Chimeric Therapeutics Ltd (ASX:CHM) has been given a mid-case valuation of $0.74 per share by RaaS, which has initiated coverage of the clinical-stage cell therapy company.
The mid-case valuation is almost triple the last traded price of A$0.26 and RaaS expects to revisit the portfolio valuation as Chimeric progresses these assets beyond the pre-clinical stage.
CAR T cell therapies
The company is currently focused on CAR T cell therapies, primarily with indications for solid tumours.
It has licensed two technologies from two world-leading research centres:
➢ CLTX CAR T (CHM 1101) from the City of Hope Cancer Centre in Los Angeles; and
➢ CDH17 CAR T (CHM 2101) from the University of Pennsylvania.
Following its ASX listing in January 2021, Chimeric has expanded its C-suite capability in cell therapy development and commercialisation and secured US FDA approval to begin Phase I trials of its CLTX CAR T cell therapy.
It has received encouraging results from the first dose of the four-dose program designed for Phase I of its CLTX CAR T clinical trial and expanded its portfolio range with its CDH17 CAR T licensing arrangement.
Chimeric is currently running a Phase I trial with CHM 1101 targeting recurrent glioblastoma, and preclinical studies with CHM 1101 for additional solid tumour indications.
CHM 2101 is in preclinical studies for a range of gastrointestinal cancers.
The company has also received patent approval from the European Patent Office for its CLTX CAR T cell therapy.
Investment case
RaaS believes that Chimeric has the opportunity to achieve success based on the following reasons:
The company has assembled a highly-experienced and -credentialed team, with specific expertise in cell technology development and commercialisation of CAR T cell therapies at established biotech firms. Members of the senior management team have been involved in four of the five CAR T cell therapies currently in commercial use;
The board and senior management have experience in advancing and on-selling or out-licensing therapies to major pharma;
Chimeric’s pipeline covers a number of potential avenues for partnerships, licensing and commercialisation, having partnered with two world-leading research groups in CAR T cell therapy;
The company’s intellectual property is targeted at growing areas of research in CAR T cell technology, with a large and growing total addressable market;
Chimeric is well-capitalised to fund the current Phase I CLTX CAR T trial and potentially to expand its pipeline with strategic acquisitions;
The GBM market is growing globally, with significant investment in finding treatments that extend survival rates; and
There is significant corporate activity in the CAR T space, highlighting the value of a pipeline with multiple therapies and expertise.
Valuation
Applying a risk-weighted valuation to its forecasts for the GBM opportunity, RaaS has arrived at a valuation range of $0.50-$0.93 per share with the mid-point at $0.74 per share, based on the current share count.
On a fully diluted basis for all options on issue, the mid-point valuation is $0.69 per share.
The valuation is solely based on the opportunity for CHM 1101 for recurrent glioblastoma.
Further upside
RaaS believes that further upside could be obtained from:
➢ The advancement of CHM 1101 to Phase II with GBM;
➢ The commencement of a Phase I frontline GBM study;
➢ The application of CHM 1101 to other indications;
➢ The advancement of CDH17 CAR T from pre-clinical stage to Phase I and beyond; and
➢ From the acquisition of additional portfolio opportunities.
Chimeric has identified melanoma, colorectal and prostate cancers as potential further targets but these are in the pre-clinical stage.
Additionally, CDH17 CAR T (CHM 2101) has set initial indications of colorectal, pancreatic, gastric and neuroendocrine cancers for its pre-clinical studies.
Chimeric has also indicated that it is seeking to expand the portfolio with additional acquisitions, which depending on their level of advancement, could add to our valuation range.