MabVax Therapeutics Holdings Inc (NASDAQ: MBVX) announced early this morning that it has signed an asset acquisition and other related agreements surrounding the company’s program targeting multiple solid tumor cancers. As a result, the stock is up more than 3X, trading at $2.42 per share after gaining 310.17%. So, why is this asset sale such big news?
Digging Into The Details Of The MBVX Asset Sale
With the deal that was announced, MabVax Therapuetics will be selling off it’s program targeting a glycan that’s commonly seen as an overexpression in multiple solid tumor cancer types. The program and all rights to it are being sold to Boehringer Ingelheim for an upfront payment of $11 million. On top of the upfront payment, there are multiple milestones both in the near term and long-term that will generate payments. So, the asset has the potential to become an incredibly lucrative one. But does that really warrant gains of 3X?
The Most Important Part Of The Equation
Often times, when smaller biotechnology companies sell an asset with such a price tag, it’s the lead candidate at the company and includes rights that may affect the company’s ability to continue other clinical development programs without licensing back technology. That’s not the case here.
In fact, the asset being purchased is a distinctly separate program from others under development. Most importantly, the others include the company’s lead program, it’s HuMab-5B1 antibody program.
The company’s HuMab-5B1 antibody is an fully human antibody that was discovered from the immune response of cancer patients vaccinated with an antigen-specific vaccine drug during a Phase 1 clinical trial.
In collaboration with the Memorial Sloan Kettering Cancer Center, the 5B1 antibody has demonstrated both high specificity and affinity in preclinical studies. The treatment has also been proven in these preclinical studies to be a potent cancer kill that has shown efficacy an animal models of pancreatic, colon and small cell lung cancers.
Moreover, the potential indications surrounding this treatment are incredible. Through research in collaboration with the Memorial Sloan Kettering Cancer Center, the company has found that the treatment targets are expressed on various cancers. In particular, the target is expressed in more than 90% of pancreatic cancers as well as a significant portion of GI and Lung cancers.
It’s also important to note that the HuMab-5B1 antibody being developed by MBVX is being assessed as both a monotherapy and a combination treatment. The same antibody is also being developed as a diagnosis tool. In fact, when combined with radiolabel, the antibody becomes a potentially new generation PET imaging agent, which has been through a Phase 1a clinical trial.
The HuMab-5B1 antibody has very good tumor targeting capabilities and is internalized by pancreatic cancer cells. These important attributes have allowed us to use the HuMab-5B1 antibody as a tumor-targeting platform to create multiple products. The antibody itself has completed a Phase 1a clinical trial as a therapeutic agent. This same antibody, when combined with a radiolabel, is a potentially new generation PET imaging agent, which has also completed a Phase 1a clinical trial. We are also developing more potent HuMab-5B1 based products such as our lead program, a radioimmunotherapy product, where the antibody is combined with a cytotoxic radioisotope, and lastly, an antibody drug conjugate when combined with a toxin payload. While all of the mentioned products are based on the targeting capabilities of HuMab-5B1, each product has unique characteristics and potential uses for the treatment of multiple types of solid tumors.
So, while the acquisition announced today will pull one asset off of the table, the lead asset, and most promising candidate is still all in the hands of MBVX. As a result, the funds that come in the door as the result of today’s asset sale will give the company further financial leverage when it comes to progressing this impressive lead candidate.
Consider The Risks
Any time any investment or trade is made, there are risks that come with doing so. Here are some to consider in this case:
- Clinical Stages – First and foremost, it’s important to keep in mind that MabVax is currently a clinical stage biotechnology company, and an early stage company at that. Currently in the process of Phase 1 clinical trials, there are quite a few unknowns. While data so far shows strong efficacy and safety with regard to the company’s lead candidate, any mishap in clinical trials could lead to dramatic declines.
- Beware The Pullback – MBVX is up more than 300%. Sure, it’s for a good reason, but often times, when we see gains like this, the stock pulls back a bit before heading back on an upward trend. So, be careful buying at these levels.
Good, Bad or Ugly?
When it comes to the question, “Does MBVX look good, bad or ugly?”, I’d have to say that the company looks pretty good. With $11 million coming down the line very soon and potential near-term milestone payments, today’s sale strengthens the company’s balance sheet while giving it the ability to fucus more of its efforts and funding on its lead candidate, which seems to be promising. All in all, there are risks in early-stage biotechnology companies, but should the data continue to be positive as it rolls out, the rewards could be massive! I’d be a little worried about jumping it at these levels, but after the pull back, digging in may just be a good option.