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Genocea Biosciences: Don’t Sleep On This Small Biotech (NASDAQ:GNCA)

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Via SeekingAlpha.com

Introduction

Genocea Biosciences (GNCA) is a clinical-stage biotech company working on developing novel cancer immunotherapies. With its proprietary discovery platform, ATLAS, the company can identify immunotherapy targets based on an individual’s tumor antigen-specific T cell responses which results in more personalized cancer immunotherapies.

ATLAS Platform

Recently, immunotherapy has emerged as a novel and effective way of treating cancer by activating or suppressing the immune system. Examples of immunotherapy include checkpoint inhibitor which works by blocking checkpoint proteins from binding with their partner proteins, which otherwise would prevent the T cells to attack the cancer cells. Checkpoint inhibitor has been largely successful with the 2018 Nobel Prize in Medicine awarded to 2 scientists for their discovery of checkpoint inhibitors. Merck’s (MRK) blockbuster drug, Keytruda, is a PD-1 inhibitor drug and is forecasted to be the world’s top-selling drug by 2023.

Another example of immunotherapy is CAR-T therapy which engineers a patient’s T cells to fight the cancer cells and has shown excellent response rates in hematological malignancies. While CAR-T has had limited success in solid tumors, companies such as Adaptimmune (ADAP) and Iovance Biotherapeutics (IOVA) are pioneering other cell therapy techniques, namely T-Cell Receptor (“TCR”) and Tumor-Infiltrating Lymphocytes (“TILs”) therapies respectively to target solid tumors.

In such cell therapies, the T cells work by targeting specific targets on tumors such as the proteins processed by the tumor and presented as peptide on the tumor surface where the T cells can interact with them. Identifying such optimal antigens is challenging as each of the responses of each antigen varies from person to person and the number of candidate antigens can number up to the range of thousands per patient. Hence, an effective antigen selection system must not only account for each patient’s tumor but also their T cell repertoire.

Genocea’s ATLAS platform can identify an optimal antigen by using the patient’s own T cell immune response machinery. Each patient’s T cell responses to a comprehensive set of candidate antigens, tumor-associated antigens, and tumor-associated viral antigens are measured. The targets associated with the anti-tumor T cell responses are then selected.

The company believes that ATLAS is the most comprehensive and accurate system for antigen discovery. In addition, ATLAS has also potentially a novel candidate antigen profile, identified as inhibitory antigens or inhibigens. All candidate antigens were thought to be stimulatory or irrelevant, but the company has identified that inhibigens can promote tumor progression in preclinical studies. Moreover, an antigen can be stimulatory in one patient and inhibitory in another, highlight the importance of selecting immunogenic antigens. In Nov 2019, the company presented clinical evidence that inhibigens suppressed anti-tumor immune responses while promoting tumor growth.

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Clinical Pipeline

Genocea, currently, has 2 clinical assets in development: a neoantigen cancer vaccine that can be used in existing treatment for cancer to enhance the T cell response to cancer and a T cell therapy targeting specific neoantigens.

Figure 1 Genocea Biosciences’ Clinical Pipeline (Source)

Its lead program, GEN-009, uses ATLAS to identify specific neoantigens, and then a personalized vaccine for each patient is manufactured using only the neoantigens determined to be stimulatory to anti-tumor immune responses. GEN-009 is being evaluated in a Phase 1/2a clinical trial across a range of solid tumor types, both as a monotherapy and in combination with checkpoint inhibitors.

Enrolment for the monotherapy portion for the trial has been completed and data from 8 dosed patients showed that GEN-009 was well-tolerated with no dose-limiting toxicities. An impressive 99% response rate was detected against the administered vaccine neoantigens, which is far higher than what was reported previously in other neoantigen vaccines, demonstrating its best-in-class potential. The combination with a checkpoint inhibitor portion of the trial is ongoing, with initial clinical data expected in Q2 or Q3 of 2020.

The company is also developing GEN-011 as an adoptive T cell therapy specific for neoantigens identified by ATLAS. Adoptive T cell therapies such as TIL therapy have shown excellent efficacy in solid tumors. An example is Iovance, whose TIL therapies demonstrated objective response rates of 44% and 36.4% in melanoma and cervical cancer respectively. This compares favorably to Keytruda which posted objective rates of 24% and 14.7% respectively in the 2 indications.

Rather than using TILs, which has a general process on extracting TILs from patient’s solid tumor and expanding them non-specifically before reinfusing them back into the patient, GEN-011 use peripheral blood lymphocytes (“PBL”) which expands T cells from patient’s peripheral blood rather than their tumor. Genocea believes that GEN-011 can provide potency, efficacy, and ease of manufacturing benefits over TIL therapies. The company expects to file for an IND application for GEN-011 in Q2 of 2020 with interim results anticipated in the first half of 2021.

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Beyond the 2 programs, the company is also exploring additional program opportunities by using ATLAS to pursue the discovery of novel candidate antigens. Such programs could target shared neoantigens, non-mutated tumor-associated antigens, and virally driven cancers caused by Epstein-Barr virus.

Prospects

As of 31 Dec 2019, cash and equivalents on hand were $40.1M, which the company projects can fund operations into Q1 of 2021. Given the relatively short cash runway, I would expect the company to raise more cash at the next positive catalyst, likely when they provide an interim data update from the combination trial of GEN-009 and checkpoint inhibitor.

The company’s clinical pipeline is very early-stage, with only GEN-009 reporting any clinical data to date. Even so, the patient population was only 8 with only immunogenic data reported. It is also unclear if the COVID-19 pandemic will result in any disruption of Genocea’s operations, given that several clinical trials have already been delayed or suspended globally. In the case of any delays, it will have a negative impact on the company’s cash burn, and its ability to raise more cash as GEN-011 will likely be pushed back.

On the bright side, the potential of the ATLAS platform to select precise antigen target is immense. Beyond using ATLAS to select targets to develop its own cancer immunotherapies, the company can leverage the platform to drive partnerships with other companies, as an avenue for fundraising via upfront payments and future milestone payments, as with typical biotech partnerships. An example of this is its partnership with Iovance, which is the leader in TIL therapies with 2 pivotal trials ongoing in melanoma and cervical cancer.

Notably, Iovance is also working on PBL with the first patient recently dosed in a phase 1 trial for chronic lymphocytic leukemia. Given that Iovance themselves is working on a shorter manufacturing process for its TILs, the importance of having an easier manufacturing process cannot be understated. The potential of GEN-011 being used to treat solid tumors with an easier manufacturing process compared to TIL therapies is intriguing. The flip side of this is that Genocea, being an early-stage biotech, currently does not have its own manufacturing facility and relies on third-party. While this means there is a lower upfront capital expenditure, manufacturing is a very key part of successful cell therapies. By outsourcing manufacturing to a third party, the company also loses out on building its internal capabilities, which will come in useful as they progress to late-stage trials and prepare for a BLA submission to the FDA.

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Conclusion

Genocea is an early-stage biotech with only 1 program having reported any clinical data. While such biotech companies are normally outside of my risk-reward profile, I am intrigued by the potential of its ATLAS system to select precise antigen targets for cell therapies. The partnership with Iovance also highlights the potential for future partnerships, which provides for an additional avenue of fundraising.

Its current market cap is around $50B, which means that its cash on hand alone is almost 80% of its market cap. While its cash will continue to be depleted, its current valuation is pricing in almost no value for its technology and intellectual properties. Hence, I am ready to take on a small speculative position with a mid-to-long-term time horizon.

As always, investors should conduct their own due diligence and consider their risk appetites and time horizon before taking up any position. Investing in clinical-stage biotech companies has always been risky, especially so in the current market environment which has been very volatile due to the COVID-19 pandemic.

I specialize in covering tech and biotech firms. Readers who are interested are welcome to follow me to read and comment on my articles.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. 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.




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