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$SELB - Selecta Biosciences

$SELB – Selecta Biosciences

Overview:

Selecta Biosciences is a clinical-stage biopharma company focused on oppressing the body’s immune response to make therapies more efficient.  They are combining their tolerogenic Synthetic Vaccine Particles (SVP) to multiple therapies for rare diseases.  They currently have 5 products in their pipeline which range from SVP-enabled enzymes and oncology, to gene therapies.  Based out of Watertown, MA, just outside Boston, the company hopes to treat patients that currently have ineffective or are completely lacking treatments. 

The company not only has a US base, but they also have a subsidiary in Moscow, Russia which is building a pipeline of targeted immunotherapies and vaccines in oncology and infectious diseases.  This is being developed off of their SVP candidates and their hope is to expand their portfolio of immunotherapies in conjunction with the research and development occurring in Boston.

The company has multiple collaborations going on currently because of their SVP product which interacts with the immune system and induces antigen-specific immune responses.  This broad application of the SVP products allows them to collaborate with other companies to test the compatibility of the SVP with their therapies. 

The collaborations that Selecta has are with 3SBio, Duke University Medical Center, Genethon, International Centre for Genetic Engineering and Biotechnology, Massachusetts Eye and Ear, National Cancer Institute, National Human Genome Research Institute, National Institute on Drug Abuse, and the Skolkovo Foundation. 

Pipeline:

Representing a robust pipeline, this company currently has five different candidates ranging from Preclinical to Phase II while targeting several different therapeutic areas. 

SEL-212 – Chronic Severe Gout

SEL-403 – Pancreatic Cancer and Mesothelioma

SEL-302 – Methylmalonic Acidemia (MMA) – Gene Therapy

SEL-313 – Ornithine Transcarbamylase

Hemophilia A - Gene Therapy - provided Spark Therapeutics with exclusive worldwide rights.

While most of the products are in the Preclinical Phase, there is one in Phase II and another in Phase I.  Our main focus however is on SEL-212, Tophaceous Gout, which is expected to present Phase II five-monthly dose data at the ACR meeting with a pivotal trial to begin Q4 2018.  SEL-212 is a monthly treatment consisting of pegsiticase, a potent uric acid lowering uricase enzyme, administered alongside SVP-Rapamycin to prevent ADA (anti-drug antibodies) which might otherwise compromise the medications safety and efficacy. 

Specific Drug:

SEL-212 so far in clinical trials has demonstrated that it has the capability to significantly lower serum uric acid levels down to those conductive to rapid tophi dissolution and the reduction of flares and other symptoms. 

Currently being studied for the treatment of chronic severe gout, the drug candidate shows great promise.  Chronic severe gout presents itself as a high burden of inflammatory nodules of crystalized uric acid (tophi) that have no response to current medications.  This often leads to debilitating flares, gouty arthritis, and a low quality of life.  SEL-212 aids the drug being administer in conjunction by avoiding adverse reactions due to immunogenicity.

Recently the company presented expanded data from patients receiving up to 0.15 mg/kg of SVP Rapamycin with 0.2/0.4 mg/kg of pegsiticase from its Phase 2 trial of SEL-212, designed to be the first non-immunogenic version of uricase.  The data reported that patients receiving three monthly doses of SEL-212 up to 0.15 mg/kg of SVP-Rapamycin in combination with 0.2/0.4 mg/kg of pegsiticase, followed by two monthly doses of pegsiticase alone.  Roughly 81% of evaluable patients (n=27) had serum uric acid control below 6 mg/dL at week 12, which indicates a great response in bringing patients down to normal uric acid levels which range up to 6.0 mg/dL for females and 7.0 mg/dL for males.  Gout is typically defined as a serum uric acid concentration above 7 mg/dL.  Comparatively, in a separate study of the only FDA-approved uricase therapy, 44% of evaluated patients had serum uric acid control below the 6 mg/dL benchmark at week 16.  27% of all current patients in the SEL-212 Phase II trial experienced gout flares during the first month after treatment with continued reduction of gout flare rates over months two to five.  This represents a massive decrease in gout flare ups when compared to the FDA-approved product for uricase. 

The previous data almost concretely demonstrated SEL-212’s potential ability to change the chronic severe gout treatment paradigm by providing better and more sustained serum uric acid control, fewer flares, and less frequent dosing compared retrospectively to the only FDA-approved product.  This upcoming data set has the potential to demonstrate the extended benefit of utilizing SEL-212 in chronic severe gout patients with high medical needs and pave the path to initiating the Phase III trial which is expected to start in Q4 of 2018. 

Phase II data is meant to represent safety of the drug candidate and to see if it is tolerable.  SEL-212 has been generally tolerable at clinically active doses following repeated administrations in the trial, with 17 serious adverse events, 9 of which were reported to not be related to the study drug, 8 were infusion reactions previously reported, and one was an infusion reaction.  No infusion reactions have been reported following the second treatment cycle and all serious adverse events were successfully treated.

Market and Competition:

As previously mentioned, there is only one product on the market that is FDA-approved for uricase, which as the data above demonstrates is much inferior to the current data being presented for SEL-212.  There are over 8 million individuals in the US alone that have gout, with 160,000 suffering from chronic severe gout and are seen by rheumatologists.  Affecting their daily activities and quality of life, over 34% of individuals describe their flares as severe burns and 28% describe it as painful as breaking a bone.  Astonishingly, on average for patients under the age of 65 there are 25 lost work days each year due to lost productivity from severe gout flares. 

The market of gout therapeutics is going to boom in coming years.  Expected to reach a valuation of $8.3 billion by 2025 and growing at a CAGR of 16.1%, the treatment of SEL-212 shows promise to take hold of a massive share in the market.  The market growth is attributed to the major urate-lowering agents, approval of effective biologics, and increasing number of individuals suffering from chronic gout.  Currently because of the lack of effective treatments, Nonsteroidal Anti-inflammatory Agents (NSAIDs) accounted for the highest share of the market in 2015, which can be credited to highest penetration, higher demand due to low cost, and efficient pain relief.  With the biggest market currently in the US, we are expecting to see a boom in the Asian markets mostly due to increasing quality in health care and better diagnosis of the disease.

The biggest competition in the market includes most notably Horizon Pharma’s gout drug Krystexxa, but also Takeda, Novartis, Savient, AstraZeneca, GSK, Merck, Teijin, and Regeneron.

Finances:

The company has been granted a buy rating with high price expectations by several groups.  This shows promise and great sentiment towards the stock, with their data it is likely they will see high share price in the near future.  The company is however financially stressing at this point.  Their products are all in early stages of development with the exception of the Phase II candidate.  Their chief medical officer also resigned this year with no explanation at the time, causing a bit of worry. 

Their second quarter financial results produced no revenues, down from Q2 2017 due to the company’s grants and collaborations.  Expenses increased by 30% YOY when you compare quarters, a value of $18.8 million for the quarter which resulted in a net loss of $0.84 per share and missing expectations by $0.16. 

As it stands, the company has $66.2 million in cash and cash equivalents and believes that this will be sufficient to fund operations through to Q3 2019.   The current operating plan accounts for funding in preparation for the planned Phase III clinical trial for SEL-212 and initial patient enrollment into a couple of Phase III clinical trial sites, but the company will require an additional equity offering or other external sources of capital to expand enrollment in the Phase III trial and to conduct the planned head-to-head trial against Krystexxa.

Review:

This company has a promising pipeline and drug.  The data from the SEL-212 trials so far is incredible when compared to the market competition.  Selecta has several great collaborations with their candidate drugs and has presented almost nothing but good data.  They are making strides in markets that are in demand and have no effective or proper treatments for patients.  They fill an unmet need that will demand a market presence. 

However, beware.  The company is currently in a financial rut, with funds to push operations through for not even the next year, DILUTION IS IMMENENT.  The company will need to raise capital by completing an offering in order to fund their Phase III trials.  I would be absolutely weary of a dilution coming within days of positive news mid October when they present their updated Phase II data.  It would be the perfect time to complete an offering during high investor sentiment as it shows promise and will draw in new investor base.

Earlier Event: October 19
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Later Event: October 19
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