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Topline Summary
Cellectar Biosciences (NASDAQ:CLRB) is a long-toothed developmental biotech focused on the development of a radiolabeled phospholipid for the management of hematologic malignancies, with Waldenstrom’s macroglobulinemia being their main shot on goal. Very recently, they had a trial read out with what they believe are strong-enough data to justify and Accelerated Approval, and yet the company remains a microcap stock. While they have cash concerns and pipeline risk in the future, for 2024 I do not feel that such a cheap valuation is warranted, and I will be taking a serious look at initiating a position in this company.
Pipeline Overview
Iopofosine
CLRB is working on various compounds, but at this time they only have one in clinic: a radiolabeled phospholipid called iopofosine. This molecule is designed to take advantage of the observation that cancer cells tend to recruit exogenous lipids into structures on the cell surface called lipid rafts, the overall idea being that by doping this molecule with a radioactive isotope of iodine, you can preferentially deliver radiation to cancer cells.
The most advanced development for iopofosine so far has been in Waldenstrom’s macroglobulinemia, a rare form of non-Hodgkin’s lymphoma. Iopofosine is the subject of an open-label, single-arm study with registrational intent in patients with Waldenstrom’s and at least 2 prior lines of therapy. Major response rate is the primary endpoint for the study.
Back in January, CLRB highlighted the case study of a patient with Waldenstrom’s that has entered the central nervous system. This patient had clearance of disease in the nervous system, suggesting that iopofosine could have activity in this difficult-to-treat compartment. They included this into the nascent story of a patient with clearance of CNS lymphoma in a separate phase 2a study.
CLRB also released top-line data from their pivotal study in conjunction with the JP Morgan Healthcare Conference, showing that 75.6% of patients achieved a clinical response (61% major response rate), meeting the primary objective for the study. The company intends to file an NDA in the near future, with the intent of pursuing Accelerated Approval, given their Fast Track designation from the FDA.
Considering there are no approved therapies in that setting, I think it’s likely these findings are compelling enough for the FDA to give the thumbs up to iopofosine in Waldenstrom’s. The answer to “when?” will depend on how fast CLRB can get the filing together.
CLRB also has a number of other notable pipeline projects in phase 2 development, including in B-cell malignancies, primary CNS lymphoma, and multiple myeloma. Most recently, they also officially launched a phase 1 trial of iopofosine in children with high-grade gliomas.
One highlight in myeloma was published in September 2022 in Blood, showing an encouraging 50% response rate in patients with heavily pretreated (median 9 prior lines of therapy).
Financial Overview
As of their most recent quarterly filing, CLRB held $20.1 million in current assets, made up mainly of $19.0 million in cash and equivalents. They had operational expenses of $9.4 million, and after revaluation of their warrants and costs related to issuance of warrants, CLRB realized a net loss of $13.7 million.
At the same quarterly expense, CLRB had approximately 2 quarters of cash left on hand to fund operations. However, this does not take into account the issuance of Tranche A warrants that yielded gross proceeds of $44.1 million, which could extend the cash runway by as much as one extra year at the current operational run.
Strengths and Risks
Strength – A positive pivotal trial gives a glimmer of hope for getting something to market
The Waldenstrom’s trial may not quite pass muster for a classic “well-powered” clinical study showing decisive benefit, given the single-arm, open-label study design and relatively low patient numbers. However, it’s important to point out that in these rare cancers of serious unmet need, signals of activity can be sufficient to support approval, at least contingent on conducting a randomized trial.
The phase 2 study also exceeded response rates you would expect in that population by a fairly wide margin. They had a large major response rate that tracks very favorably with the 4%-12% seen in other studies in this setting. It’s pretty convincing, in my opinion.
Risk – Cash, even after fundraising
Prior to the $44 million in gross proceeds, I would have described CLRB’s cash situation as pretty dire. They now have some breathing room, although I don’t think it’s enough to get them all the way through an NDA submission, approval, launch, and early commercialization. I think dilution is very much on the table to finance these early days.
However, the company has also indicated that they are deep in discussion with global partners to explore opportunities to out-license iopofosine outside the US, though nothing definitive yet. It is also worth noting that more warrants will trigger for another >$30 million upon approval of iopofosine, so there are chances for the company to address cash concerns without catastrophic dilution.
Risk – WM may not be a big enough market to reach profitability
Waldenstrom’s is a rare form of cancer, and patients who reach the point of multiclass-refractory status represent only a subset of that. The market size of the entire disease is currently in the realm of $100-$150 million annually, giving you a sense of the rarity of this disease. The company has not provided definitive guidance on pricing, but in the near term it is likely that they’ll be able to build a market size that is a significant fraction of that $100-$150 million.
CLRB needs to score more clinical wins with iopofosine if they’re going to make the whole story work in the long term. And that is far from guaranteed, despite the promising evidence they’ve generated to date.
Strength – A growing number of signals that their drug can help CNS cancers
Although it’s been mostly talk of single patients with clearance of different cancers in the CNS, I see it as a strength that they’re pursuing iopofosine development in the context of clinical trials for diseases like glioma and CNS lymphoma. These are major areas of unmet need, and if they can capitalize and reproduce those CNS findings in more patients, CLRB’s drug could end up being a blockbuster.
Bottom-Line Summary
My first impression of CLRB when I was researching their output was not great. Here’s a company with a $100 million market cap (an instant red flag for a lot of investors) touting single-patient results in press releases (a red flag for me) and having next to no cash as of their most recent quarterly filing. But the intervening quarter since last November has been game changing for CLRB, and the phase 2 study in Waldenstrom’s is about as convincing as you’re going to get for now.
I think they have a strong chance at Accelerated Approval, and that means 2024 holds a potential paradigm-shifting catalyst for the company that is clearly not being recognized by the market. While there are many risks still with respect to cash, the market size, and future success of their drug, I think CLRB is sitting too cheap to ignore right now, and you should take a serious look.
