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Posted On: 02/23/2020 8:40:25 PM
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a major reason I am investedCytoDyn In the Running as Trump's PrEP Replacement Plan
Prevention in HIV is all about keeping the viral load under 50 copies/mL, which the FDA considers an undetectable level and incapable of spreading the disease. As a once a week injectable, PRO 140 (leronlimab) offers convenience to the patient, virtually no side effects, and essentially keeps the virus away from the T-Cells and unable to replicate. Here's a nice analogy: HIV is like having little piranha in your blood that only eats T-Cells. The HAART treatment lets the piranha eat the T-Cell but slaughters most but not all of its offspring. Leronlimab, on the other hand, puts a Teflon coating around the T-Cells so the piranha have nothing to eat, so they die from malnutrition.
In a prevention setting, if a person at risk is given leronlimab and exposed to the virus the theory is that the virus will be blocked from replicating and eventually defenses in the body will break it down. This theory might even be applied to patients diagnosed with HIV. If this is done long enough perhaps the virus will eventually break down. Esteban Hernandez-Vargas said that " latently infected resting memory CD4+ T cells are the only cell type in which it has been clearly demonstrated that replication-competent virus can persist for several years in patients." Some patients have been on leronlimab for close to 5 years and at some point, this group of patients would be ideal for that sort analysis to see if they have in fact been cured.
The Thai Red Cross AIDS research center is initiating a PrEP clinical trial in subjects at high risk of HIV infection. Leading scientific advisor Dr. Jonah Sacha is conducting the research and CytoDyn has a Memorandum of Understanding with the Tai Red Cross to develop the HIV PrEP clinical trials. Sacha will also oversee the PrEP cure developments. Supporting PrEP and cure initiatives is the independent leronlimab data from the PRESTIGO Registry Study Group, which is to be presented at CROI. The people in this study are heavily treatment-experienced (HTE) patients that averaged at least 4-classes of drug resistance. The group of patients in this PrEP study are actually less sick than in the leronlimab phase 3 groups, where leronlimab managed to yield a whopping 90% responders rate. The PrEP responders rate to be announced at CROI might be very high. If the majority of HIV positive patients have no side effects, cannot transmit the disease, and has a fully functional immune system, this could be considered a functional cure, allowing Trump to claim a big win.
Gilead Maintains Dominance - But for How Long?
Throughout the article, little seeds have been planted to accentuate the case for a new player in HIV, who has a disruptive technology, backed by data on long term patients, who possibly could be cured with a drug that has little to no side effects. The CytoDyn story, once again, could be "too good to be true." However, the company is weeks away from a planned BLA submission that will result in a planned drug approval by June 2020, based on its rolling BLA and fast track status. In September, CytoDyn signed a non-binding licensing deal for $90 million from a major distributor. Once the drug is approved, the company has Samsung Biologics ready to provide them with up to $1.0 billion of inventory, based on anticipated drug prices, to meet the expected demand. CytoDyn also signed with distribution partners ready to market the drug. The pieces are in place for CytoDyn to start bringing in billions in revenue next year, except for one key thing. The company needs about $20 to $25 million to fund its operating costs while they are waiting for BLA approval over the next 6 months. This need for either a licensing deal or some type of financing seems to be dampening the enthusiasm for the technology as market participants await closure on financing terms or a licensing deal. It's been eerily quiet in the past two months because no big pharma company has made an even an overture toward what could be the most disruptive technology in the HIV space.
A Gilead investor might consider hedging his bets with the biggest threat in the HIV space. In a worst-case scenario for this investor, nothing happens and CytoDyn doesn't become a political football, then the investor can unwind the hedge after the CROI meeting. If something does happen then the hedge could be wildly profitable and even cover multiple situations included the licensing of the technology by a competitor. In all likelihood, the Trump lawsuit against Gilead could be much ado about nothing, as are most political events. However, can investors ignore 565 patients that were able to throw away their daily HAART regimen and defy big pharma? A 95% responder rate with prolonged remission and favorable safety is good enough to ignite a patient advocacy revolution, and as an investor, you don't want to be caught on the wrong side of the trade.
Investment Summary
There are a lot of theories floating out there about how to cure HIV and how to deal with the HIV epidemic. The big picture is that Trump seems stalwart in his approach about eradicating HIV, but therein lies the opportunity. The challenge to investors in the coming months leading up to the State of the Union is figuring out which horse is he going to back. Gilead is the largest HIV drug maker in the world and was the golden child in HIV until the Trump lawsuit hit. This lawsuit should serve notice to GILD investors that they have been targeted by Trump. There is a body of evidence to suggest that CytoDyn has the goods to be crowned the new innovator in HIV. It's definitely a long shot that Trump would elevate a $120 million market cap company as the frontrunner, but it is possible.
The most likely scenario would be Merck and ViiV jockeying for position in their efforts to get top billing and dethrone Gilead. Both of them could potentially negotiate with the administration, but its not clear which company might have the best strategy for PrEP. Whoever is perceived to have the inferior PrEP solution may be forced to seek a license from another PrEP drug maker; however, they would need a drug asset close to approval. Fortunately for CytoDyn, leronlimab approval is only about 6 months away, and if the technology is as robust as presented in this article, a licensee (Merck or ViiV) and CytoDyn could cobble together a viable PrEP program in months and then file for a label expansion.
If Gilead gets wind of this strategy, they might try to play "spoiler", which would be a great outcome for CytoDyn. Regardless, the bottom line is that Trump hit Gilead hard, and they could be on the ropes in the PrEP race. The question for investors is: does Gilead wake up in time to fight back, or does Merck, ViiV, or possibly a CytoDyn collaboration with one of them knock Gilead out?
Prevention in HIV is all about keeping the viral load under 50 copies/mL, which the FDA considers an undetectable level and incapable of spreading the disease. As a once a week injectable, PRO 140 (leronlimab) offers convenience to the patient, virtually no side effects, and essentially keeps the virus away from the T-Cells and unable to replicate. Here's a nice analogy: HIV is like having little piranha in your blood that only eats T-Cells. The HAART treatment lets the piranha eat the T-Cell but slaughters most but not all of its offspring. Leronlimab, on the other hand, puts a Teflon coating around the T-Cells so the piranha have nothing to eat, so they die from malnutrition.
In a prevention setting, if a person at risk is given leronlimab and exposed to the virus the theory is that the virus will be blocked from replicating and eventually defenses in the body will break it down. This theory might even be applied to patients diagnosed with HIV. If this is done long enough perhaps the virus will eventually break down. Esteban Hernandez-Vargas said that " latently infected resting memory CD4+ T cells are the only cell type in which it has been clearly demonstrated that replication-competent virus can persist for several years in patients." Some patients have been on leronlimab for close to 5 years and at some point, this group of patients would be ideal for that sort analysis to see if they have in fact been cured.
The Thai Red Cross AIDS research center is initiating a PrEP clinical trial in subjects at high risk of HIV infection. Leading scientific advisor Dr. Jonah Sacha is conducting the research and CytoDyn has a Memorandum of Understanding with the Tai Red Cross to develop the HIV PrEP clinical trials. Sacha will also oversee the PrEP cure developments. Supporting PrEP and cure initiatives is the independent leronlimab data from the PRESTIGO Registry Study Group, which is to be presented at CROI. The people in this study are heavily treatment-experienced (HTE) patients that averaged at least 4-classes of drug resistance. The group of patients in this PrEP study are actually less sick than in the leronlimab phase 3 groups, where leronlimab managed to yield a whopping 90% responders rate. The PrEP responders rate to be announced at CROI might be very high. If the majority of HIV positive patients have no side effects, cannot transmit the disease, and has a fully functional immune system, this could be considered a functional cure, allowing Trump to claim a big win.
Gilead Maintains Dominance - But for How Long?
Throughout the article, little seeds have been planted to accentuate the case for a new player in HIV, who has a disruptive technology, backed by data on long term patients, who possibly could be cured with a drug that has little to no side effects. The CytoDyn story, once again, could be "too good to be true." However, the company is weeks away from a planned BLA submission that will result in a planned drug approval by June 2020, based on its rolling BLA and fast track status. In September, CytoDyn signed a non-binding licensing deal for $90 million from a major distributor. Once the drug is approved, the company has Samsung Biologics ready to provide them with up to $1.0 billion of inventory, based on anticipated drug prices, to meet the expected demand. CytoDyn also signed with distribution partners ready to market the drug. The pieces are in place for CytoDyn to start bringing in billions in revenue next year, except for one key thing. The company needs about $20 to $25 million to fund its operating costs while they are waiting for BLA approval over the next 6 months. This need for either a licensing deal or some type of financing seems to be dampening the enthusiasm for the technology as market participants await closure on financing terms or a licensing deal. It's been eerily quiet in the past two months because no big pharma company has made an even an overture toward what could be the most disruptive technology in the HIV space.
A Gilead investor might consider hedging his bets with the biggest threat in the HIV space. In a worst-case scenario for this investor, nothing happens and CytoDyn doesn't become a political football, then the investor can unwind the hedge after the CROI meeting. If something does happen then the hedge could be wildly profitable and even cover multiple situations included the licensing of the technology by a competitor. In all likelihood, the Trump lawsuit against Gilead could be much ado about nothing, as are most political events. However, can investors ignore 565 patients that were able to throw away their daily HAART regimen and defy big pharma? A 95% responder rate with prolonged remission and favorable safety is good enough to ignite a patient advocacy revolution, and as an investor, you don't want to be caught on the wrong side of the trade.
Investment Summary
There are a lot of theories floating out there about how to cure HIV and how to deal with the HIV epidemic. The big picture is that Trump seems stalwart in his approach about eradicating HIV, but therein lies the opportunity. The challenge to investors in the coming months leading up to the State of the Union is figuring out which horse is he going to back. Gilead is the largest HIV drug maker in the world and was the golden child in HIV until the Trump lawsuit hit. This lawsuit should serve notice to GILD investors that they have been targeted by Trump. There is a body of evidence to suggest that CytoDyn has the goods to be crowned the new innovator in HIV. It's definitely a long shot that Trump would elevate a $120 million market cap company as the frontrunner, but it is possible.
The most likely scenario would be Merck and ViiV jockeying for position in their efforts to get top billing and dethrone Gilead. Both of them could potentially negotiate with the administration, but its not clear which company might have the best strategy for PrEP. Whoever is perceived to have the inferior PrEP solution may be forced to seek a license from another PrEP drug maker; however, they would need a drug asset close to approval. Fortunately for CytoDyn, leronlimab approval is only about 6 months away, and if the technology is as robust as presented in this article, a licensee (Merck or ViiV) and CytoDyn could cobble together a viable PrEP program in months and then file for a label expansion.
If Gilead gets wind of this strategy, they might try to play "spoiler", which would be a great outcome for CytoDyn. Regardless, the bottom line is that Trump hit Gilead hard, and they could be on the ropes in the PrEP race. The question for investors is: does Gilead wake up in time to fight back, or does Merck, ViiV, or possibly a CytoDyn collaboration with one of them knock Gilead out?
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