaminitis in two of five subjects (40%) enrolled in the first and lowest dose cohort of 200mg BID. They were about to test two higher doses. We all know that elevated liver enzymes are a death blow to any drug being developed, although it is even more terminal in a chronic condition such as the ones like urticaria (and asthma, and EoE, etc.). Although we have written on THRD as one to watch in this new mast cell race, we also said that an oral drug in these conditions are too pleiotropic when given systemically over time and could lead to unforeseen side effects. This side effect was not seen in earlier safety trials of THB001 – likely because they didn’t go out further enough in time (and rushed to open the IPO biotech market). Either way, its back to the drawing board for THRD, and for now we can count them out as a competitor to CLDX and barzo.
Barzo Is Best-In-Class – Antibodies Are Among The Safest Drugs Around
The absolute beautify of good monoclonal antibodies (MAbs) like barzo is their specificity to a single cell receptor that leads to very clean side effect profiles and hence wide therapeutic windows. Blockbuster MAbs include REGN’s Dupixent, ABBV’s Humira and Genentech’s Ocrevus – that are almost void of significant side effects but must (and should) be given intravenously or via a subcutaneous injection. Celldex’s barzolvolumab is such a monoclonal antibody – to KIT-3 ligand that leads to the best mast cell inhibition ever seen – with a very acceptable AE profile. We just finished writing about the latest positive clinical results for barzo that was presented on December 7 at the Global Urticaria Forum (GUF) for our upcoming Issue of the MTSL due out this weekend and its 100% Complete Response (CR) rates in various urticaria patients. Yes, 100% CRs. Stay tuned for this week’s Issue.
Despite hitting a 52-week high today, we still believe CLDX is undervalued at current levels and reiterate our BUY rating. With today’s THRD news, we are even further convinced that it is the Best-In-Class mast cell inhibitor around. Barzo also has significant potential in other autoimmune diseases including asthma as it is quite common for MAbs to be used to treat a broad spectrum of related autoimmune disorders. As a reminder, CLDX owns the compound outright; hence, one day we believe that someone will take them out at a much higher valuation as we know the premiums paid for valuable proprietary compounds in blockbuster markets.