Upcoming price inflections on clinical pipeline
Cerulean (NASDAQ:CERU) is entering a rich newsflow period with multiple clinical junctures in the coming months. The company will announce key data for CRLX101 in relapsed renal cell carcinoma (RCC) at ASCO 2015 with interim data in two additional indications expected in Q115. Recent financial agreements with Hercules have provided Cerulean with the resources to fund ongoing trials, including the advancement of its two lead drugs, CRLX101 and CRLX301.
Key data points for CRLX101 expected in early 2015
Cerulean’s CRLX101 is a nanoparticle-drug conjugate (NDC) targeting cancerous tumours with a slow release of its payload, camptothecin, inhibiting HIF-1 and topoisomerase 1. CRLX101 appears to be more potent and better tolerated than currently marketed topo 1 inhibitors. HIF is a master regulator of cancer survival and an important novel cancer target. Full Phase II data will be presented at ASCO 2015 for CRLX101 in combination with Avastin in relapsed renal cell carcinoma. This final data set from all 22 patients in the study follows the interim data in 11 patients that led to Cerulean’s IPO in April 2014. Interim data are also imminently expected (Q115) for CRLX101 combined with chemoradiotherapy in neoadjuvant nonmetastatic rectal cancer as well as in combination with Avastin in second- and thirdline ovarian cancer.
Multi-treatment potential from differentiated platform
Cerulean’s tumour-targeting system offers efficient drug delivery via NDCs aimed at improving the safety and efficacy of cancer treatments by selectively attacking tumour cells, thereby sparing the body’s normal cells and enabling combinations with other cancer treatments. Cerulean will present Phase I results from a Phase I/IIa trial for a second NDC, CRLX301 (with a docetaxel payload) in solid tumours by yearend 2015. We expect at least one more new drug candidate to follow in 2016 while the technology platform holds the potential for NDC combinations with numerous currently marketed compounds.
Valuation: EV of c $120m
Following its IPO, when the company raised $67m in new funds, in January 2015 Cerulean secured a term loan with Hercules Technology Growth Capital for up to $26m. We estimate that Cerulean had net cash of c $43m at end-February resulting in an EV of c $120m, reflecting a company with an established proof of principle and positive safety data for its lead drug candidate. Positive upcoming data for CRLX101 could trigger a re-rating of the share. However, we expect Cerulean will require further financing from 2016 to fund future pipeline development.
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