Autolus Therapeutics and F-Star Therapeutics in the spotlight
(including updates on Eloxx Pharmaceuticals and Jounce Therapeutics)
Biotech (XBI) is back under $125 after a small September rally. On biotech weakness, we’re looking to buy companies on our watchlist or add to existing position. A list of companies in each category are below:
Watchlist
Autolus Therapeutics (AUTL) – Buy under $6/share
AUTL is a next-gen CAR-T play that is targeting blood cancers. Their lead candidate AUTO1, currently in Phase 1a/2, is targeting relapsed/refractory adult acute lymphocytic leukemia (ALL) as a 2nd/3rd line treatment.
The existing CAR-T players (GILD/NVS/BMY) use a high affinity binder that targets the CD19 antigen found on leukemia cancers. This means that the CAR-T cell would target the cancer cell and bind it longer than necessary. As a result, the CAR-T cell offers great efficacy, but is over-activated and leads to inflammation (a sign of toxicity) and T-cell exhaustion (a sign of short persistence). These are two challenges for CAR-T: toxicity and non-durable responses.
AUTL believes that using a lower affinity binding receptor for shorter binding can overcome the inflammation and persistence challenges.
Their data thus far has shown to tackle the existing two challenges of CAR-T (toxicity/durability). Obe-cel has a favorable safety profile, despite treating heavily pre-treated patients with high disease burden (2nd-3rd line). On the durability front, obe-cel has shown 50% event free survival (EFS) at 24 months, compared to sub-30% for peers.
So why does AUTL trade at an EV of $250M? Their technology is boring autologous (own cells expanded outside body and re-introduced) compared to the newer allogeneic (off-the-shelf cells from donors). The allogeneic cell therapy companies like FATE and ALLO receive premiums that AUTL doesn’t, even though AUTL has superior data. Manufacturing potential makes less economic sense with AUTL.
Data trumps all in biotech. At such a low valuation, we think AUTL is a compelling buy. They will report additional blood cancer data at ASH in December.