Chimeric Therapeutics Ltd (ASX:CHM), an Australian clinical-stage cell therapy company established in 2020, has had research coverage initiated by Diamond Equity Research along with a A$1.04 price target, well above the current price of A$0.31.
The company is focused on research, development and commercialisation of innovative and promising cell therapies, which it believes can not only delay disease progression but cure cancer altogether.
Chimeric’s CLTX- chimeric antigen receptor T cell (CAR T) technology incorporates chlorotoxin, a peptide derived from scorpion toxin, as a novel CAR tumour recognition domain.
The company’s pipeline consists of two core therapies. CHM1101 is targeting glioblastoma, melanoma, colorectal and prostate cancer while CHM2101 is being used to target Neuroendocrine tumours, colorectal, pancreatic and gastric cancers.
CHM1101 is in Phase I clinical study in glioblastoma and a preclinical study for melanoma, colorectal and prostate cancer while CHM 2101 is in a pre-clinical study for neuroendocrine tumours, colorectal, pancreatic and gastric cancers.
The following is an edited excerpt of Diamond Equity’s research report.
Investment highlights
Entering the attractive unchartered territory of solid tumours
CAR T therapies have proven to be effective in the treatment of Haematological (blood-forming tissue-based) cancers, but there has been minimal success seen in solid tumours with no approved therapies to date.
Chimeric’s lead indication glioblastoma (GBM) has a high mortality rate and the heterogeneous nature of tumours creates challenges in the treatment of patients.
Chimeric’s use of chlorotoxin as a binding agent to a wide variety of GBM cells has exhibited encouraging early-stage data in terms of efficacy and safety in preclinical trials. The CLTX CAR T therapy is currently in Phase I trials with initial safety data expected in Q4 2021.
GBM – an unmet medical need
Glioblastoma remains an unmet medical need with a 5-year survival rate of around 5% and median overall survival remains at approximately 12 months. GBM is the most common and deadly malignant brain tumour, while continuing to have a poor prognosis.
Surgery, radiation therapy and local or systemic chemotherapy are the standard of care. Given the challenges in current treatments, such as crossing the blood-brain barrier and several other resistance mechanisms, GBM historically returns after remission.
Promising pipeline position as ASX leader in cell therapy
Chimeric has a promising pipeline targeting different solid tumours with CLTX CAR T and CDH17 CAR T. The CLTX CAR T therapy concentrates on four indications including glioblastoma, melanoma, colorectal and prostate cancer.
The second therapy CDH17 CAR T is exploring treating neuroendocrine, colorectal, pancreatic and gastric tumours. With multiple indications being targeted, including some of the highest incidence cancers globally, Chimeric is developing a strong diversified pipeline targeting solid tumours with CAR T therapies, with Chimeric positioning itself as the ASX leader in cell therapy.
Unassuming valuation with unique risk-reward scenario
Chimeric is targeting an untapped market with high unmet needs. Diamond Equity believes GBM presents a huge opportunity given the complex nature of tumours. The company’s novel technology has shown potential efficacy and safety in preclinical trials, which although early stage is highly encouraging.
Assuming positive data, Diamond models the approval and commercialisation in FY2026. Further, Diamond models the company generating peak sales of A$3.01 billion.
Diamond notes the area is highly competitive, as there are over 18 CAR T clinical trials being conducted under GBM, with the majority sponsored by academia. Diamond believes the scientific, as well as business skills of Chimeric’s senior team will prove advantageous.
Valuation
Diamond Equity says: “We have valued the company based on its lead asset CLTX CAR T targeting glioblastoma achieving commercialisation. We expect the company to initially concentrate on two major geographies, the US and Europe, with combined annual cases of approximately 42,000 per year with 65% of patients being eligible for CAR T-cell therapy.
“Given the unmet needs in the treatment of glioblastoma, CLTX CAR T has the potential to be the first-line treatment and not just in patients with recurrence.
“Approved CAR T is the last resort for patients who have relapsed or are refractory with no other options. CAR T therapies have shown remission rates of up to 93%24 in severe forms of blood cancer.
“Based on the effectiveness and need of CAR T therapies, especially for solid tumours, we have assumed a peak market share of 20% for the US and 17.5% for the EU based on the number of eligible patients.
“Based on the price of comparable approved CAR T therapies, we have assumed a market price for a treatment course at US$410,000. We model peak sales of A$3 billion in 2036, after which we model that the entry of competition will drive down the price and growth.
“We are initiating coverage of Chimeric Therapeutics with our valuation model indicating a fair value of A$1.04 per share, contingent on successful execution by the company.”