4 Small Cap Biotechs With Upcoming Catalysts

The biotech “run-up” trade has always attracted a wide array of traders looking to take advantage of potentially high alpha price moves before the actual catalyst/binary event come to fruition. Holding through these events does carry a certain amount of risk that traders should be aware of.  Such examples of these risks include, but are not limited to:

  • Market conditions; specifically biotech ETFs such as The iShares Nasdaq Biotechnology ETF (IBB) and the SPDR S&P Biotech ETF (XBI)
  • Near-term dilution before the actual catalyst/binary event.

Below, we list 4 biotech ‘plays’ we think should provide nice short term upside with a couple of them having longer term potential:

G1 Therapeutics, Inc. (NASDAQ:GTHX). The company’s lead asset, Trilaciclib, is currently being evaluated in a number of settings as a tack-on to the standard of care in both front line and 2nd-3rd lines of small cell lung cancer (SCLC) and triple-negative breast cancer (TNBC). The mechanism of action for Trilaciclib offers a unique take on the popular and widely successful class of CDK4/6 inhibitors. CDK4/6 keeps cells in stasis, known as the G1 phase of the cell cycle, rendering it difficult to undergo cell division.

However many tumor types can function independently of CDK4/6 co-opting various resistance mechanisms. In these CDK4/6 independent tumors, the goal is to use Trilaciclib which is a short acting IV drug to protect the rest of the body during chemotherapy. It’s important to remember that chemo only attacks cells in the cycle which are past the G1 resting phase (platinum in the S phase and taxanes in the M phase). Trilaciclib is administered just before chemo exposure to prevent off-target effects. Not only can this help protect rapidly dividing healthy cells during chemo such as the Hematopoetic Stem Cell (HSC) compartment, it may also improve on-target effects. If the hypothesis is proven, this agent has the potential to be a backbone that could tackle the tough IO-chemo combination space, keeping the immune cells protected while heating up the target tumor.

G1 Therapeutics plans to present topline Phase 2a data for Trilaciclib in combo with SoC chemo in the front line SCLC setting during the first quarter of 2018. This data is a follow up to the earlier phase 1 data which demonstrated an impressive 88% ORR in an 18 patient set. An increased dosage from 200mg/m2 to 240mg/m2 demonstrated an improved safety profile; SAEs for the blood compartment such as Neutropenia dropped from 50% (1 grade 3, 4 grade 4) to 11% (1 grade 3), and Anemia dropped from 40% (4 grade 3) to 11% (1 grade 3). Historically speaking, the chemo combination used in this study without additional agents (Etoposide and carboplatin) is rather myelo-suppressive. In a phase 3 study, this combination showed a grade 3/4 rate of 86.5% neutropenia, 10.6% febrile neutropenia, 11.5% Anemia, and 19.2% thrombocytopenia. Also, notable was the ORR rate of 43.6% in this study which is roughly half of the response rate for G1. If G1 can continue to demonstrate notable improvements in ORR as well as continued protection from off-target impact, we should see significant appreciation in share price over the coming months.

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Disclosure: Long  MYOK, SRRA, GTHX, JNCE

Disclaimer: This article/video is intended for informational and entertainment use only, and should not be construed as professional ...

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