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Candel Therapeutics, Inc. (NASDAQ:CADL) was able to report positive interim results from its phase 2 randomized study using CAN-2409 plus valacyclovir [prodrug] together with standard of care [SOC] chemoradiation, following by resection in patients with borderline respectable pancreatic ductal adenocarcinoma [PDAC]. Not only that, but it also achieved Orphan Drug Designation [ODD] of CAN-2409 for the treatment of this patient population.
Both of these events have led to the stock price trading higher. If this is the case, then why should investors continue to look into this name? That’s because it is gearing up for another major catalyst, which could be released any day now. It is expected that it will release results from an ongoing phase 2 study, using CAN-2409 for the treatment of patients with non-small cell lung cancer, in Q2 of 2024.
Should this drug be effective for this indication as well, then it opens the door to other possibilities for it. Besides this near-term catalyst, there are two other data readouts expected later towards the end of this year. This would be regarding two ongoing studies targeting patients with prostate cancer using CAN-2409. Top-line data from a phase 2 study using this drug to treat low-to-intermediate-risk, localized, non-metastatic prostate cancer is one of the two studies. The second one to look forward to would be a phase 3 study using this drug to treat localized intermediate/high-risk prostate cancer. These are additional catalysts to look forward to, which, if positive, could also significantly boost shareholder value.
CAN-2409 For The Treatment Of Patients With Non-Small Cell Lung Cancer
As I stated above, CAN-2409 is being advanced in a phase 2 study treating patients with stage III/IV non-small cell lung cancer who have had an inadequate response to immune checkpoint inhibitor [ICI] treatment. Before going over this particular phase 2 study program, plus any catalysts to come out of it, it is first important to go over what non-small cell lung cancer is and what the possible market opportunity might be for it. Non-small cell lung cancer [NSCLC] accounts for between 80% to 85% of lung cancer, and then small cell lung cancer [SCLC] accounts for between 10% to 15% of all lung cancers. As you can see, the NSCLC patient population is the larger one to go after. How are the lungs affected for those with this disease? Well, such cancerous cells dividing uncontrollably start to develop solid tumor mass on the lungs, thus causing a host of symptoms for patients.
Some symptoms that these patients with Non-small cell lung cancer experience are as follows:
- Chest pain
- Coughing
- Wheezing [unable to breathe properly]
- Rapid unexplained weight loss
- Cough that won’t go away
- Trouble swallowing.
The global non-small cell lung cancer market size is projected to reach $36.91 billion by 2031. This is a pretty significant market opportunity, but it is important to consider that it is only focusing on targeting NSCLC patients who are stage III or IV. From what I found, it could be said that approximately between 20% to 35% of NSCLC cases are stage III. Even further, about 65.1% are found to be either stage III or IV at diagnosis. Despite an emphasis on only targeting patients with stage III or IV disease, this is still a pretty big market opportunity for Candel Therapeutics to go after.
The ongoing phase 2 study for this program is expected to recruit up to 90 NSCLC patients who have Stage III or IV disease. Plus, as I noted above, these are people who have failed to achieve an adequate response to ICI treatment. One caveat about this study being done is that it is not a randomized one. The goal is to see if CAN2409 + prodrug valacyclovir can improve mOS for these patients. An interim analysis released by the company back on September 26th of 2023 noted that patients who took this therapy, while still taking background ICI therapy, were able to extend their survival time frame. First, consider that patients who are given SOC ICI therapy alone only achieve a mOS of between 10 and 13 months.
Now that I have laid that out, consider what clinical findings were achieved out of 40 evaluable patients:
- 15 patients have lived ≥ 12 months
- 10 patients have lived > 18 months, of whom 70% [7/10] were alive as of last follow up
- All 4 patients [100%] with OS > 24 months were alive at last follow up, with the longest reaching 31.7 months [data cutoff August 1, 2023].
The point here is that adding CAN2409 + prodrug valacyclovir was able to extend mOS compared to that observed with historical ICI therapy alone. Why is it important to mention this program? That’s because there were another 18 out of the 40 evaluable patients who were a part of this study but had not yet reached the 12-month median follow-up protocol. I mention this because it is possible for the mOS number to improve. It won’t be long for you to see whether this number is improved upon. That’s because Candel Therapeutics expects to release updated results from this phase 2 study, using CAN2409 for the treatment of patients with stage III/IV NSCLC, any day now in Q2 of 2024.
If this OS data improves, plus is viewed positively by the stock market, then this is another catalyst that could cause the stock price to trade higher. Despite it having already climbed so much on the release of the positive pancreatic cancer treatment results, plus the Orphan Drug Designation just given by the FDA for CAN2409.
Financials
According to the 10-K SEC Filing, Candel Therapeutics had cash and cash equivalents of $35.4 million as of December 31st of 2023. To date, this biotech has been able to finance itself through convertible preferred stock to outside investors in private equity financings. It did have its IPO, which closed back on August 17th of 2021. That is when it raised net aggregate proceeds of about $79.1 million before deducting expenses. Plus, in February 2022, it borrowed up to $20 million under the Loan Agreement with SVB as well. The truth is that this biotech is going to need to dilute in the coming months.
Its cash burn is approximately $10.4 million per quarter, for starters. Not only that, but it estimates that it will only have enough cash on hand to fund its operations into Q4 of 2024. This is not a huge cash runway; thus, it will need to start looking at ways to raise additional funds.
I believe that it would elect to raise cash after another major milestone event. One such event could be the release of results from the phase 2 study using CAN-2409 for the treatment of patients with stage III/IV NSCLC. If such data is positive, then management would not hesitate to pull the trigger to raise additional funds.
Risks To Business
There are several risks that investors should be aware of before investing in Candel therapeutics. The first risk to consider would be regarding the advancement of CAN-2409 for the treatment of patients with Stage III/IV NSCLC in the ongoing phase 2 study. These are patients with an inadequate response to immune checkpoint inhibitor [ICI] treatment. There is no assurance that adding CAN-2409 plus prodrug valacyclovir or acyclovir with SOC ICI therapy [ant-PD-1/anti-PD-L1], will result in an improvement of overall survival [OS] for these patients.
The second risk to consider would be regarding the positive results that the company just released from its phase 2 study using CAN-2409 plus prodrug valacyclovir together with SOC chemoradiation followed by resection [surgery] for borderline resectable pancreatic ductal adenocarcinoma [PDAC]. Even though the combination of CAN-2409 plus prodrug was able to help patients achieve a median overall-survival [mOS] of 28.8 months, there is no assurance that a larger phase 3 study will achieve a similar outcome.
A third risk to consider would be regarding the two ongoing studies using CAN-2409 for the treatment of patients with prostate cancer. Again, one is a phase 3 study targeting low-to-intermediate-risk, localized, non-metastatic prostate cancer patients. The primary endpoint for this phase 3 study is disease-free survival [DFS] over an extended period of time. The other one is a phase 2 study targeting localized intermediate/high-risk prostate cancer patients. The primary endpoint for this study is going to look at biopsy-proven progression-free survival [PFS]. Upon data readouts from both of these studies, there is no assurance that each of them will be able to achieve their respective primary endpoints. Should neither of these studies achieve their primary efficacy outcome measures, then it is highly likely that the prostate cancer treatment program could be terminated entirely.
The fourth and final risk to consider would be regarding the advancement of CAN-3110, which is being advanced to treat patients with recurrent high-grade glioma in an ongoing phase 1b study. The thing is that Candel Therapeutics was already able to report positive results from this early-stage study using this drug for the treatment of this brain cancer patient population. Such positive phase 1b data was published in the Nature online medical journal back on October 18th of 2023.
Even though preliminary data showed this drug to extend survival for this patient population, there is no assurance that additional studies to be done afterward will achieve a similar outcome. Not only that, but the modality of CAN-2409 is to alter the tumor microenvironment [TME] leading to an improved immunological response. There is no guarantee that this drug will be able to achieve this end goal for the entire patient population, nor that it will be able to do so in other types of cancers either.
Conclusion
Candel Therapeutics, Inc. has done well to advance its main drug CAN-2409 for the treatment of patients with several types of cancers. This is evident with the most recent positive interim results that were just released from the phase 2 randomized study targeting patients with borderline resectable pancreatic ductal adenocarcinoma [PDAC]. The thing is that this company can add CAN-2409 with a prodrug along with SOC and achieve a very good outcome for such patients.
For instance, in the case of targeting these PDAC patients, it combined this adenovirus drug together with the prodrug valacyclovir along with chemoradiation followed by surgery to accomplish an improved mOS for them. The hope is that upon the release of results from the phase 2 study, using CAN-2409 together with SOC ICI treatment targeting patients with Stage III/IV NSCLC, that it can show an improved objective response rate [ORR] for these patients. With several positive developments accomplished recently, plus several other catalysts on the way during this year, I believe that Candel Therapeutics, Inc. investors could benefit with any potential gains made.
