Monte Rosa: Novartis Deal Bolsters MGD Platform With Flush Of Cash

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Monte Rosa Therapeutics, Inc. secured a $150 million upfront partnership with Novartis to develop MRT-6160 for immune-mediated conditions, with a potential $2.1 billion in milestone payments.Initial ...

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Enough to fund its operations into the 1st half of 2027.gorodenkoff/iStock via Getty Images Monte Rosa Therapeutics, Inc. (NASDAQ:GLUE) was able to establish a partnership deal with Novartis AG (NVS) to develop a molecular glue degrader [MGD] drug known as MRT-6160 for the treatment of immune-mediated conditions. More details about this massive deal are below, but the premise is that it was able to obtain an upfront cash payment of $150 million because of it, along with other good items. The importance of this program is that MRT-6160 is currently being explored in healthy volunteers in the ongoing phase 1 single-ascending dose [SAD] / Multiple-Ascending dose [MAD] study for such immune-elation to another related disorders. The key question to ask is why should investors care after this deal with Novartis has already been established? That's because there is another catalyst on the horizon for investors to look forward to, which is the release of data from this ongoing early-stage trial. It is expected that the company will release initial data from this phase 1 SAD/MAD study in Q1 of 2025. From there, it is possible for further shareholder value creation on the back of this program. This is because positive data from this could lead to new proof-of-concept studies targeting specific autoimmune disorders like ulcerative colitis [UC], rheumatoid arthritis [RA] and other autoimmune disorders. Believe it or not, but there is another expected milestone for investors to track as well. This would be in relation with another MGD candidate being developed, known as MRT-2359 for the treatment of patients with MYC-driven solid tumors in an ongoing phase 1/2 study. It is expected that the finding of the recommended phase 2 dose [RP2D] and updated results from this trial will be released in the 2nd half of 2024 any day now. With a partnership established with Novartis to further develop MRT-6160 for immune-mediated conditions, along with the continued advancement of MRT-2359 for MYC-driven solid tumors, I believe that investors could benefit from any potential gains made here. MRT-6160 Partnership Deal Brings On Board A Lot Of Cash To Help Fund MGD Pipeline As I stated above, Monte Rosa Therapeutics was able to establish a licensing partnership agreement with big pharma Novartis regarding a clinical candidate known as MRT-6160. This specific candidate is currently being tested in the ongoing phase 1 SAD/MAD study of healthy volunteers for immune-mediated disorders. The goal here is likely to eventually target a multitude of autoimmune disorders. However, since the company notes that the initial ones it might look into initiating mid-stage studies for are Ulcerative Colitis and Rheumatoid Arthritis, then these are the two I want to go over first. Ulcerative Colitis [UC] is a type of autoimmune disorder characterized by inflammation and ulcers that form in the digestive tract of a patient. The specific parts of the digestive tract that suffer from these problems would be the colon and rectum. The issue with this disorder is that there is something known as symptoms flare-ups. That is, there are symptoms that just arise out of nowhere for a brief period and then disappear. This type of issue regarding symptoms of this disorder happens on and off. Some types of symptoms that these patients with UC experience are as follows:  Diarrhea Sudden type of weight loss occurring Urgent need to release bowel movements Blood in stools Mild or severe belly cramping.  The global ulcerative colitis market size is projected to grow to $10.77 billion by 2032. This is one considerable market opportunity that may ultimately be targeted by MRT-6160. The second candidate that the company is thinking about going after with its MGD candidate, would be Rheumatoid Arthritis [RA]. This is an autoimmune disorder characterized by inflammation or damage to the joints. Where the immune system is supposed to help the body fight off infections, instead targets the patient's own tissues on joints. The main parts of the body that are affected by this disorder would be the hands and feet. However, believe it or not, it could also have an impact on other types of organs in the body. Other parts of the body that might be impacted by it are: the heart, lungs, blood vessels, eyes, and skin. The global rheumatoid arthritis drugs market size is expected to reach $53.1 billion by 2031. This is another good opportunity for the biotech, but to be in a position to initiate several proof-of-concept studies for them, it needs to first achieve success in the phase 1 SAD/MAD study. To see if MRT-6160 can be effective in targeting immune-mediated disorders, it is in the process of running the ongoing phase 1 SAD/MAD study. This early-stage study is expected to recruit up to 76 patients who are to be tested with both dose types of cohorts [SAD/MAD]. The thing about this clinical candidate is that it takes advantage of the company's molecular glue degrader [MGD] technology platform. The drugs are designed using this MGD platform to degrade proteins using the body's natural protein degradation system. In turn, this modulates and/or eliminates the protein in question. What makes this platform unique is that it is looking to be the opposite of small molecule inhibitor drugs, in that it can go after undruggable target indications. In the case of MRT-6160, it is specifically designed to modulate the VAV1 protein expression. What's so special about this protein? This specific protein modulates downstream activity of T-cell and B-cell receptors, which in turn reduces cytokine activity. Cytokines are necessary for autoimmune disorders to function, thus reducing/eliminating them is likely to have a massive impact on being able to effectively treat them. Some autoimmune disorders to be targeted could be UC, RA, and many others. The first patient was dosed in this phase 1 SAD/MAD study back on August 19th, 2024. The importance of this program is the fact that initial data from it, using MRT-6160 in healthy volunteer patients, will be released in Q1 of 2025. This VAV-directed MGD is going to establish initial biomarker data such as looking at specific biomarkers like CD69, IL-2, IL-6, and IL-17. This data will be important to see if the mechanism of action [MOA] of MRT-6160 can achieve its goal of VAV1 protein degradation. The best part of all is the ability for this company to provide a drug capable of targeting VAV1 expression of only blood and immune cells like T-cells and b-cells, without having any type of impact on another protein. If it ends up working out for this company, then it would have a safe/oral drug with MRT-6160 being able to go after T-cell and T-cell/B-cell mediated disorders like big pharma companies. For instance, HUMIRA from AbbVie Inc. (ABBV) and ENBREL from Amgen Inc. (AMGN) are said to produce estimated sales of $10 billion by 2030 in immune and inflammatory indications only. The point is that Monte Rosa Therapeutics is using a differentiated approach to targeting such autoimmune disorders. Thus, competitive advantages for it would be being able to give MRT-6160 as an oral drug, along with the possibility of having a far safer/effective approach. Of course, it first has to be proven that this drug's MOA works in degrading the VAV1 protein effectively. This will be important because it will bring about a new way of being able to target autoimmune disorders with an entirely different method completely. Remember the term undruggable target proteins? Well, VAV1 is a type of protein that takes advantage of the GEF-independent signaling pathway. That is, it is a dual GEF and scaffolding protein never before targeted. If all goes well, then this will bring about two other catalysts for investors to focus on. This would be the eventual initiation of two mid-stage studies using MRT-6160 as a VAV1 MGD targeting such patients as RA and UC. Novartis Agreement Brings A Large Amount Of Cash To Fund MGD Pipeline The thing is that Monte Rosa Therapeutics could have been able to develop MRT-6160 alone in the ongoing phase 1 SAD/MAD study of healthy volunteers for immune-mediated disorders. However, a big pharma company appeared to have been intrigued with this VAV1 MGD candidate. Having said that, Novartis entered into a global license agreement to help develop this candidate for autoimmune disorders. As part of this agreement, Monte Rosa Therapeutics received an upfront $150 million payment because of it. Even better, if several items like development, regulatory, and sales go well regarding MRT-6160, then it could even possibly obtain up to $2.1 billion as milestone payments. The downside though, if you consider it to be, would be that the small-cap will still be responsible for completing the phase 1 study first. If all is well, then Novartis will take over the development of this program starting with the phase 2 study. Further progress, such as a phase 3 study, will be done in a co-funding fashion, along with sharing profits and costs in the United States. Another item to note about this deal is that it is not just MRT-6160 being developed alone as part of this deal. It states in the agreement that this candidate and other VAV1 MGDs can be developed under it. Thus, it might be possible for further development of other MGDs targeting this VAV1 protein. Hopefully, the MGD program technology can be further enhanced upon. The truth is that this Novartis deal to advance this type of technology isn't the only one. There was another collaboration license agreement made with Roche Holding AG (OTCQX:RHHBY) back in October 2023, whereby both companies would develop MGDs targeting cancer and neurological disorders. Monte Rosa Therapeutics received an upfront $50 million payment as part of this deal and could be eligible to earn up to $2 billion in milestone payments. Both of these deals signify the potential of using MGDs to target undruggable protein targets. However, this technology was also made possible by the small-cap biotech's Quantitative and Engineered Elimination of Neosubstrates [QuEEN] platform. This uses artificial intelligence [AI] & machine learning [ML] to selectively target precise MGDs capable of deep modulation of pathways for disorders. Thus, the most recent Novartis deal and prior to Roche deal encapsulate the ability of the MGD technology with the QuEEN platform to develop successful oral clinical drug candidates. Financials According to the 10-Q SEC Filing, Monte Rosa Therapeutics had cash, cash equivalents, restricted cash and marketable securities of $267.1 million as of June 30th, 2024. The company is in excellent shape in terms of cash on hand, and this is because of the cash projection that it currently has. It believes that this will be enough cash on hand to fund its operations, or cash runway, into the 1st half of 2027. This will be enough to make it through several expected clinical milestones over the coming years. However, the stock is trading higher by 63% on the back of the news of the partnership agreement with Novartis. Despite the sufficient cash runway, there are times when management takes advantage of significant share price rises such as this. Having said that, it is quite possible that management may choose to raise additional funds now regardless of the expected cash on hand it has. Risks To Business There are several risks that investors should be aware of before investing in Monte Rosa Therapeutics. The first risk to consider would be regarding the development of MGD candidate MRT-6160 for the treatment of immune-mediated disorders. The use of this candidate is being explored in the ongoing phase 1 SAD/MAD study targeting healthy volunteers. The risk here is that there is no guarantee that the initial biomarker results will be positive. This would be bad, as it would be a massive blow to proving that this MRT-6160 drug is capable of being able to eventually treat patients with autoimmune disorders. The second risk is regarding the possible expansion opportunity of moving MRT-6160 into phase 2 clinical development. The goal is to initiate two mid-stage trials targeting patients with UC and RA for this program. The risk here is that there is no assurance that the results to be released from such studies will turn out to be positive. Nor, that this drug will eventually be explored in any type of phase 3 study targeting patients from any type of autoimmune disorder. The third risk is regarding the two ongoing collaboration agreements made with Novartis and Roche. That's because the ability to earn the billions of dollars of anticipated milestone payments is largely going to depend upon whether the drugs being evaluated as part of the collaboration are ultimately successful. The risk here is that there is no guarantee that either of these big pharma companies will continue such agreements. If one of them feels as though the MGDs being developed are not doing well, or are not considered to be eventually successful, then it's possible that they could end the partnership agreement at any moment's notice. If this were to happen, then the company could end losing up to $2.1 billion from the Novartis agreement and then up to >$2 billion from the Roche agreement. The fourth and final risk to consider would be in terms of the development of MRT-2359 for the treatment of patients with MYC-driven solid tumors in the phase 1/2 study. The company released good initial safety and pharmacodynamic [PD] data from this early-stage study when patients were given 0.5 mg of this drug in a 21-day on and 7-day off cycle. The current study is to evaluate a higher 0.75 mg dose of MRT-2359 over the very same 21 days and 7-day off-cycle treatment regimen. The goal is to release updated clinical data and the RP2D in the 2nd half of 2024. The risk here is that there is no assurance that the data to be released from this phase 1/2 study will turn out to be positive. Nor, that the results to be released from it will be enough to warrant further investigation into phase 2 expansion cohorts. Conclusion Monte Rosa Therapeutics has been able to do well in establishing two licensing agreements with big pharmaceutical companies regarding its MGD technology platform. As I highlighted above, there was one deal established with Roche to advance such drugs targeting cancer and neurological disorders, and then the Novartis deal entailed developing MRT-6160 for the treatment of immune-mediated disorders. With the Novartis global license agreement being the most recent one [today], this is what it is causing the stock price to trade higher by 60% or more. It received an upfront cash payment of $150 million as part of this specific collaboration agreement and could earn up to $2.1 billion as development, regulatory and sales milestones. Along with tiered royalties on ex-U.S. net sales. Again, despite the rise in share price, there is another upcoming catalyst which, I believe, might be capable of driving the share price higher. This would be regarding the release of initial biomarker data, from the phase 1 SAD/MAD study using MRT-6160 for the targeting of healthy volunteers, in Q1 of 2025. This will be a huge inflection point for the biotech because it will prove whether this MGD has clinical activity in targeting immune-mediated disorders.  Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. 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