CDTX has now reacquired CD388 from Janssen. The deal includes an $85M upfront payment to Janssen, up to $150M in developmental/regulatory milestones, up to $455M in commercial milestones and NO royalties. CDTX had to compete against other companies for re-acquiring CD388. Details are not known, but it appears that the fact that CDTX was the only one able to start a ph2b soon enough (for the 2024-2025 Northern Hemisphere flu season) played a big role (note that a delay in starting the trial in time would mean having to wait for the next flu season). Also note that Janssen (or another acquiring company) would own considerable milestones plus royalties to CDTX in a scenario where another company would acquire the rights from Janssen (in other words, the total value of the deal for Janssen is higher than the sum of the above milestones).
CDTX now plans to start a ph2b trial in 2024. Details of the design/timeline are not known yet, but it appears that a readout is possible by mid-2025 if CDTX manages to start the trial soon enough to allow full enrollment during the upcoming flu season.
Details of the design/timeline of the planned ph2b will be revealed in the upcoming 1-2 weeks.
Important details to check are the following;
What is the planned timeline? Is the plan to completely enroll the ph2b in a single flu season
(meaning a readout in 2025) or will a 2nd season be necessary (meaning a readout in 2026)?
How many patients will be enrolled? This has multiple implications
(cost of the trial, timeline for completing enrollment, statistical power).
What will the comparator to CD388 be? Placebo? A flu vaccine? Will CD388 be used as an add-on to the flu vaccine? In a comparison with placebo, it will be easier to show benefit (less risky trial) but will be less compelling long term (unless efficacy is much higher than expected for flu vaccines, typically ranging between 40-60%). In a comparison with a flu vaccine, it will be harder to show benefits, but long-term commercial prospects will be much better if CD388 can show superiority over flu vaccination. I strongly believe that CD388 can show a benefit over vaccination, especially in the subset of patients that don't mount a good immune response, or even in seasons where vaccine strains are not well-matched to circulating flu strains.
What will the enrollment criteria be? Based on prior comments from CEO and expected benefit of CD388 I expect the trial to focus on high-risk (especially immunosuppressed) patients (i.e., those most likely to not mount a good enough immune response from vaccination, hence more likely to benefit from CD388).
What CDTX plans to do after the ph2b is unclear. Based on so far available data (discussed in prior coverages and the recent 10K) I expect the trial to be positive. Options for CDTX after that include:
proceeding to a ph3 alone... (which would mean need to raise considerably more cash)
or
new partnership / buyout... (which should be at much better terms following a positive ph2b).
Additional data presented on CD388
To sum up, the data presented in prior coverages (1, 2):
CD388 is safe, with only mild and transient adverse events among n=114 patients.
A single dose (either intramuscularly or subcutaneously) has a sufficient duration of action to cover the whole flu season.
CD388 was effective in reducing influenza virus replication and preventing influenza infection in a human challenge study.
The following additional pre-clinical data has been presented since my last coverages:
CD388 activity is driven by the antiviral activity of the small molecule neuraminidase inhibitor (NAI) attached to the Fc-fragment and not by the Fc-mediated effector functions. In other words, CD388 works as a long-acting antiviral and its activity is not dependent on an intact immune system (in contrast to vaccines).
CD388 is more potent in vitro compared to NAIs used in clinical practice (oseltamivir and zanamivir) and baloxavir.
CD388 retains activity against NAI-resistant strains.
In vitro activity translates to in vivo efficacy in a mouse model. Notably, CD388 was effective both prophylactically (administered before the influenza challenge) and for treatment (administered after influenza infection), even against NAI-resistant isolates. Furthermore, CD388 was more effective than currently used NAIs (oseltamivir and zanamivir). Finally, CD388 activity was preserved even at low doses and a low resistance potential was shown (both supporting the potential for prolonged protection from a single dose).
Financials
CDTX reported $35.8M in cash and cash equivalents as of December 31, 2023. Subsequently, in 2024 CDTX has received $11M and $2.8M in regulatory milestone payments associated with rezafungin. Furthermore, CDTX just raised 240M in gross proceeds from a private placement by issuing preferred stock (240,000 convertible preferred shares at a price of $1,000/share, conversion price $14.2/share). Subtracting the $85M upfront payment to Janssen, as well estimated (based on Q4 2023) $22M operating expenses (R&D $14.7M, SG&A $5.4M) during Q1 2024 CDTX should have around $180M in cash as of April 2024. Operating expenses have been relatively stable during 2022-2023, ranging from $20M-$25M per quarter. Total operating expenses were $84M in 2020, $91M in 2021, $94M in 2022 and $88M in 2023. Therefore, based on historical cash burn and above-estimated current cash balance, CDTX should have a runway of about 2 years.
However, right now, R&D expenses should be much lower, considering that CDTX has no ongoing clinical trials. On the other hand, R&D expenses will start rising again as soon as the ph2b trial starts, and will rise even more when oncology Cloudbreak assets enter the clinic. An accurate estimation of future cash burn is not possible until further guidance by CDTX on the timeline and details (e.g., number of patients) of planned clinical trials. CDTX plans to reveal more details on the ph2b within the next 1-2 weeks, which should help better inform the cash runway. What is important is that, according to CDTX, the cash runway is sufficient for the ph2b readout.
The above-mentioned $240M financing included top-tier institutional investors ("led by RA Capital Management with significant participation by Bain Capital Life Sciences as well as BVF Partners and Canaan Partners"). Although it means considerable dilution long-term (from the conversion of preferred stock to common stock), I think the overall news is very positive for CDTX. With CD388 now fully owned by CDTX, progress in the oncology pipeline and sufficient funding for the next milestones (ph2b readout and initiation of early-phase studies for CBO-421) I expect considerable upside for CDTX stock.
https://seekingalpha.com/article/4686881-cidara-therapeutics…