Arcellx: Speculative Buy For Their CAR-T Cell Therapy (NASDAQ:ACLX) – Seeking Alpha

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Arcellx (NASDAQ:ACLX) is a clinical-stage biotech whose stated goal is to develop potentially "safer, more effective, and more broadly accessible" CAR-T cell therapies for cancers and incurable diseases.

For anyone who is unfamiliar with CAR-T cell therapy, the following is an easy-to-understand explanation from National Cancer Institute.

cancer.gov

Simply put, CAR T-cell therapy is using & equipping patients' own T-cells to recognize, tag, and destroy cancer cells.

Currently, there are six CAR-T cell therapies approved by the FDA to treat five types of refractory* or relapsed* blood cancers (see below), including relapsed or refractory multiple myeloma (r/r MM).

*Note: Refractory means a cancer has stopped responding to treatments; Relapsed means a cancer has come back.

cancer.gov

Before I dive into ACLX's data in r/r MM, I would like to cover briefly what the company says about its underlying technology, which ACLX believes has the potential to produce "Best-in-Class" CAR-T cell therapies.

In order for a CAR-T cell therapy to work, the engineered T-cells, capable of expressing cancer-specific CAR (Chimeric Antigen Receptor), need to accomplish two very important tasks:

1. to recognize and tag the cancer cells by binding to the target antigen, e.g. CD19, BCMA, that is highly expressed on the surface of cancer cells;

2. once that part is done, the engineered T-cells then are activated (or signaled) to kill the tagged cancer cells.

According to the National Institute of Cancer, much innovation has taken place on the signaling part (that's inside the T-cells), see below.

cancer.gov

According to ACLX, their innovation is on the Antigen-binding domain (on the outside of T-cells, called D-Domain, which is smaller and more stable than the binding domains of other CAR-T therapies (below, slide 6).

ACLX thinks that these differences in the binding domain can potentially lead to improvements in safety, efficacy, and availability of their ddCAR T-cell therapy which they called ARC- (Antigen Receptor Complex) T cells.

ACLX June 2022 presentation

Furthermore, ACLX believes their ARC-T cell therapy can work with their second proprietary platform, called ARC-SparX platform.

SparX [proteins] stands for soluble protein antigen-receptor X-linker.

ACLX believes that this platform can develop novel CAR-T cell therapies that, unlike the current ones, are "dosable, controllable, and adoptable" T-cell therapies.

For anyone interested, there is a ~2min video on the company website explaining how ARC-SparX is supposed to work.

ACLX website

The cell (in light blue) with light blue tags on the outside represents the ARC-T cells.

The upside-down Y shape thing represent SparX proteins which have two ends, i.e. the Universal-tag end (a white-ish tag) that binds to ARC-T cells, and antigen-receptor end (in purple) that binds to the antigens (in pinkish color) on cancer cells.

So patients are dosed with SparX proteins that are designed to recognize and bind to antigen on cancer cells on the one end and bind to ARC-T cells on the other hand, which would activate the ARC-T cells to kill the tagged cancer cells.

In theory, SparX will recognize and bind to antigens that are specific to each cancer, and ARC-T cells are only activated when bound to SparX which are already bound to cancer cells.

Therefore by controlling SparX proteins, e.g. dose or antigen-receptor design, ACLX believes that such ARC-SparX T-cell therapy can potentially be " dosable, controllable, and adoptable", i.e. one-time infusion of ARC-T cells, but different doses or antigens of SparX proteins, if necessary.

I find this rationale very interesting and I can see it being very impactful & beneficial as a cancer treatment if successfully developed.

Let us now turn to the results presented at the 2022 ASCO meeting that seems to have impressed the market.

ACLX announced the presentations at ASCO on Friday, June 3, which must have impressed the market, as on Monday, June 6, the stock of ACLX rose 20%, i.e. from $13.09 to $15.79, see below.

ACLX 5-day chart ending on June 7, 2022 (Seeking Alpha)

The table below lists the headlines from ACLX's r/r MM p1 trial:

(Source: Emphasis by author)

To put these data in context, ACLX presents a table comparing their results with other approved MM treatments (see below):

ACLX presentation

As can be seen above, relative to other approved treatments for MM, ACLX's lead candidate CART-ddBCMA showed very promising efficacy and safety data so far, i.e. best ORR (100%), best safety (0% in Grade3/4 CRS [Cytokine release syndrome]).

Perhaps the strong efficacy and safety r/r MM p1 data so far explains the enthusiastic price action by the market.

More on this next.

According to ACLX, MM is the third most common blood cancer, affection 100,000 patients per year, and total addressable market by T-cell therapy is around $10B, see below.

ACLX ASCO 2022 presetation

It is important to remember ACLX's r/r MM data, though very promising, are early data, which means that one cannot assume too much.

In the same PR, the company mentioned that a pivotal p2 trial is on track to start by YE 2022, and if the pivotal trial is successful, the company anticipates BLA (Biologic License Application) filing to take place in 1H 2025 (slide 10).

As discussed in these market reports (here, here), CART-ddBCMA's early data seem to be "in-line" with the current CAR-T therapy leader, Carvykti, from Johnson & Johnson (JNJ) and Legend Biotech (LEGN).

A bullish outlook will be that CART-ddBCMA, continues to report positive data both in p1 & pivotal p2 trial, and ultimately be approved & commercialized.

As seen above, CART-ddBCMA has the potential to be safer and more effective than the currently available MM treatments, CAR-T or other therapies.

If so, then CART-ddBCMA will no doubt be very competitive in this space, translating in a significant potential upside.

For example, LEGN's lead CAR-T cell therapy, Carvykti, was approved in March 2022, and LEGN is currently valued at $7.09B (on June 7), 15 times ACLX's $467M market cap.

Or even if it's only comparable, as availability of CAR-T therapies is a rate-limiting step (more demand than the supply), a newly approved CAR-T should still be making very meaningful contribution to MM patients.

Significant risks to the investment thesis include but are not limited to: disappointing p1 & p2 data or trial failures, delays or difficulties in manufacturing, CMC (chemistry, Manufacturing, Control) data, delays or failures in regulatory process, dilution risks, etc.

According to the latest 10Q (page 18), as of March 31, 2022, ACLX had cash and cash equivalents and marketable securities of $210.9 million and a net loss of $32.4M in Q1, 2022.

The company believes the cash position is "adequate to fund operations into the second half of 2023".

This article on ACLX marks a personal-first for me: it's my first SA article covering a cancer drug. In the past, I have largely stayed away from the oncology space, due to very high failure rate of cancer trials.

Hopefully, this marks the beginning of something good.

As I have expressed many times in my past bullish articles, small clinical-stage biotech stocks are highly speculative and price action volatile. While good news does not always send the stock upwards, bad news will certainly send it down.

In the recent days, the short-term price action of the whole biotech sector is even more volatile and seemingly driven by anything but company-specific material news, as seen in ACLX's 1 year chart.

ACLX 1-year chart ending on June 7, 2022 (Seeking Alpha)

While it is very encouraging to see a clearly positive move to ACLX's r/r MM data, there is no guarantee that this stock, has turned to a sustainable up-trend.

With this in mind, please invest prudently with only money you are prepared to lose, if after doing your own due diligence, you find the upside potential suits your risk tolerance and investment time frame.

Thanks for reading and wishing you all the best!

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Arcellx: Speculative Buy For Their CAR-T Cell Therapy (NASDAQ:ACLX) - Seeking Alpha