CytoDyn: The Best Is Yet To Come Jan. 2, 2020 9:0
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Posted On: 01/02/2020 9:12:42 AM
CytoDyn: The Best Is Yet To Come
Jan. 2, 2020 9:00 AM ET|1 comment | About: CytoDyn Inc. (CYDY)
Jannik Reiners
Jannik Reiners
Long only, Deep Value, contrarian, long-term horizon
(9 followers)
Summary
Shares rallied about 300% in December after the company announced a US HIV licensing deal with Vyera Pharmaceuticals.
The company plans to submit Part 2 and 3 of their BLA for leronlimab for HIV combo in January. Once accepted, the BLA should be approved in Q2 2020.
CytoDyn is making good progress with its cancer trials; a replication of the stunning results seen in the first two patients in a higher number of patients would be ground-breaking.
2020 is likely to be a transformational year for the company with many catalysts ahead.
If its potential in non-HIV indications like cancer, NASH, GvHD and MS (and other diseases where CCR5 is involved) is validated, leronlimab might turn out to be a mega-blockbuster.
Editor's note: Seeking Alpha is proud to welcome Jannik Reiners as a new contributor. It's easy to become a Seeking Alpha contributor and earn money for your best investment ideas. Active contributors also get free access to SA PREMIUM. Click here to find out more »
Introduction
Recently, shares of CytoDyn Inc. (OTCQB:CYDY) have rallied more than 300% on huge volume after the company announced a $87.5m licensing deal with privately-held Vyera Pharmaceuticals for their drug candidate leronlimab, a best-in-class CCR5 antagonist, for HIV in the US.
Since then, the company has aroused a great deal of interest and excitement among investors, new and old alike, after the stock had fallen sharply during the year due to numerous small dilutive raises and delays in the BLA submission.
Now that financial concerns have been significantly alleviated through the closing of the deal, with a market-cap of still only $350m, the stock has further room to appreciate and reach a more appropriate valuation given its vast potential in many different indications and how close it is to BLA submission and commercialization for HIV combo therapy.
In this article, I intend to briefly comment on some recent developments at CytoDyn and look at what might be ahead for the company in 2020. I won’t be covering all aspects, though, and readers should do their own DD to get the whole picture and make an informed investment decision.
Bullish Chart
Figure 1: CYDY 1Y daily chart
Source: Yahoo Finance
After the announcement of the licensing deal, the stock showed remarkable strength, blasting away several key resistance levels (50MA, 200MA; ~.80 resistance) with ease on huge volume. Since the stock failed to close above the psychologically important $1 threshold on both 27/12 and 30/12 after having climbed as high as $1.18 intraday, it seems possible that there will be a pullback to the ~.80 resistance level (now big support) and a consolidation between .80 and $1 until further fundamental catalysts materialize.
HIV licensing deal for the US
On December 17, CytoDyn inked a long-awaited licensing agreement with Vyera Pharmaceuticals for the marketing and commercialization of leronlimab in HIV-related indications in the US for $0.5m up-front and up to $87m in milestones plus 50% royalty on net sales. Additionally, Vyera made a $4m equity investment in the company.
While the exact amount of the milestone payments hasn’t been disclosed in the 8-k filing at this time, the company’s CEO, Dr. Nader Pourhassan, provided some hints in a Proactive Investors interview on December 18, and it seems that these payments are tailored to the payments owed to AbbVie and Progenics upon BLA filing ($0.5m to ABBV) and approval ($0.5m to ABBV; $5m to PGNX).
My initial response to the company’s deal with Vyera was somewhat muted when I discovered that the latter is a subsidiary of the notorious pharmaceutical company Turing Pharmaceuticals, founded and formerly run by the convicted and imprisoned criminal Martin Shkreli. However, despite several articles and rumours that Shkreli was still trying to pull the strings of Turing/ Vyera from prison, CytoDyn’s CEO assured investors that the company has performed sufficient due diligence on their partner and stated that Vyera’s new CEO, Averill Powers, who has an impressive background (e.g. having been Vice President of JPMorgan from 1998-2003), is fully in charge and highly committed to right the ship, while their salesforce is hungry and eager to sell the drug upon approval. Also, Nader confirmed that the price tag of leronlimab will be appropriate: $60k for combination therapy with a floor of $45k.
Although some concerns persist, for instance Vyera’s small salesforce, its shady past and questionable reputation, and the company therefore needs to prove itself to be a reliable partner, in my view there is no doubt that this deal is better than the alternative, i.e. no deal and having to raise at least $50m for commercialization at around .30, which would have resulted in a massive dilution of existing shareholders (about 200m shares + at least 50% warrant coverage). Under the licensing agreement, marketing and commercialization costs lie with Vyera and CytoDyn will receive COG + 10%.
Moreover, this deal brings some visibility and financial validation by an external party, and shows that management and BOD are capable of securing sources of non-dilutive financing after years of constant dilution under unfavourable terms. The closing of the deal has greatly helped to mitigate some of my remaining reservations and doubts outside of the science.
Sure, in an ideal world, CytoDyn would have found a reputable BP or mid-tier biotech company willing to enter and to disrupt the HIV market (with future success in monotherapy and PrEP), but apparently no interested party came up with an acceptable offer, probably relating to the royalties – 50% of net sales under the current deal are an impressive result of months of negotiations.
More importantly, CytoDyn’s management indirectly sends a powerful message to potential partners for future licensing deals (e.g. for NASH or GvHD): ~“We won’t entertain some paltry offers; if you’re interested in leronlimab, you’ll need to offer some serious money and fair conditions!”. It is encouraging to see that management and BOD, who are invested heavily in the company, won’t give leronlimab out of their hands for pocket money after having spent $200m+ on its development and bringing it to the finish line, and are committed to protecting long-term shareholder value.
Update on cancer
On December 23, CytoDyn provided an update on two patients of its ongoing cancer trials via a PR.
Further data from the first mTNBC patient continued to show no detectable circulating tumor cells (NYSE:CTC) or putative metastatic tumor cells in the peripheral blood, as well as additional reductions in CCR5 expression on cancer-associated cells at 11 weeks of treatment with leronlimab.
The second patient, enrolled through an emergency IND, is a stage 4 MBC patient with metastases to the liver, lung and brain. She received her first injection of leronlimab on November 25, with one 700 mg dose each week. The results from two subsequent scans of her metastatic lesions demonstrated shrinkage of the tumors at both timepoints following the first leronlimab injection, reduction in brain edema, and disappearance of several metastatic tumors.
While these results are early and in a low number of patients, they are extremely encouraging and confirm the extraordinary results of an animal study (98% CTC reduction in a humanized mouse model for a sustained period of time amounting to at least several years in humans). If the company succeeds in showing similar results in the next patients currently being screened and enrolled, this will amount to nothing less than a medical breakthrough for metastatic cancers, especially given the excellent safety-profile of leronlimab (no SAEs in more than 830 patients treated in HIV), and make the company extremely valuable and attractive to BP suitors obviously.
CytoDyn has already indicated that they intend to file for BTD in January given these promising results in a population of unmet medical need.
BLA submission for HIV combo – Part 2 and 3
During the CC on December 17, the company confirmed that they are on track to complete the last two parts of their BLA submission for HIV combination therapy in December/January pending the imminent FDA decision and feedback on the best dosage (525mg or 700mg).
Many Catalysts ahead in 2020
The next year has the potential to be truly transformational for the company and is extremely catalyst-rich. So, what can investors look forward to in 2020?
Completion of BLA submission for HIV-combo and BLA acceptance by the FDA, likely by January; approval and commercialisation in Q2, if BLA is successful.
Winding up of cancer trial enrolment given the positive preliminary results; more results from the first two patients; application for BTD; regulatory discussions with FDA for possible accelerated approval.
Finalization of Phase 3 protocol for HIV monotherapy and start of the pivotal trial.
Starting enrolment of GvHD Phase 2 study provided sufficient funding.
Start of the Thai Red Cross PrEP trial; coordination with Dr Sasha for funding for PrEP and HIV cure from the US army, Government, and Gates Foundation.
IND submission for a Phase 2 study in MS.
Design of a cancer basket trial (melanoma, pancreatic, lung, liver, breast, and prostate cancer).
Additional licensing deals for HIV in ex-US territories; licensing of leronlimab for NASH.
Undoubtedly, the most important catalysts and milestones are BLA complete submission for HIV combo, FDA approval and a successful product launch in Q2.
Since the company’s financial situation is still relatively week, it is vital that the BLA is flawless to avoid a CRL. However, given that the company had enough time to oversee the submission process, and in the light of the excellent efficacy and safety data of leronlimab, the involvement of Samsung Biologics for the manufacturing part, and the FDA assurance that they adamantly want leronlimab approved, I view a CRL as quite unlikely, although there is no certainty in the world of biotech.
Furthermore, I believe that once submitted, the FDA will take substantially less time than six months to review the BLA and approve leronlimab under priority review, since under the rolling review process, Part 1 of the BLA had already been submitted in March and the FDA already took a look at the 525mg and 700mg safety and efficacy data to decide the optimum dosage for the BLA. My target date for a possible approval is end of April.
Before I continue, please allow me a critical side-note as to FDA's handling of the regulatory/BLA submission process of HIV combination therapy, i.e. requesting more safety data for higher dosages: since leronlimab had shown excellent efficacy and safety at 350mg dosage (81% with surpressed viral load after 24 weeks), compared to e.g. 43% suppression of Ibalizumab at 24 weeks or Maraviroc with 45% at weeks 24 and 48, which all have a significantly worse safety profile than leronlimab, in my humble opinion, FDA should have granted accelerated approval for 350mg and requested a Phase 4 study for a 525mg and 700mg label expansion instead, given that the population of MDR2+ patients is still one of significant unmet medical need.
When approved, CytoDyn’s partner Vyera will need to prove that it can effectively market and sell leronlimab. There are a couple of considerations that make me optimistic that the launch will succeed:
First, the company at this time merely seeks a label in an unmet medical need population, namely MDR2+ patients (MDR2 patients with limited options and MDR3 patients), where few or no competitors exist, but which is by no means a small niche market (as per company presentation, based on the independent BioVid Market Research report, at least 50k-100k patients in the US).
Second, the pricing of $60k per year (with an option to go down to $45k) seems reasonable enough when compared to e.g. Ibalizumab (MDR3, $120k per year).
Third, leronlimab’s safety, efficacy and adherence profile is outstanding, making it a future best-in-class treatment for HIV.
Last, the strong HIV-lobby and community with well-informed and educated people makes it seem likely that patients will be prepared to try a superior product. I could even foresee some patients trying it as a monotherapy, given the findings of the investigative mono trial that patients could safely return to their HAART therapy.
So, even under conservative assumptions regarding number of patients treated and market penetration, it seems fairly certain that peak annual sales for combo alone, not factoring in the likely success of monotherapy, will surpass the current market cap by a significant amount (the company itself calculates the revenue rage for combo by using 70% of the low and high end of BioVid’s research, and projects 2.1b and 4.2b respectively).
Figure 2: Market Potential in HIV for leronlimab
Source: Corporate presentation
The second most important milestone for 2020 will be the closing of another licensing deal in order to ramp up cancer and GvHD trials, as well as pivotal mono, since the company is only funded until February and will need to raise additional funds after that.
CytoDyn has already indicated that they expect significant interest from BPs for the licensing of leronlimab for the treatment of NASH in the light of the recent positive results of an animal study, and that they seek to do a deal with larger up-front payment with lower royalties this time.
Due to the fact that the recent rally of the stock makes it much easier to raise funds with an acceptable amount of dilution, the company is now in a much stronger negotiation position. Also, the exercising of warrants at. .30 and .50 might bring in additional funds.
Closing remarks
Much more can be said about CytoDyn and leronlimab. I had originally planned to do a brief synopsis of leronlimab and its science, but luckily, a recent excellent contribution from user trding at the Investors Hangout (IH) CYDY message board (message #13623) containing an extensive fact-sheet about the company and leron-limab, as well as many links and extensive references to scientific papers, has released me from this difficult task, and I gladly refer interested readers to it and the IH board in general, which has many brilliant and friendly contributors like trding, misiu143, ohm20, sjacobs26 (and others), who know the company and its science much better than I ever could. The whole article has greatly profited from their posts and insights, and I recommend visiting the board to everyone interested in CytoDyn.
Without a doubt, 2020 will be a crucial and transformative year for CytoDyn. If everything goes as planned, the company will achieve a historic milestone and become a revenue company. Moreover, enrolment in the cancer trials should speed up and over the course of the next few months investors will know whether the encouraging results of the first two patients can be reproduced at a larger scale in a higher number of patients over a sustained period of time.
In my humble opinion, at $350m market cap, the company is still severely undervalued - accounting for HIV combination therapy only. If leronlimab turns out to be a "platform drug" for cancer, GvHD, MS, NASH and many other diseases and indications where CCR5 is involved (e.g. Inflammatory Bowel Diseases, Atherosclerosis, Diabetes and Stroke), as management believes it to be and many scientific papers indeed suggest, the drug is likely to become a mega-blockbuster over the course of the next decade and perhaps one of the most important molecules of the 21st century. Of course, the immense potential must still be proven in further clinical trials, but therein lies the buying opportunity.
All in all, shareholders of CytoDyn have every right to be excited about what 2020 will bring for their company. While management has been known for their overpromise and underdeliver approach in some areas, eventually they tend to get everything done and, most importantly, they have recognized the immense value of leronlimab and are not prepared to give it away for pennies, which admittedly has caused a lot of dilution and suffering of long-term shareholders, but might turn out to have been the exactly right decision for the "endgame".
While there are still certain risks associated with the company, e.g. regarding FDA approval process and financing, I strongly believe in the prospects of CytoDyn and leronlimab and am convinced that the company has a bright future ahead of it.
A recent SA contributor opined that CytoDyn is “too good to be true”. I strongly disagree, since I believe that the best it yet to come for the company and that it is about to write medical history.
To conclude, I would like to reiterate a fitting quote from the recent corporate presentation:
"Sometimes it is the people no one can imagine anything of who do the things no one can imagine."
– Alan Turing
Disclosure: I am/we are long CYDY. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Additional disclosure: I own 80,000 shares at .47 average.
Jan. 2, 2020 9:00 AM ET|1 comment | About: CytoDyn Inc. (CYDY)
Jannik Reiners
Jannik Reiners
Long only, Deep Value, contrarian, long-term horizon
(9 followers)
Summary
Shares rallied about 300% in December after the company announced a US HIV licensing deal with Vyera Pharmaceuticals.
The company plans to submit Part 2 and 3 of their BLA for leronlimab for HIV combo in January. Once accepted, the BLA should be approved in Q2 2020.
CytoDyn is making good progress with its cancer trials; a replication of the stunning results seen in the first two patients in a higher number of patients would be ground-breaking.
2020 is likely to be a transformational year for the company with many catalysts ahead.
If its potential in non-HIV indications like cancer, NASH, GvHD and MS (and other diseases where CCR5 is involved) is validated, leronlimab might turn out to be a mega-blockbuster.
Editor's note: Seeking Alpha is proud to welcome Jannik Reiners as a new contributor. It's easy to become a Seeking Alpha contributor and earn money for your best investment ideas. Active contributors also get free access to SA PREMIUM. Click here to find out more »
Introduction
Recently, shares of CytoDyn Inc. (OTCQB:CYDY) have rallied more than 300% on huge volume after the company announced a $87.5m licensing deal with privately-held Vyera Pharmaceuticals for their drug candidate leronlimab, a best-in-class CCR5 antagonist, for HIV in the US.
Since then, the company has aroused a great deal of interest and excitement among investors, new and old alike, after the stock had fallen sharply during the year due to numerous small dilutive raises and delays in the BLA submission.
Now that financial concerns have been significantly alleviated through the closing of the deal, with a market-cap of still only $350m, the stock has further room to appreciate and reach a more appropriate valuation given its vast potential in many different indications and how close it is to BLA submission and commercialization for HIV combo therapy.
In this article, I intend to briefly comment on some recent developments at CytoDyn and look at what might be ahead for the company in 2020. I won’t be covering all aspects, though, and readers should do their own DD to get the whole picture and make an informed investment decision.
Bullish Chart
Figure 1: CYDY 1Y daily chart
Source: Yahoo Finance
After the announcement of the licensing deal, the stock showed remarkable strength, blasting away several key resistance levels (50MA, 200MA; ~.80 resistance) with ease on huge volume. Since the stock failed to close above the psychologically important $1 threshold on both 27/12 and 30/12 after having climbed as high as $1.18 intraday, it seems possible that there will be a pullback to the ~.80 resistance level (now big support) and a consolidation between .80 and $1 until further fundamental catalysts materialize.
HIV licensing deal for the US
On December 17, CytoDyn inked a long-awaited licensing agreement with Vyera Pharmaceuticals for the marketing and commercialization of leronlimab in HIV-related indications in the US for $0.5m up-front and up to $87m in milestones plus 50% royalty on net sales. Additionally, Vyera made a $4m equity investment in the company.
While the exact amount of the milestone payments hasn’t been disclosed in the 8-k filing at this time, the company’s CEO, Dr. Nader Pourhassan, provided some hints in a Proactive Investors interview on December 18, and it seems that these payments are tailored to the payments owed to AbbVie and Progenics upon BLA filing ($0.5m to ABBV) and approval ($0.5m to ABBV; $5m to PGNX).
My initial response to the company’s deal with Vyera was somewhat muted when I discovered that the latter is a subsidiary of the notorious pharmaceutical company Turing Pharmaceuticals, founded and formerly run by the convicted and imprisoned criminal Martin Shkreli. However, despite several articles and rumours that Shkreli was still trying to pull the strings of Turing/ Vyera from prison, CytoDyn’s CEO assured investors that the company has performed sufficient due diligence on their partner and stated that Vyera’s new CEO, Averill Powers, who has an impressive background (e.g. having been Vice President of JPMorgan from 1998-2003), is fully in charge and highly committed to right the ship, while their salesforce is hungry and eager to sell the drug upon approval. Also, Nader confirmed that the price tag of leronlimab will be appropriate: $60k for combination therapy with a floor of $45k.
Although some concerns persist, for instance Vyera’s small salesforce, its shady past and questionable reputation, and the company therefore needs to prove itself to be a reliable partner, in my view there is no doubt that this deal is better than the alternative, i.e. no deal and having to raise at least $50m for commercialization at around .30, which would have resulted in a massive dilution of existing shareholders (about 200m shares + at least 50% warrant coverage). Under the licensing agreement, marketing and commercialization costs lie with Vyera and CytoDyn will receive COG + 10%.
Moreover, this deal brings some visibility and financial validation by an external party, and shows that management and BOD are capable of securing sources of non-dilutive financing after years of constant dilution under unfavourable terms. The closing of the deal has greatly helped to mitigate some of my remaining reservations and doubts outside of the science.
Sure, in an ideal world, CytoDyn would have found a reputable BP or mid-tier biotech company willing to enter and to disrupt the HIV market (with future success in monotherapy and PrEP), but apparently no interested party came up with an acceptable offer, probably relating to the royalties – 50% of net sales under the current deal are an impressive result of months of negotiations.
More importantly, CytoDyn’s management indirectly sends a powerful message to potential partners for future licensing deals (e.g. for NASH or GvHD): ~“We won’t entertain some paltry offers; if you’re interested in leronlimab, you’ll need to offer some serious money and fair conditions!”. It is encouraging to see that management and BOD, who are invested heavily in the company, won’t give leronlimab out of their hands for pocket money after having spent $200m+ on its development and bringing it to the finish line, and are committed to protecting long-term shareholder value.
Update on cancer
On December 23, CytoDyn provided an update on two patients of its ongoing cancer trials via a PR.
Further data from the first mTNBC patient continued to show no detectable circulating tumor cells (NYSE:CTC) or putative metastatic tumor cells in the peripheral blood, as well as additional reductions in CCR5 expression on cancer-associated cells at 11 weeks of treatment with leronlimab.
The second patient, enrolled through an emergency IND, is a stage 4 MBC patient with metastases to the liver, lung and brain. She received her first injection of leronlimab on November 25, with one 700 mg dose each week. The results from two subsequent scans of her metastatic lesions demonstrated shrinkage of the tumors at both timepoints following the first leronlimab injection, reduction in brain edema, and disappearance of several metastatic tumors.
While these results are early and in a low number of patients, they are extremely encouraging and confirm the extraordinary results of an animal study (98% CTC reduction in a humanized mouse model for a sustained period of time amounting to at least several years in humans). If the company succeeds in showing similar results in the next patients currently being screened and enrolled, this will amount to nothing less than a medical breakthrough for metastatic cancers, especially given the excellent safety-profile of leronlimab (no SAEs in more than 830 patients treated in HIV), and make the company extremely valuable and attractive to BP suitors obviously.
CytoDyn has already indicated that they intend to file for BTD in January given these promising results in a population of unmet medical need.
BLA submission for HIV combo – Part 2 and 3
During the CC on December 17, the company confirmed that they are on track to complete the last two parts of their BLA submission for HIV combination therapy in December/January pending the imminent FDA decision and feedback on the best dosage (525mg or 700mg).
Many Catalysts ahead in 2020
The next year has the potential to be truly transformational for the company and is extremely catalyst-rich. So, what can investors look forward to in 2020?
Completion of BLA submission for HIV-combo and BLA acceptance by the FDA, likely by January; approval and commercialisation in Q2, if BLA is successful.
Winding up of cancer trial enrolment given the positive preliminary results; more results from the first two patients; application for BTD; regulatory discussions with FDA for possible accelerated approval.
Finalization of Phase 3 protocol for HIV monotherapy and start of the pivotal trial.
Starting enrolment of GvHD Phase 2 study provided sufficient funding.
Start of the Thai Red Cross PrEP trial; coordination with Dr Sasha for funding for PrEP and HIV cure from the US army, Government, and Gates Foundation.
IND submission for a Phase 2 study in MS.
Design of a cancer basket trial (melanoma, pancreatic, lung, liver, breast, and prostate cancer).
Additional licensing deals for HIV in ex-US territories; licensing of leronlimab for NASH.
Undoubtedly, the most important catalysts and milestones are BLA complete submission for HIV combo, FDA approval and a successful product launch in Q2.
Since the company’s financial situation is still relatively week, it is vital that the BLA is flawless to avoid a CRL. However, given that the company had enough time to oversee the submission process, and in the light of the excellent efficacy and safety data of leronlimab, the involvement of Samsung Biologics for the manufacturing part, and the FDA assurance that they adamantly want leronlimab approved, I view a CRL as quite unlikely, although there is no certainty in the world of biotech.
Furthermore, I believe that once submitted, the FDA will take substantially less time than six months to review the BLA and approve leronlimab under priority review, since under the rolling review process, Part 1 of the BLA had already been submitted in March and the FDA already took a look at the 525mg and 700mg safety and efficacy data to decide the optimum dosage for the BLA. My target date for a possible approval is end of April.
Before I continue, please allow me a critical side-note as to FDA's handling of the regulatory/BLA submission process of HIV combination therapy, i.e. requesting more safety data for higher dosages: since leronlimab had shown excellent efficacy and safety at 350mg dosage (81% with surpressed viral load after 24 weeks), compared to e.g. 43% suppression of Ibalizumab at 24 weeks or Maraviroc with 45% at weeks 24 and 48, which all have a significantly worse safety profile than leronlimab, in my humble opinion, FDA should have granted accelerated approval for 350mg and requested a Phase 4 study for a 525mg and 700mg label expansion instead, given that the population of MDR2+ patients is still one of significant unmet medical need.
When approved, CytoDyn’s partner Vyera will need to prove that it can effectively market and sell leronlimab. There are a couple of considerations that make me optimistic that the launch will succeed:
First, the company at this time merely seeks a label in an unmet medical need population, namely MDR2+ patients (MDR2 patients with limited options and MDR3 patients), where few or no competitors exist, but which is by no means a small niche market (as per company presentation, based on the independent BioVid Market Research report, at least 50k-100k patients in the US).
Second, the pricing of $60k per year (with an option to go down to $45k) seems reasonable enough when compared to e.g. Ibalizumab (MDR3, $120k per year).
Third, leronlimab’s safety, efficacy and adherence profile is outstanding, making it a future best-in-class treatment for HIV.
Last, the strong HIV-lobby and community with well-informed and educated people makes it seem likely that patients will be prepared to try a superior product. I could even foresee some patients trying it as a monotherapy, given the findings of the investigative mono trial that patients could safely return to their HAART therapy.
So, even under conservative assumptions regarding number of patients treated and market penetration, it seems fairly certain that peak annual sales for combo alone, not factoring in the likely success of monotherapy, will surpass the current market cap by a significant amount (the company itself calculates the revenue rage for combo by using 70% of the low and high end of BioVid’s research, and projects 2.1b and 4.2b respectively).
Figure 2: Market Potential in HIV for leronlimab
Source: Corporate presentation
The second most important milestone for 2020 will be the closing of another licensing deal in order to ramp up cancer and GvHD trials, as well as pivotal mono, since the company is only funded until February and will need to raise additional funds after that.
CytoDyn has already indicated that they expect significant interest from BPs for the licensing of leronlimab for the treatment of NASH in the light of the recent positive results of an animal study, and that they seek to do a deal with larger up-front payment with lower royalties this time.
Due to the fact that the recent rally of the stock makes it much easier to raise funds with an acceptable amount of dilution, the company is now in a much stronger negotiation position. Also, the exercising of warrants at. .30 and .50 might bring in additional funds.
Closing remarks
Much more can be said about CytoDyn and leronlimab. I had originally planned to do a brief synopsis of leronlimab and its science, but luckily, a recent excellent contribution from user trding at the Investors Hangout (IH) CYDY message board (message #13623) containing an extensive fact-sheet about the company and leron-limab, as well as many links and extensive references to scientific papers, has released me from this difficult task, and I gladly refer interested readers to it and the IH board in general, which has many brilliant and friendly contributors like trding, misiu143, ohm20, sjacobs26 (and others), who know the company and its science much better than I ever could. The whole article has greatly profited from their posts and insights, and I recommend visiting the board to everyone interested in CytoDyn.
Without a doubt, 2020 will be a crucial and transformative year for CytoDyn. If everything goes as planned, the company will achieve a historic milestone and become a revenue company. Moreover, enrolment in the cancer trials should speed up and over the course of the next few months investors will know whether the encouraging results of the first two patients can be reproduced at a larger scale in a higher number of patients over a sustained period of time.
In my humble opinion, at $350m market cap, the company is still severely undervalued - accounting for HIV combination therapy only. If leronlimab turns out to be a "platform drug" for cancer, GvHD, MS, NASH and many other diseases and indications where CCR5 is involved (e.g. Inflammatory Bowel Diseases, Atherosclerosis, Diabetes and Stroke), as management believes it to be and many scientific papers indeed suggest, the drug is likely to become a mega-blockbuster over the course of the next decade and perhaps one of the most important molecules of the 21st century. Of course, the immense potential must still be proven in further clinical trials, but therein lies the buying opportunity.
All in all, shareholders of CytoDyn have every right to be excited about what 2020 will bring for their company. While management has been known for their overpromise and underdeliver approach in some areas, eventually they tend to get everything done and, most importantly, they have recognized the immense value of leronlimab and are not prepared to give it away for pennies, which admittedly has caused a lot of dilution and suffering of long-term shareholders, but might turn out to have been the exactly right decision for the "endgame".
While there are still certain risks associated with the company, e.g. regarding FDA approval process and financing, I strongly believe in the prospects of CytoDyn and leronlimab and am convinced that the company has a bright future ahead of it.
A recent SA contributor opined that CytoDyn is “too good to be true”. I strongly disagree, since I believe that the best it yet to come for the company and that it is about to write medical history.
To conclude, I would like to reiterate a fitting quote from the recent corporate presentation:
"Sometimes it is the people no one can imagine anything of who do the things no one can imagine."
– Alan Turing
Disclosure: I am/we are long CYDY. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Additional disclosure: I own 80,000 shares at .47 average.
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