BriaCell Therapeutics: High-Potential In Phase 3 Metastatic Breast Cancer, But Financing Concerns

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BriaCell Therapeutics' lead candidate, Bria-IMT, shows promising trial results for metastatic breast cancer, potentially doubling overall survival and median progression-free survival.Despite a market...

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Warrant"},"translate_title":"BriaCell Therapeutics：转移性乳腺癌3期潜力巨大，但融资问题","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"BCTX":0.9,"BCTXW":0.9},"content_text":"BriaCell Therapeutics' lead candidate, Bria-IMT, shows promising trial results for metastatic breast cancer, potentially doubling overall survival and median progression-free survival.Despite a market cap below $30 million, BriaCell could tap into a $1-$5 billion market upon approval, with valuations between $1-$2 billion.Financing and shareholder dilution remain significant concerns, with recent offerings raising $18.5 million but also massively increasing the share count.The coming months may be interesting as the company moves closer to Phase 3 data.Analyst target of $15 implies over 1,000% upside; I maintain a Buy rating despite near-term financing uncertainties due to strong long-term potential.Maskot Thesis I have covered BriaCell Therapeutics (NASDAQ:BCTX) (NASDAQ:BCTXW) (TSX:BCT:CA) before in January 2023, and I am reissuing a Buy recommendation based on recent news and the latest progress. The company is currently in a Phase 3 trial with Bria-IMT for metastatic breast cancer, with a potential interim analysis in the second half of 2025. A potential BLA submission could then follow in the first half of 2026. Bria-OTS is an earlier-stage asset with high potential in a Phase 1/2 trial. Although the company's progression from a Phase 2 trial into a Phase 3 trial on the basis of consistent data has been impressive, and the thesis is still intact, the stock has come down strong since my previous coverage. The company's market cap is close to $30 million at the time of writing. In case of success, the company counts on a $1-$5 billion market to open up in case of approval. My valuation exercise leads me to possible valuations in between $1 and $2 billion. However, financing and shareholder dilution seem to be the issue here. The company has done repeated offerings over the past months, which allow it to continue operations, and may continue to do so going forward. From that perspective, chances are reasonable that the stock rerates considerably going into the potentially pivotal year 2025. Right now seems like a good time to cover the stock, with a big catalyst less than twelve months away. Company BriaCell Therapeutics (BCTX) (BCTXW) is a Canadian biotech company focused on developing treatments against various solid tumors, by using replication-incompetent and engineered cell lines against tumors. The market performance of this stock over the past five years has been outright abominable. Five-year stock chart (Google) Its lead therapy candidate is Bria-IMT, and its second therapy candidate is Bria-OTS. BriaCell has received FDA fast track designation for Bria-IMT for the treatment of metastatic breast cancer. Bria-IMT and Bria-OTS are different to many other therapies because they stimulate the patient's innate immune system by way of an irradiated cancer cell line which they have subsequently engineered. Bria-IMT is a late-stage asset in Phase 3 trials, and Bria-OTS had its Phase 1/2 trial recently initiated. The FDA granted Bria-IMT fast-track designation on the basis of its tolerability profile and overall survival data, improving that reported in literature by 50% or more. Since my last coverage, the company is now focusing on getting its lead candidate to market in breast cancer, instead of initiating trials in a variety of solid tumors. This is its current development and catalyst timeline. Development timeline and catalysts (Corporate Presentation) This is the company's full pipeline. BriaCell pipeline (Corporate Presentation) Bria-IMT Bria-IMT is a replication-incompetent allogeneic cell line derived from a breast cancer cell. It expresses HLA class I and II molecules, which may make patients with matching HLA classes more susceptible to successful treatment. The goal of Bria-IMT is to let it be recognized by the body's immune system, and to boost the immune response by secreting GM-CSF. Bria-IMT MoA (BriaCell) The HLA system encodes cell surface molecules that present antigens for T-cells. People have different HLA types. Bria-IMT presents HLA class I and II molecules, and better responses have been seen in patients with matching HLA types. Good safety profile Several tests have now been performed with BriaCell-IMT, and in each of them, no significant adverse events have been noted, apart from injection site irritation. The therapy candidate has a perfect tolerability profile. Consistent trial results show a near twofold increase in overall survival Across trials so far, Bria-IMT has shown consistency in prolonging overall survival in patients. On average, that consistency leads to about a double in overall survival and median progression-free survival compared to historical controls, if patients are treated with the Phase 3 formulation, and much higher clinical benefits seen across cancer types. Otherwise, there is still a benefit compared to historical controls, but less. This was a trial in heavily pretreated patients who had failed more than 3 prior therapy attempts, meaning these patients are very end-stage. BriaCell's Phase 2 trial tested patients on Bria-IMT combined with two checkpoint inhibitors, pembrolizumab and retifanlimab, and did so with and without IFN-γ. The dosing without IFN-γ produced better results and showed consistent results in different types of breast cancer. In summary, with the Phase 3 dosing regimen, overall survival of patients on Bria-IMT with checkpoint inhibitors without IFN-γ was 15.6 months compared to 5.9-9.8 months, meaning about 7.85 on average, for historical controls. Overall survival slide (Corporate Presentation) Median progression-free survival was 3.9 months compared to 1.6-2.5, meaning 2.05 on average, in the literature. In the slide below, contrary to the one above, orange indicates the group on the Phase 3 formulation. mPFS slide (Corporate Presentation) Furthermore, clinical benefit was seen in 55% of evaluable patients across different types of breast cancer, compared to only 7-10% as mentioned in literature. The April 2024 press release even mentioned progression-free survival of 4.2 months in ADC resistant patients receiving the Phase 3 formulation and a clinical benefit rate of 56%. Comparison with other trial results (Corporate Presentation) On October 22, 2024, the company reported that 55% of patients remained alive one year after initiating therapy, and several patients had a survival of over 2 years. Phase 2 data, October 2024 (October 22, 2024 press release) The aforementioned Phase 2 trial results were also entirely consistent with previous trials, in which Bria-IMT had each time shown superiority to existing therapies. I refer to my previous coverage in that respect. Already in December 2021, BriaCell had presented data showing for patients on checkpoint inhibitors from three different trials in patients who had failed on average 5 to 6 prior regimens. The data showed an overall survival of 12 months, mPFS of 4.2 months and DCR of 33%. SABC 2021 conference data (BriaCell) The combination with checkpoint inhibitors appeared superior to monotherapy, and even better results were seen in HLA-matching patients. HLA-matching leads to better response (BriaCell) The combination therapy with checkpoint inhibitors makes sense, as Bria-IMT activates the immune system while checkpoint inhibitors neutralize immune suppression. Reason for Bria-IMT combination with checkpoint inhibitors (Corporate Presentation) Interestingly, also, efficacy of Bria-IMT is even seen in intracranial tumors, showing efficacy of Bria-IMT across the blood-brain-barrier. the company has reported on several occasions on the complete resolution of an 'eye-bulging' tumor in a patient who had failed 8 prior regimens, the ongoing regression of an intracranial tumor in another patient, and an 83% intracranial objective response rate. Intracranial response examples (BriaCell ASCO 2024 slides) The ongoing Phase 3 trial BriaCell has a pivotal Phase 3 trial underway in metastatic breast cancer which, in case of positive results, could result in full approval. This trial was initiated in October 2023. This trial combines Bria-IMT with a checkpoint inhibitor. This is the design of that pivotal study, with overall survival as its primary endpoint. Phase 3 design (Corporate Presentation) The study will enroll a total of 354 patients. The pivotal part of the study compares Bria-IMT with a checkpoint inhibitor as the physician's treatment of choice, but the trial also has a Bria-IMT alone arm. The last reported update on this trial is that it has 35 active sites, with additional sites in various stages of startup, and that enrollment is expected to be completed mid-2025. An interim readout which could give way to full approval is scheduled for mid-2025. That readout will be made on the basis of 144 occurrences of death - 144 'events' - which can then allow comparison between overall survival in any of the Bria-IMT regimens and overall survival when treated by the physician's choice. As part of Bria-IMT's Fast Track Designation program, the FDA has also authorized an expanded access policy for metastatic breast cancer patients outside of the scope of the Phase 3 clinical trial. Bria-OTS trial in breast cancer underway, and prostate cancer start imminent As mentioned above, Bria-IMT performs better in HLA-matching patients, and Bria-OTS has been developed exactly in line with that understanding. Bria-OTS is an off-the-shelf therapy which is essentially an HLA-matching version of Bria-IMT, with different HLA-subtypes for a personalized treatment. Bria-OTS, among other things, works by activating natural killer cells to counter cancer immune escape caused by the loss of human leukocyte antigens (HLA). Bria-OTS has been given different names depending on the type of cancer that is being targeted. Bria-BRES+, Bria-PROS+, Bria-LUNG+ and Bria-MEL+ are the names for breast cancer, prostate cancer, lung cancer and melanoma respectively. A Phase 1/2a study is underway in advanced metastatic breast cancer since May 2024, both as monotherapy and in combination with PD-1 inhibitor tislelizumab. In September 2024, BriaCell announced a positive pre-IND meeting with the FDA for a trial initiation in prostate cancer, during which the FDA has waived the animal toxicology and animal pharmacokinetic (PK) studies requirement for opening the IND. The hope is to start a Phase 1/2 trial for prostate cancer in the first half of 2025. Both trials should deliver continuous patient data over the course of the years 2025 and 2026, and the company hopes to launch additional trials in melanoma and lung cancer over that same period. Valuation At the time of writing, BriaCell has a market cap slightly below $30 million. In light of Bria-IMT's Phase 3 trial and Bria-OTS's Phase 1/2 in metastatic breast cancer, I believe one can focus on breast cancer for now. The global breast cancer market size is almost $32 billion, and grows with a CAGR of about 10%, with 264,000 cases being diagnosed in women in the US each year. About 40,000 deaths from breast cancer are reported each year. About 150,000 women in the U.S. alone develop breast cancer each year, of which about 45% will receive third line therapy, which would mean there are about 68,000 patients eligible for treatment with Bria-IMT. Recently approved breast cancer treatments cost $16,000 per month on average. Approval could be as early as 2026. Assuming a treatment of one year, that could mean $160,000 in revenue per patient. Peak market penetration of 5,000-10,000 patients per year would in such case generate annual sales revenue of in between $800 million and $1.6 billion. The median EV/revenue multiple for biotech companies in 2023 was close to 13. But even with a 5x multiple on $500 million in peak sales revenue, discounted back for three years at a 20% discount rate, the company should still have a discounted value of $1 billion. With higher potential peak sales, the market cap should logically increase proportionally. A peak sales assumption of $1 billion could lead to a $2 billion valuation. Below is an overview of marketed therapies on the basis of their objective response rates and progression-free survival, showing that these therapies generated between $1.1 and $25 billion in revenue in 2023. Market opportunities (BriaCell corporate presentation) There is currently only one analyst covering BriaCell, Emily Bodnar of H.C. Wainwright, with a current price target of $15, which represents a 1,820% upside and represents about $500 million. In September 2024, that price target was still $18. Analyst price target - 1,820% upside (Seeking Alpha) Logically, in case of success, the stock could be revalued even higher. However, the above valuation analysis does not include the financing situation BriaCell is facing. That situation seems to be the issue keeping the stock from attracting more investors, as I will explain below. Finances According to the latest quarterly report, BriaCell had only $0.9 million in cash at the end of April 2024 as compared to $21 million at the end of July 2023. At that time, about 15 million shares had been issued, similar to the number of shares that were issued in the framework of my previous coverage. Cash burn was $27.3 million in 2023, which would be about $2.25 million per month. The company has done several offerings in May, September and October of 2024 for a total of $18.5 million. These three financings have added 2,402,935, 12,325,000 and 5,128,500 common shares respectively, or a total of 19,856,435 million shares. At the cash burn rate of 2023, the company may have already burnt through about $13.5 million of its financings by the end of October 2024, leaving only $5 million remaining which could cover another two months of operations. The above-mentioned financings also included warrants to purchase up to an aggregate of 2,402,935 common shares at $2.11 per share, exercisable as of November 2024, and 5,128,500 warrants at a $0.85 per share exercise price exercisable immediately. Once the share price goes above $0.85, I assume these warrants could start being exercised. As a result, shareholder dilution has been massive recently and may continue to be massive going forward. According to the latest corporate presentation for autumn 2024 made in October 2024, BriaCell had 35.8 million shares outstanding, 2.1 million options with a weighted average exercise price of $6.16 and 16.6 million warrants with a weighted average exercise price of $3.45. BriaCell also has an AI collaboration with ImmunoPrecise Antibodies (IPA) following which it would need to pay $500,000 in case of successful anti-cancer antibody discovery. I actually own shares of IPA, but am not sure whether this collaboration has already amounted to something. If it did, then some of the above financing would need to go to IPA. Risks BriaCell has not received approval for its treatments yet. The competition in the oncology space is high, and good results from a competitor may lower expectations for success and commercialization for Bria-IMT or Bria-OTS. The trial can also not meet its endpoints, in which case a more difficult path to approval would await the company, and other regulatory hurdles could occur along the way. The company is ramping up trials, which may mean its cash burn accelerates. The stock is trading under a dollar for the moment, but apparently has not received a warning from the SEC yet in that respect. If it does, it has six months to fix that situation, although that period can often be prolonged. The company can also elect to do a reverse-stock-split to become more attractive to investors. Finally, BriaCell's stock can be highly volatile. In September 2024, it rocketed 150% on Positive Phase 2 data. At the time of writing, the stock is up 15% premarket on a positive further update from the Phase 2 trial. Conclusion Bria-IMT has consistently presented excellent results across different subtypes of metastatic breast cancer, doubling overall survival and median progression-free survival compared to literature. The latest news, reported on October 22, 2024, is that 55% of patients remained alive one year after initiating therapy, and several patients had survival of over 2 years. This data is in line with previous therapies in late-stage terminally ill breast cancer patients. Data from the Phase 3 trial is scheduled to be reported in the second half of 2025. That makes the upcoming months particularly interesting. The company now also has a trial with Bria-OTS ongoing, entitled Bria-BRES+, and hopes to initiate a trial with Bria-OTS in prostate cancer in the first half of 2025. Data from these trials could come in over the course of 2025 and 2026. If BriaCell Therapeutics were successful in its Phase 3 trial in metastatic breast cancer, a market with $1-$5 million in revenue potential could open up. My fair value analysis leads to a potential market cap at this time of in between $1 and $2 billion. The issue here is financing. The company has recently picked up $18.5 million in financing, thereby more than doubling the outstanding share count at price above and below the dollar. According to my estimations, the company has about two months worth of cash to continue operations at this time, and its latest financing included more than 5 million of warrants that were exercisable immediately at an exercise price of $0.85. Cash burn was $27.3 million in 2023, and with all trials ongoing, I do not see that going down in the foreseeable future. As a result, further financings and further dilution may be imminent. There is an analyst target of $15 on the stock, representing a more than 1,000% upside. My analysis comes to the same conclusion. However, with the current financing and dilution concerns, it is unclear what lies ahead for investors in the near term. All-in-all, the chances of success and the potential revaluation as a result outweigh the risks here in my eyes, which is why I am giving the stock a Buy rating.  Editor's Note: This article covers one or more microcap stocks. 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