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Last close As at 09/06/2023
USD1.31
▲ −0.09 (−6.43%)
Market capitalisation
USD21m
Research: Healthcare
Context Therapeutics announced plans to collaborate with the Menarini Group to study ONA-XR in combination with elacestrant, an oral selective estrogen receptor degrader (SERD) for the treatment of second/third-line HR+/HER2- metastatic breast cancer (mBC) patients. The Phase Ib/II study (ELONA trial) is expected to commence from Q422. This is a key development as elacestrant is the first oral SERD to demonstrate higher efficacy than fulvestrant (standard of care) in Phase III studies. Fulvestrant is an injectable SERD and we believe an oral formulation within this drug class would improve patient adherence. Greater efficacies are often observed in combinational oncology therapies, so we believe the upcoming ONA-XR/elacestrant trial is an encouraging clinical advancement. ONA-XR has previously shown promising preclinical data in combination with anti-estrogen therapy. We value an incremental contribution of $1.1/share from this program.
Context Therapeutics |
Promising combination therapy for ONA-XR |
Development update |
Pharma and biotech |
2 August 2022 |
Share price performance
Business description
Next events
Analysts
Context Therapeutics is a research client of Edison Investment Research Limited |
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Context Therapeutics announced plans to collaborate with the Menarini Group to study ONA-XR in combination with elacestrant, an oral selective estrogen receptor degrader (SERD) for the treatment of second/third-line HR+/HER2- metastatic breast cancer (mBC) patients. The Phase Ib/II study (ELONA trial) is expected to commence from Q422. This is a key development as elacestrant is the first oral SERD to demonstrate higher efficacy than fulvestrant (standard of care) in Phase III studies. Fulvestrant is an injectable SERD and we believe an oral formulation within this drug class would improve patient adherence. Greater efficacies are often observed in combinational oncology therapies, so we believe the upcoming ONA-XR/elacestrant trial is an encouraging clinical advancement. ONA-XR has previously shown promising preclinical data in combination with anti-estrogen therapy. We value an incremental contribution of $1.1/share from this program.
Year end |
Revenue ($m) |
PBT* |
EPS* |
DPS |
P/E |
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 |
(21.9) |
(1.37) |
0.0 |
N/A |
N/A |
12/23e |
0.0 |
(34.2) |
(2.14) |
0.0 |
N/A |
N/A |
Note: *PBT and EPS are normalized, excluding exceptional items.
Elacestrant leads the pack in oral SERDs
While several oral SERDs are in mid-to-late-stage clinical development, we believe elacestrant is the frontrunner, having reported positive top-line data from its Phase III EMERALD study in December 2021. The study met both primary endpoints, demonstrating a 30% reduction in the risk of disease progression or death versus standard of care endocrine therapy in the overall population (p=0.0018) and 45% reduction in patients with estrogen receptor 1 (ESR1) mutations (p=0.0005). Menarini filed a new drug application (NDA) for elacestrant in June 2022 and recently announced its plans to pursue combination studies for elacestrant under the hypothesis that a broader targeting (than just estrogen receptors) would likely improve efficacy and thereby progression-free survival (PFS) in patients.
ONA-XR elacestrant study design
The upcoming trial will be a Phase Ib/II proof-of-concept study (Context-sponsored trial with Menarini contributing the elacestrant at no cost) and is expected to recruit up to 73 patients who have progressed on first-line treatment (≥50% of the selected patient population will have the ESR1 mutation). The primary endpoint will be overall response rate, while PFS and the clinical benefit rate will be secondary endpoints.
Valuation: $151.0m or $9.46 per basic share
We have updated our valuation to include the upcoming ONA-XR elacestrant program. The target population has been kept in line with the ongoing combination study with fulvestrant, but we assume peak penetration of 7.5% and a 10% probability of success. The program has added roughly $1.1/share to our valuation and shortens the cash runway to Q423 (from Q124). We now estimate the need to raise $10m in FY23 and a further $160m between FY24 and FY26 before reaching profitability in FY27.
Menarini agreement broadens market potential
Despite ongoing R&D efforts, the treatment landscape for advanced hormone-driven cancers remains restricted. Currently approved endocrine therapies only target estrogen, which allows tumorigenic activity mediated by other pathways to continue unchecked. Studies indicate that a combination therapy may improve the efficacy of anti-estrogens, resulting in better treatment outcomes. Context has been exploring this unmet need to develop its PR antagonist ONA-XR as a combination therapy with anti-estrogens. One of the ongoing studies being undertaken by Context is a Phase II clinical trial in HR+/HER2- mBC along with the standard of care (SoC), fulvestrant, which, as noted earlier, is a SERD available only in the injectable form and is associated with side effects such as liver damage. The newer-generation oral SERDs, several of which are under later-stage clinical development, are being proposed as more convenient and safer oral alternatives to fulvestrant, although we note the possible regulatory resistance stemming from lower-priced generic versions of the injectable formulation.
Elacestrant leading the oral SERDs race
The global SERD market is estimated to reach $4.1bn by 2030, the bulk of which we expect to be made up of oral SERDs. While several oral SERDs targeting second-line HR+/HER2- mBC are currently in advanced stage clinical development, elacestrant is the first oral SERD to demonstrate a statistically significant and clinically meaningful improvement in PFS versus the SoC endocrine therapy, while early category leaders Sanofi and Roche have fallen short of meeting the primary endpoint (Exhibit 1).
Exhibit 1: Selected oral SERDs in late-stage clinical development for previously treated HR+/HER2- mBC
Drug |
Company |
Development phase |
Indication |
Comparator |
Prior CDK4/6 use |
Trial participants selected for ESR1 mutation |
Comments |
Elacestrant |
Menarini/ |
NDA |
Second-line, postmenopausal mBC |
Faslodex or aromatase inhibitor |
Mandatory |
Yes |
Top-line data from pivotal Phase III EMERALD trial presented in December 2021. Trial met both primary endpoints (PFS as monotherapy vs SoC endocrine therapy in overall population and PFS versus SoC in ESR1 population). New drug application (NDA) filed in June 2022 with FDA decision expected in 2023. |
Camizestrant |
AstraZeneca |
Phase III |
Second-line, postmenopausal mBC |
Faslodex |
Not mandatory |
Unclear |
Data from the pivotal Phase III SERENA-2 study expected to read out in September 2022. |
Imlunestrant |
Lilly |
Phase III |
Second-line, postmenopausal mBC |
Faslodex or aromatase inhibitor |
Not mandatory |
Unclear |
Data from the pivotal Phase III EMBER-3 study expected to read out in June 2023. |
Giredestrant |
Roche |
Phase II |
Second/third-line |
Faslodex or aromatase inhibitor |
Not mandatory |
No |
Failed to meet the primary end (PFS in all-comers) point in the Phase II acelERA study. Positive signal seen in cases with ESR1 mutation. Roche is continuing to study the drug as a first line and adjuvant treatment in separate studies. |
Amcenestrant |
Sanofi |
Phase II |
Second-line mBC |
Faslodex or aromatase inhibitor |
Required for some cohorts |
No |
Failed to meet the primary end (PFS in all-comers) point in the Phase II AMEERA-3 study. Sanofi is continuing to study the drug as a first line and adjuvant treatment in separate late-stage studies. |
Source: Evaluate Pharma, Edison Investment Research
ESR1 mutation cohort likely to be the biggest beneficiary
The Phase III EMERALD trial was a randomized, open-label, active-controlled study evaluating elacestrant as second/third-line monotherapy in estrogen receptor+(ER+)/HER2- mBC patients. The study enrolled 477 patients (~50% had ESR1 mutations) who had received prior treatment with one or two lines of endocrine therapy, including a CDK 4/6 inhibitor. Patients in the study were randomized to receive either elacestrant or the investigator’s choice of an approved hormonal agent. The primary endpoint of the study was PFS in the overall patient population and in patients with ESR1 mutations. Secondary endpoints included evaluation of overall survival (OS), objective response rate (ORR), and duration of response (DOR).
The study met its primary endpoint, demonstrating a 30% reduction in the risk of disease progression or death versus SoC in all-comers (PFS of 2.79 months versus 1.91months for the control group; p=0.0018). More notably, the corresponding figure stood at 45% for patients with ESR1 mutations (PFS of 3.78 months versus 1.87 months for the control group; p=0.0005), which is believed to have driven the positive results for all comers. We highlight that ESR1 mutations are associated with endocrine therapy resistance and, while rarely present in primary tumors, are relatively common in metastatic HR+/HER2- cancers (10–50% of cases1). Some observers consider that the failure of Sanofi and Roche’s candidates could have resulted from their lack of ESR1 selectivity in the study design. We therefore expect the ESR1 mutation cohort to be the most likely target population for new oral SERDs under development.
Zundelevich, A., Dadiani, M., Kahana-Edwin, S. et al. ESR1 mutations are frequent in newly diagnosed metastatic and loco-regional recurrence of endocrine-treated breast cancer and carry worse prognosis. Breast Cancer (2020)
The Phase Ib/II ELONA study design
The upcoming trial will be a Phase Ib/II proof -of-concept study to evaluate the efficacy and tolerability of ONA-XR + elacestrant combination treatment in patients who have progressed on first-line antiestrogen + CDK4/6 inhibitor therapy. The patients cannot have received prior chemotherapy in the metastatic setting. Notably ≥ 50% of the selected patient population will carry the ESR1 mutation. The trial is expected to recruit up to 73 participants across 16–19 sites in the United States and will be sponsored by Context, with Menarini providing elacestrant clinical trial material free of cost. The Phase Ib dose escalation portion will evaluate four cohorts of ONA-XR plus elacestrant and Phase II will evaluate up to 45 patients. The primary endpoint will be objective response rate (ORR), while PFS and clinical benefit rate (CBR) will be secondary endpoints. The trial is expected to commence in Q422 and Context and Menarini will form a joint committee to review the results.
Valuation
We include the upcoming ONA-XR elacestrant program in our valuation but keep our assumptions conservative. While the target population (c 35,000 progesterone receptor positive (PR+)/HER2- mBC patients seeking second/third-line treatment in the US) has been kept in line with the ongoing combination study with fulvestrant, we incorporate a lower peak penetration (7.5% versus 10%) due to the likelihood of the combination benefiting the ESR1 subset the most (c 40% of the total target population according to Context). We have also assumed a probability of success of 10%, which is in line with the standard figure ascribed to Phase Ib/II studies. Overall, the program adds an incremental $1.1/share to our valuation. The cash runway, however, shortens to Q423 (from Q124) to account for the increased spending given the trial will be sponsored by Context. We now estimate the need to raise $10m in FY23 and an additional $160m between FY24 and FY26 (previously $110m) before reaching profitability in FY27 (this assumes that Context self-commercializes in the US). We show the raises as illustrative debt, as per Edison methodology. However, we note that, given fulvestrant and elacestrant are both SERDs, Context is likely to pursue only one of the two programs for further clinical studies, based on data from the Phase II trials. We also believe that a positive result from the Phase Ib/II combination study could lead to potential licensing partnerships in the future for ONA-XR.
Exhibit 2: Context Therapeutics valuation (risk-adjusted NPV)
Program |
Indication |
Status |
Probability of success |
Launch year |
Peak sales ($m) |
Economics |
Risked NPV ($m) |
|||
ONA-XR |
Second-line HR+/HER2- mBC (in combination with fulvestrant) |
Phase II |
15% |
2026 |
498 |
US (fully owned) |
40.7 |
|||
First-line escalation therapy for HR+/HER2- mBC (ctDNA+) |
Phase Ib |
7.5% |
2027 |
222 |
US (fully owned) |
7.0 |
||||
Second-third line HR+/HER2- mBC (in combination with elacestrant) |
Phase Ib/II |
10% |
2028 |
498 |
US (fully owned) |
17.5 |
||||
Recurrent PR+ endometrial cancer |
Phase II |
10% |
2027 |
583 |
US (fully owned) |
28.5 |
||||
Advanced GCT of the ovary |
Phase II |
10% |
2027 |
292 |
US (fully owned) |
11.5 |
||||
Net cash (at the end of Q122) $m |
45.7 |
|||||||||
Total firm value |
151.0 |
|||||||||
Total basic shares (m) |
16.0 |
|||||||||
Value per basic share ($) |
9.46 |
|||||||||
Total diluted shares (m) |
2.1 |
|||||||||
Value per diluted share ($) |
8.37 |
|||||||||
Source: Edison Investment Research
Exhibit 3: Financial summary
$000s |
2020 |
2021 |
2022e |
2023e |
2024e |
||
Year end 31 December |
US GAAP |
US GAAP |
US GAAP |
US GAAP |
US GAAP |
||
INCOME STATEMENT |
|||||||
Revenue |
|
|
0 |
0 |
0 |
0 |
0 |
Cost of Sales |
0 |
0 |
0 |
0 |
0 |
||
Gross Profit |
0 |
0 |
0 |
0 |
0 |
||
Research and Development Expenses |
(1,642) |
(6,893) |
(13,536) |
(21,654) |
(35,546) |
||
Sales, General and Administrative Expenses |
(931) |
(3,633) |
(8,356) |
(12,534) |
(13,787) |
||
EBITDA |
|
|
(2,572) |
(10,526) |
(21,892) |
(34,188) |
(49,333) |
Operating profit (before amort. and excepts.) |
|
|
(2,572) |
(10,526) |
(21,892) |
(34,188) |
(49,333) |
Amortization of acquired intangibles |
0 |
0 |
0 |
0 |
0 |
||
Exceptionals |
0 |
0 |
0 |
0 |
0 |
||
Share-based payments |
0 |
0 |
0 |
0 |
0 |
||
Reported operating profit |
(2,572) |
(10,526) |
(21,892) |
(34,188) |
(49,333) |
||
Net Interest |
(661) |
(64) |
0 |
0 |
0 |
||
Joint ventures & associates (post tax) |
0 |
0 |
0 |
0 |
0 |
||
Exceptionals |
9,878 |
133 |
0 |
0 |
0 |
||
Profit Before Tax (norm) |
|
|
(3,233) |
(10,590) |
(21,892) |
(34,188) |
(49,333) |
Profit Before Tax (reported) |
|
|
6,644 |
(10,457) |
(21,892) |
(34,188) |
(49,333) |
Reported tax |
0 |
0 |
0 |
0 |
0 |
||
Profit After Tax (norm) |
(3,233) |
(10,590) |
(21,892) |
(34,188) |
(49,333) |
||
Profit After Tax (reported) |
6,644 |
(10,457) |
(21,892) |
(34,188) |
(49,333) |
||
Minority interests |
0 |
0 |
0 |
0 |
0 |
||
Discontinued operations |
0 |
0 |
0 |
0 |
0 |
||
Net income (normalized) |
(3,233) |
(10,590) |
(21,892) |
(34,188) |
(49,333) |
||
Net income (reported) |
6,644 |
(10,457) |
(21,892) |
(34,188) |
(49,333) |
||
Average Number of Shares Outstanding (m) |
0 |
3 |
16 |
16 |
16 |
||
EPS - basic normalized ($) |
|
|
(9.28) |
(3.74) |
(1.37) |
(2.14) |
(3.09) |
EPS - normalized fully diluted ($) |
|
|
(9.28) |
(3.74) |
(1.37) |
(2.14) |
(3.09) |
EPS - basic reported ($) |
|
|
19.07 |
(3.69) |
(1.37) |
(2.14) |
(3.09) |
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 |
32,689 |
9,481 |
20,674 |
Stocks |
0 |
0 |
0 |
0 |
0 |
||
Debtors |
0 |
0 |
0 |
0 |
0 |
||
Cash & cash equivalents |
341 |
49,686 |
32,041 |
8,833 |
20,026 |
||
Other |
9 |
1,620 |
648 |
648 |
648 |
||
Current Liabilities |
|
|
(9,548) |
(3,033) |
(6,309) |
(7,289) |
(7,815) |
Creditors |
(2,708) |
(1,826) |
(3,798) |
(4,152) |
(4,194) |
||
Tax and social security |
0 |
0 |
0 |
0 |
0 |
||
Short term borrowings |
(5,884) |
0 |
0 |
0 |
0 |
||
Other |
(956) |
(1,207) |
(2,511) |
(3,137) |
(3,621) |
||
Long Term Liabilities |
|
|
(69) |
0 |
0 |
(10,000) |
(70,000) |
Long term borrowings |
(69) |
0 |
0 |
(10,000) |
(70,000) |
||
Other long-term liabilities |
0 |
0 |
0 |
0 |
0 |
||
Net Assets |
|
|
(9,150) |
48,272 |
26,380 |
(7,807) |
(57,141) |
Convertible preferred stock |
(7,771) |
0 |
0 |
0 |
0 |
||
Minority interests |
0 |
0 |
0 |
0 |
0 |
||
Shareholders' equity |
|
|
(16,921) |
48,272 |
26,380 |
(7,807) |
(57,141) |
CASH FLOW |
|||||||
Operating Cash Flow |
(2,572) |
(10,526) |
(21,892) |
(34,188) |
(49,333) |
||
Working capital |
1,318 |
(2,225) |
4,248 |
980 |
526 |
||
Exceptional & other |
219 |
3,951 |
0 |
0 |
0 |
||
Tax |
0 |
0 |
0 |
0 |
0 |
||
Net operating cash flow |
|
|
(1,035) |
(8,799) |
(17,644) |
(33,208) |
(48,807) |
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 |
(17,644) |
(33,208) |
(48,807) |
||
Opening net debt/(cash) |
|
|
21,742 |
13,384 |
(49,686) |
(32,041) |
1,167 |
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) |
(32,041) |
1,167 |
49,974 |
Source: Context Therapeutics reports, Edison Investment Research
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Research: Healthcare
Medlab Clinical has released its cash flow report for Q422 and the full FY22 period. Net cash outflow from operating activities in FY22 was A$9.0m, roughly in line with our estimate of A$9.3m. The company reported cash operating revenues for the year of A$6.2m, however it expects to record a A$3.5m research and development grant post the period end (in September/October 2022). Total cash outflow for FY22 was A$8.2m, which was lower than our estimate of A$9.3m as the company received A$750k and will receive A$250k in November 2022 and is expected to receive A$250k in November 2023 from the disposal of its nutraceuticals business. At end-FY22 Medlab had a gross cash position of A$5.2m which, at the current Q422 burn rate of A$3.4m, we estimate will fund operations into CY23 (second quarter of FY23). In the absence of full company accounts, we maintain our estimates for FY22–23 and will revisit these as more information becomes available. Our valuation of Medlab Clinical is unchanged at A$239.8m or A$0.70 per share.
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