Allogene Therapeutics: Revisiting Its Prospects 5 Months On – Allogene Therapeutics, Inc. (NASDAQ:ALLO)
Since my last article on Allogene Therapeutics (ALLO) about 5 months ago, its share price has fallen by around 30%, largely in part due to the stock market crash driven by the COVID-19 global pandemic. Despite the progress in clinical development, strong management team and balance sheet, I was bearish on the company’s short-term prospects due to the early stage of its clinical pipeline and its high valuation.
Since then, I have also covered the prospects of Cellectis (CLLS) and argued that it was a better investment idea due to its more modest market cap, despite my opinion that the company has stalled from its position as the pioneer in allogeneic CAR-T.
In this article, I revisit Allogene’s prospect and while I have yet to turn bullish on its prospects, investors with the appropriate risk appetite and time horizon may consider starting to take on a position.
Clinical Programs Updates
Since my last article, the company has made notable progress in its clinical programs, although there have not been further clinical data updates. Figure 1 lists the company’s updated clinical pipeline.
Figure 1: Allogenic Therapeutics’ Clinical Pipeline (Source)
Its lead program, UCART19, which is co-developed together with Servier for the treatment of relapsed/refractory (“r/r”) CD19 positive B-cell Acute Lymphoid Leukemia (“ALL”) has seen no updates since my last article. Despite promising data showing that 67% of patients achieve a complete remission and that 82% of patients who received a lymphodepletion regimen that includes an anti-CD52 antibody achieved complete remission, UCART19 has been plagued by slow enrollment rate and manufacturing delays in the past. Servier recently revealed that enrollment in UCART19 has been halted due to the COVID-19 situation. Given that UCART19 was originally expected to be advanced into potential registration trials this year, it is unknown whether this timeline will be further pushed back by the latest setback.
There is more positive news regarding ALLO-501, which is identical to UCART19 in molecular design, with the distinctions that several modifications have been made in the manufacturing process to facilitate more efficient manufacturing scale-up for the larger patient population target.
The phase 1 ALPHA trial for ALLO-501 has been initiated in 2019 and the company expects to have interim data to be presented in Q2 2020. In addition, the FDA has approved the Investigational New Drug (“IND”) application for ALLO-501A which is the next generation of ALLO-501 and was created to eliminate the rituximab recognition domains in ALLO-501, to allow for use in a much broader patient population. The company expects to initiate a Phase 1 trial of ALLO-501A in Q2 2020 to finalize the ALLO-501A cell dose and ALLO-647 anti-CD53 lymphodepletion regiment for a potential pivotal phase 2 trial.
The last program in a clinical trial is ALLO-715 which is an anti-B-cell maturation antigen (“BCMA”) CAR-T candidate for the treatment of multiple myeloma (“MM”). A phase 1 UNIVERSAL trial for ALLO-715 was initiated in 2019 and interim data are expected to be available in Q4 2020. As part of its overall strategy around MM, Allogene also entered into a clinical collaboration with SpringWorks Therapeutics to evaluate ALLO-715 in combination with SpringWorks’ investigational gamma-secretase inhibitor, nirogacestat. In preclinical models, nirogacestat has shown to enhance the activity of BCMA-targeted therapies. This combination trial is expected to be initiated in the second half of 2020. In addition, ALLO-605 has been nominated as the company’s first TurboCAR candidate. TurboCAR technology provides the effects of cytokine stimulation to AlloCAR T cells with the goal of enhancing their potency, expansion, and persistence. ALLO-605 is currently in preclinical development with a potential IND to be filed in 2021.
Finally, the company also updated that ALLO-316 will be the company’s next clinical candidate for development in acute myeloid leukemia (“AML”), T-cell malignancies and renal cell carcinoma (“RCC”). The company expects to submit the IND for ALLO-316 by the end of 2020.
As of December 31, 2019, cash and equivalents on hand were $588.9M which I expect will last the company for at least 2 years. Given the recent market turmoil due to the COVID-19 situation, the importance of clinical-stage biotech companies having enough cash runway cannot be understated.
Since my last update, the company has further built on its momentum and made signs of progress, as stated earlier. Notable progress includes progress in clinical development and notable partnerships such as the collaboration with SpringWorks Therapeutics. The company also inked a deal with Notch Therapeutics to research and develop induced pluripotent stem cells (“IPSC”)-derived allogeneic therapeutics. By using IPSCs as a renewable cell source, there can be several advantages over healthy donor-derived allogeneic therapies. Such advantages include improved product consistency and potency and a manufacturing process that is more akin to the well-established biologics field where they are produced from a single cell line. It must be noted that Fate Therapeutics (FATE) is the market leader in IPSC-derived allogeneic therapies, although their focus appears to be more on Natural Killer (“NK”) cells.
There are also several prominent names that are developing allogeneic CAR-T and they include Cellectis, Precision BioSciences (DTIL) and CRISPR Therapeutics (CRSP). The main difference among these companies is primarily the choice of gene-editing tools. Cellectis is both Allogene’s partner and competitor and both use TALEN while Precision is using ARCUS and CRISPR is using its namesake CRISPR/Cas9 for gene editing. All these companies are in a similar stage of clinical development in allogeneic CAR-T, with multiple programs planned in early-stage trials. Interestingly, while CRISPR’s lead program is in gene editing, both Cellectis and Precision’s priority is in allogeneic CAR-T but are trading at a lower market cap relative to Allogene. This can perhaps be attributed to Allogene’s strong cash position as well as its distinguished management team which was behind Kite Pharma’s success.
Also, Atara Biotherapeutics (ATRA) is developing an Epstein-Barr Virus (“EBV”)-based allogeneic T cell therapy platform. Its lead program is in Phase 3 and a BLA filing is expected by the second half of the year. That should put it in the lead position of commercializing an allogeneic T cell therapy and the company is gradually moving into CAR-T space as well.
In my last article, I noted the company’s rapid progress since its founding but still held a bearish view given that the company’s pipeline is still early-stage and the lack of a pivotal trial and to wait for more clinical data before taking up any position. While the company has still not started any pivotal trials since, the share price has dropped by about 30%. While I’m not about to enter a position yet, in my view, the company’s prospects should be upgraded from bearish to neutral at its current valuation.
As always, investors should conduct their own due diligence and consider their risk appetites and time horizon before taking up any position. This is especially so, given the recent market turmoil from the COVID-19 pandemic which has led to several countries announcing lockdowns, disruption in supply chain and business operations. Several clinical trials have already been delayed globally, including UCART19 and this may also impact Allogene’s other programs negatively, as their cash burn will continue even if clinical trials are delayed.
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Disclosure: I am/we are long ATRA. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.