Context Therapeutics — CTIM-76 selected as clinical CLDN6 candidate

Context Therapeutics (NASDAQ: CNTX)

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Last close As at 30/03/2023

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Research: Healthcare

Context Therapeutics — CTIM-76 selected as clinical CLDN6 candidate

In an encouraging pipeline development, Context Therapeutics has announced the selection of a final clinical candidate for its second R&D program, a CLDN6xCD3 bispecific antibody. The nominated candidate CTIM-76, which was introduced at the recent R&D webinar, was selected from partner Integral Molecular’s CLDN6xCD3 library for its high CLDN6 binding and specificity and strong safety profile to date (low immunogenicity risk) at the selected dose. We reiterate that the therapeutic benefits of targeting CLDN6 (expressed on a variety of malignant tumor cells but rarely in healthy tissue) are well recognized, although development has been challenged by a lack of selectivity. Context asserts that its CLDN6 candidate has superior selectivity and activity, presenting a compelling upside case, provided there is successful clinical progression.

Soo Romanoff

Written by

Soo Romanoff

Managing Director - Head of Content, Healthcare

Healthcare

Context Therapeutics

CTIM-76 selected as clinical CLDN6 candidate

Pipeline update

Pharma & biotech

2 December 2022

Price

$1.4

Market cap

$22m

Net cash ($m) at 30 September 2022

39.4

Shares in issue

15.97m

Free float

67%

Code

CNTX

Primary exchange

Nasdaq

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

10.4

(27.0)

(80.7)

Rel (local)

4.4

(28.9)

(78.7)

52-week high/low

$6.3

$1.0

Business description

Context Therapeutics is a clinical-stage women’s oncology company. Lead candidate ONA-XR is a ‘full’ progesterone receptor antagonist currently being evaluated in three Phase II and one Phase Ib/II clinical trial in hormone-driven breast, endometrial and ovarian cancer. The other asset is a bi-specific monoclonal antibody, CLDN6xCD3, with the selected candidate CTIM-76 undergoing IND-enabling studies (IND submission is planned for Q124).

Next events

Phase II readout in HR+/HER2- mBC (ONA-XR+fulvestrant)

December 2022

Updated data from the Phase II trial in endometrial cancer

Mid-2023

ELONA trial Phase Ib data

Q423

Analysts

Soo Romanoff

+44 (0)20 3077 5700

Jyoti Prakash, CFA

+44 (0)20 3077 5700

Dr Adam McCarter

+44 (0)20 3077 5700

Context Therapeutics is a research client of Edison Investment Research Limited

In an encouraging pipeline development, Context Therapeutics has announced the selection of a final clinical candidate for its second R&D program, a CLDN6xCD3 bispecific antibody. The nominated candidate CTIM-76, which was introduced at the recent R&D webinar, was selected from partner Integral Molecular’s CLDN6xCD3 library for its high CLDN6 binding and specificity and strong safety profile to date (low immunogenicity risk) at the selected dose. We reiterate that the therapeutic benefits of targeting CLDN6 (expressed on a variety of malignant tumor cells but rarely in healthy tissue) are well recognized, although development has been challenged by a lack of selectivity. Context asserts that its CLDN6 candidate has superior selectivity and activity, presenting a compelling upside case, provided there is successful clinical progression.

Year end

Revenue
($m)

PBT*
($m)

EPS*
($)

DPS
($)

P/E
(x)

Yield
(%)

12/20

0.0

(3.2)

(9.28)

0.0

N/A

N/A

12/21

0.0

(10.6)

(3.74)

0.0

N/A

N/A

12/22e

0.0

(18.1)

(1.13)

0.0

N/A

N/A

12/23e

0.0

(27.4)

(1.72)

0.0

N/A

N/A

Note: *PBT and EPS are normalized, excluding exceptional items.

CLDN6: A promising therapeutic target

CLDN6, a protein coding gene and part of the claudin family of tight junction proteins, is enriched in several malignant tumors such as ovarian, lung and gastric cancers, but is rarely expressed in adult healthy tissue. However, development against this target has been stymied by challenges in accurate selectivity due to CLDN6’s structural similarity to other claudins such as CLDN9 and CLDN4, both of which are also expressed in healthy tissue. Although several candidates are under development, Context argues, based on preclinical data, that its bispecific antibody displays superior CLDN6 selectivity and activity compared to competitors.

CTIM-76 claims higher selectivity and safety

Encouraging Phase I/II follow-up data presented by category leader BioNTech on its CLDN6 CAR-T asset BNT211 has established proof of concept for CLDN6 as an effective target in certain malignant tumors. As part of its R&D webinar, Context presented compelling pre-clinical data on the high selectivity and specificity of its selected CLDN6xCD3 candidate CTIM-76 for CLDN6 and well as maximal T-cell induced lysis at the selected dose, without resulting in excessive cytokine production (demonstrating high efficacy and safety). Context has commenced IND-enabling studies and we expect the initial clinical focus to be on ovarian and testicular cancer, given the high CLDN6 expression in these tumors and clinical PoC via BNT211.

Valuation: Maintained at $146.5m or $9.18/basic share

Although we view the CLDN6 candidate finalization as a positive step, we await the selection of a target indication and initiation of clinical trials to incorporate the program in our valuation. We keep our valuation at $146.5m ($9.18 per basic share) but note the upside potential on CTIM-76’s transition to the clinic, anticipated in 2024.

CLDN6: An exciting therapeutic target

CLDN6 is a member of the claudin family of tight junction proteins (27 members in humans), which play an important role in cell polarity, permeability and adhesion, and participate in the regulation of cell proliferation and differentiation. A unique aspect of CLDN6 is that it has been found to be upregulated in several malignant tumors such as endometrial, ovarian, lung and gastric cancers, but is rarely expressed in adult healthy tissue. However, the expression appears to be heterogeneous across cancer subtypes and seems directly related to tumor grade (the higher the grade, the higher the CLDN6 enrichment). According to data presented by Context in its December R&D webinar, CLDN6 expression can range from 2% to 95% across indications, with testicular and ovarian cancer reported to have the highest expression (95% and 54–55%, respectively). Importantly, studies have indicated that a higher level of CLDN6 expression leads to poorer prognosis in terms of overall survival and progression free survival. A 2020 study assessing CLDN6 expression in endometrial cancer tissue resected from patients concluded that the five-year survival rate in the high CLDN6 expression group stood at 30%, compared to 90% for the low expression group. This makes CLDN6 an attractive therapeutic target for these indications, in our view.

While several pharmaceutical companies are developing CLDN6 targeting antibodies, most candidates are in early-stage clinical or preclinical development (Exhibit 1). Historically, development has been hampered by challenges in accurate selectivity due to CLDN6’s close resemblance to other claudins, which are present in healthy cells. In particular, CLDN9, which differs from CLDN6 by only three amino acids in the extracellular domain, is crucial to maintaining normal hearing and a healthy gut, highlighting the importance of accurate targeting.

Exhibit 1: Ongoing Claudin-6 development programs

Company

Program name

Antibody format

Development phase

Indications

Comments

BioNTech

BNT211

CLDN6 CAR-T

Phase I/II

Relapsed or refractory advanced solid tumors

Initial data presented in April 2022 (American Association for Cancer Research (AACR)), with an update in September 2022 (ESMO). Received Priority Medicines (PRIME) designation from EMA in June 2022 for testicular cancer.

BioNTech

BNT142

CLDN6xCD3 mRNA encoded bispecific antibody

Phase I

Multiple solid tumors

Initiated Phase I development in mid-2022.

Amgen

AMG794

CLDN6xCD3 bispecific T cell engager (BITE)

Phase I

Non-small cell lung cancer, epithelial ovarian cancer

Candidate first presented in April 2022 (AACR); expected to initiate Phase I development in December 2022.

Guangzhou Medical University

N/D

CLDN6-CAR NK

Phase I

Ovarian cancer, testicular cancer, endometrial cancer

Engineered to express IL7/CCL19 and/or SCFVs against PD1/CTLA4/Lag3. Initiated Phase I trials in June 2022.

Daiichi

DS-9606a

CLDN6 + DXd antibody drug conjugate

Phase I

Advanced solid tumors

Phase I trials initiated in mid-2022.

Preclinical

Context Therapeutics

CTIM-76

CLDN6xCD3 bispecific antibody

Preclinical

Gynecological cancers

IND submission planned for Q124.

Xencor

N/D

CLDN6Xcd3 bispecific antibody

Preclinical

Ovarian cancer

Reported positive preclinical data at AACR conference in April 2021; timeline for clinical progression not disclosed.

I-Mab

TJ-C64B

CLDN6X4IBB bispecific antibody

Preclinical

Ovarian cancer, other CLDN6 expressing tumors

Initial data presented April 2021 (AACR). IND filing is expected in H223.

Source: Context Therapeutics, Clinicaltrials.gov, Edison Investment Research

CTIM-76: Selected for its high CLDN6 selectivity and strong safety profile

In its April 2022 R&D webinar, Context had indicated that partner Integral Molecular had tested a library of 54 CLDN6xCD3 combinations, of which 12 candidates were shortlisted for further testing at that time. Of these, CTIM-76 has now been selected as the final candidate for future development, with in-vitro data presented by the company highlighting the significantly higher selectivity and specificity of CTIM-76 for CLDN6 over other claudins (Exhibit 2).

Exhibit 2: CTIM-76’s selectivity and specificity for CLDN6

Source: Context Therapeutics R&D webinar presentation, December 2022

Data presented by the company also highlighted that T-cell mediated tumor destruction (lysis), which underscores the mechanism of action for Context’s bispecific antibody (BsAb), could be achieved at extremely low concentrations (picomolar) on cells where CLDN6 is highly expressed; that is, the higher the CLDN6 expression, the higher the effectiveness of the cytotoxic T-cell response. For the high CLDN6 expressing K562 cell line, the EC50 value stood at 0.0004nM versus 2.79nM for the low CLDN6 expressing HEK cell line, representing a potentially broad and differentiating therapeutic window for CTIM-76 (Exhibit 3).

Exhibit 3: T-cell mediated lysis is directly linked to CLDN expression

Source: Context Therapeutics R&D webinar presentation, December 2022

Importantly, testing CTIM-76 against the high CLDN6 expressing cell line (K562) showed that the drug could induce cytotoxic T-cell activation without drastically increasing cytokine production. Cytokine release syndrome (CRS) is an adverse side-effect experienced in some patients in response to immunotherapy, so, in our view, the lower selected therapeutic dose provides encouraging signs for CTIM-76’s potential safety profile in the clinic (Exhibit 4). Similar observations were made (cytotoxic T-cell activation and cell lysis without drastically increasing cytokines) in the OV90 cell line (medium CLDN6 expression) at the selected dose (EC50=0.049nM).

Exhibit 4: Comparison of T-cell dependent cytotoxicity (TDCC) to cytokine production in K562 cell line

Source: Context Therapeutics R&D webinar presentation, December 2022

BioNTech’s BNT211 Phase I data establishes PoC

In September 2022, BioNTech, the current leader in this category, in our view, presented encouraging follow-up data on its CLDN6 CAR-T asset BNT211 from its ongoing Phase I/II study, in patients with relapsed or refractory advanced solid tumors. The data was presented for 21 evaluable patients (testicular, ovarian and endometrial, as well as sarcoma, fallopian tube and gastric cancer), who were treated across two dose levels (dose 1: 1x107 CAR-T cells, n=7; and dose 2: 1x108 CAR-T cells, n=15) alone or combined with CARVac (a vaccine designed to enhance T-cell activity and persistence through periodic infusions following CAR-T treatment). The objective response rate (ORR) for the cohort was 33%, with a disease control rate (DCR) of 67%, with one complete response, six partial responses and seven patients with stable disease. The results in patients with testicular cancer treated with dose 2 following lymphodepletion (n=7) were even more pronounced: an ORR of 57% and a DCR of 85%, with one complete response, three partial responses and two with stable disease. We see these early results as providing proof of concept for CLDN6 targeting therapeutics.

CTIM-76 promises higher activity than benchmark BiTE BsAb

We note that there are a handful of CLDN6 targeting BsAbs in development, notably BioNTech’s BNT142 and Amgen’s AMG794, which are currently undergoing Phase I studies (the latter is expected to start enrolment imminently). However, Context argues that the structure and design of its candidate allows superior activity and binding to CLDN6, which, if proved in clinical studies, could offer market differentiation. A head-to-head comparison with a bi-specific T-cell engager (BiTE) antibody (IMC-2-7) shows that CTIM-76 is able to induce a similar cytotoxic T-cell response at much lower dose concentrations than IMC-2-7, suggesting higher efficacy and potentially improved safety (Exhibit 5).

Exhibit 5: Benchmarking CTIM-76 against a BiTE candidate

Source: Context Therapeutics R&D webinar presentation, December 2022

Context has initiated Investigational New Drug (IND) enabling studies with CTIM-76 and the company plans to file an IND application in Q124. While the company has not disclosed a target indication for clinical studies, initial areas of interest include testicular cancer, ovarian cancer, non-small cell lung cancer and malignant rhabdoid, all indications with high CLDN6 prevalence (Exhibit 6). We expect Context to focus on the former two indications, although there will be further clarity as the drug approaches the clinic.

Exhibit 6: Potential target indications for CTIM-76

Source: Context Therapeutics R&D webinar presentation, December 2022

Valuation

Our investment case remains unchanged following the selection of CTIM-76 as the company’s CLDN6xCD3 candidate, given the early-stage nature of the data presented, although we note the potential for uplift as the drug transitions to the clinic.

Exhibit 7: Context Therapeutics valuation (risk-adjusted NPV)

Program

Indication

Status

Probability of success

Launch year

Peak sales ($m)

Economics

Risked NPV ($m)

ONA-XR

Second-line HR+/HER2- mBC
(in combination with fulvestrant)

Phase II

15%

2026

498

US (fully owned)
Europe (out-licensed)

41.4

First-line escalation therapy for HR+/HER2- mBC (ctDNA+)

Phase Ib

7.5%

2027

222

US (fully owned)
Europe (out-licensed)

7.4

Second-third line HR+/HER2- mBC
(in combination with elacestrant)

Phase Ib/II

10%

2028

374

US (fully owned)
Europe (out-licensed)

17.5

Recurrent PR+ endometrial cancer

Phase II

10%

2027

583

US (fully owned)
Europe (out-licensed)

29.1

Advanced GCT of the ovary

Phase II

10%

2027

292

US (fully owned)
Europe (out-licensed)

11.9

Net cash (at the end of Q322) $m

39.4

Total firm value

146.5

Total basic shares (m)

16.0

Value per basic share ($)

9.18

Total diluted shares (m)

1.9

Value per diluted share ($)

8.18

Source: Edison Investment Research

Exhibit 8: Financial summary

$000s

2020

2021

2022e

2023e

2024e

Year end 31 December

US GAAP

US GAAP

US GAAP

US GAAP

US GAAP

INCOME STATEMENT

Revenue

 

 

0

0

0

0

0

Cost of Sales

0

0

0

0

0

Gross Profit

0

0

0

0

0

Research and Development Expenses

(1,642)

(6,893)

(9,718)

(14,881)

(20,289)

Sales, General and Administrative Expenses

(931)

(3,633)

(8,356)

(12,534)

(13,787)

EBITDA

 

 

(2,572)

(10,526)

(18,074)

(27,415)

(34,076)

Operating profit (before amort. and excepts.)

 

 

(2,572)

(10,526)

(18,074)

(27,415)

(34,076)

Amortization of acquired intangibles

0

0

0

0

0

Exceptionals

0

0

0

0

0

Share-based payments

0

0

0

0

0

Reported operating profit

(2,572)

(10,526)

(18,074)

(27,415)

(34,076)

Net Interest

(661)

(64)

0

0

0

Joint ventures & associates (post tax)

0

0

0

0

0

Exceptionals

9,878

133

0

0

0

Profit Before Tax (norm)

 

 

(3,233)

(10,590)

(18,074)

(27,415)

(34,076)

Profit Before Tax (reported)

 

 

6,644

(10,457)

(18,074)

(27,415)

(34,076)

Reported tax

0

0

0

0

0

Profit After Tax (norm)

(3,233)

(10,590)

(18,074)

(27,415)

(34,076)

Profit After Tax (reported)

6,644

(10,457)

(18,074)

(27,415)

(34,076)

Minority interests

0

0

0

0

0

Discontinued operations

0

0

0

0

0

Net income (normalized)

(3,233)

(10,590)

(18,074)

(27,415)

(34,076)

Net income (reported)

6,644

(10,457)

(18,074)

(27,415)

(34,076)

Average Number of Shares Outstanding (m)

0

3

16

16

16

EPS - basic normalized ($)

 

 

(9.28)

(3.74)

(1.13)

(1.72)

(2.13)

EPS - normalized fully diluted (c)

 

 

(928.15)

(373.72)

(113.20)

(171.71)

(213.43)

EPS - basic reported ($)

 

 

19.07

(3.69)

(1.13)

(1.72)

(2.13)

Dividend ($)

0

0

0

0

0

BALANCE SHEET

Fixed Assets

 

 

118

0

0

0

0

Intangible Assets

0

0

0

0

0

Tangible Assets

0

0

0

0

0

Investments & other

118

0

0

0

0

Current Assets

 

 

350

51,306

35,407

8,629

4,106

Stocks

0

0

0

0

0

Debtors

0

0

0

0

0

Cash & cash equivalents

341

49,686

34,759

7,980

3,458

Other

9

1,620

648

648

648

Current Liabilities

 

 

(9,548)

(3,033)

(5,209)

(5,845)

(5,398)

Creditors

(2,708)

(1,826)

(3,136)

(3,330)

(2,897)

Tax and social security

0

0

0

0

0

Short term borrowings

(5,884)

0

0

0

0

Other

(956)

(1,207)

(2,073)

(2,515)

(2,501)

Long Term Liabilities

 

 

(69)

0

0

0

(30,000)

Long term borrowings

(69)

0

0

0

(30,000)

Other long-term liabilities

0

0

0

0

0

Net Assets

 

 

(9,150)

48,272

30,198

2,784

(31,292)

Convertible preferred stock

(7,771)

0

0

0

0

Minority interests

0

0

0

0

0

Shareholders' equity

 

 

(16,921)

48,272

30,198

2,784

(31,292)

CASH FLOW

Operating Cash Flow

(2,572)

(10,526)

(18,074)

(27,415)

(34,076)

Working capital

1,318

(2,225)

3,147

636

(447)

Exceptional & other

219

3,951

0

0

0

Tax

0

0

0

0

0

Net operating cash flow

 

 

(1,035)

(8,799)

(14,926)

(26,779)

(34,522)

Capex

0

(250)

0

0

0

Acquisitions/disposals

0

0

0

0

0

Net interest

0

0

0

0

0

Equity financing

0

58,394

0

0

0

Dividends

0

0

0

0

0

Other

0

0

0

0

0

Net Cash Flow

(1,035)

49,345

(14,926)

(26,779)

(34,522)

Opening net debt/(cash)

 

 

21,742

13,384

(49,686)

(34,759)

(7,980)

FX

0

0

0

0

0

Other non-cash movements

9,393

13,725

0

0

0

Closing net debt/(cash)

 

 

13,384

(49,686)

(34,759)

(7,980)

26,542

Source: Company reports, Edison Investment Research

General disclaimer and copyright

This report has been commissioned by Context Therapeutics and prepared and issued by Edison, in consideration of a fee payable by Context Therapeutics. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

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General disclaimer and copyright

This report has been commissioned by Context Therapeutics and prepared and issued by Edison, in consideration of a fee payable by Context Therapeutics. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

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paragon — Agreement to sell paragon semvox

paragon has announced that it is to sell its digital assistance business unit, paragon semvox, to CARIAD, the wholly owned software subsidiary of Volkswagen. The anticipated price is c €40m, which equates to approximately 33% of paragon’s enterprise value. The disposal seems likely to provide sufficient liquidity to satisfy paragon’s bond redemptions for FY23, which should finally release the shackles on the rating. The final timing of regulatory approvals, and any additional accelerated redemptions from the recently extended eurobond, remain important. However, as financial risk is retired, attention should start to focus on paragon’s automotive growth plans.

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