Context Therapeutics — Strategic pivot in pipeline focus

Context Therapeutics (NASDAQ: CNTX)

Last close As at 17/05/2024

1.22

0.00 (0.00%)

Market capitalisation

USD19m

More on this equity

Research: Healthcare

Context Therapeutics — Strategic pivot in pipeline focus

In an unexpected move, Context Therapeutics has announced that it will be discontinuing further development work on its ONA-XR program and prioritize the development of its novel preclinical bispecific CLDN6xCD3 antibody, CTIM-76. While we view the news as disappointing given efficacy data in the OATH study were encouraging, we understand the need to prioritize safety for patients. With a market cap of $11m, Context is trading well below cash levels (end-FY22 cash balance of $35.5m). We have withdrawn our estimates and will revisit our model assumptions and overall valuation in due course. We note that the discontinuation of the ONA-XR programs allows Context to extend its cash runway to late 2024 (versus early 2024 previously), well past the planned IND filing of CTIM-76 in Q124.

Adam McCarter

Written by

Adam McCarter

Associate Analyst

Doctor with cancer patient

Healthcare

Context Therapeutics

Strategic pivot in pipeline focus

Business update

Pharma and biotech

23 March 2023

Price

$0.66

Market cap

$11m

Net cash ($m) at 31 December 2022

35.5

Shares in issue

15.97m

Free float

94%

Code

CNTX

Primary exchange

Nasdaq

Secondary exchange

N/A

Share price performance

Business description

Context Therapeutics is a clinical-stage biopharma company developing therapeutics for solid tumors. Following a strategic pivot, the core pipeline focus will be on CTIM-76, a selective Claudin 6 (CLDN6) x CD3 bispecific antibody for CLDN6 positive tumors, which is in preclinical development with plans for an IND application filing in Q124.

Analysts

Dr Adam McCarter

+44 (0)20 3077 5700

Jyoti Prakash, CFA

+44 (0)20 3077 5700

Context Therapeutics is a research client of Edison Investment Research Limited

In an unexpected move, Context Therapeutics has announced that it will be discontinuing further development work on its ONA-XR program and prioritize the development of its novel preclinical bispecific CLDN6xCD3 antibody, CTIM-76. While we view the news as disappointing given efficacy data in the OATH study were encouraging, we understand the need to prioritize safety for patients. With a market cap of $11m, Context is trading well below cash levels (end-FY22 cash balance of $35.5m). We have withdrawn our estimates and will revisit our model assumptions and overall valuation in due course. We note that the discontinuation of the ONA-XR programs allows Context to extend its cash runway to late 2024 (versus early 2024 previously), well past the planned IND filing of CTIM-76 in Q124.

Year
end

Revenue ($m)

PBT*
($m)

EPS*
($)

DPS
($)

P/E
(x)

Yield
(%)

12/21

0.0

(10.6)

(3.74)

0.0

N/A

N/A

12/22

0.0

(14.8)

(0.93)

0.0

N/A

N/A

Note: *PBT and EPS are normalized, excluding amortization of acquired intangibles, exceptional items and share-based payments.

Context reported FY22 results, although details of financial performance were overshadowed by its announcement that it will discontinue its flagship ONA-XR program (three ongoing Phase II trials and one Phase Ib trial in advanced breast, endometrial and ovarian cancers) and focus its resources on the other preclinical asset, CTIM-76, a bispecific CLDN6xCD3 antibody, targeting Claudin 6 expressing tumors. Context will now focus its R&D activities on CTIM-76, which was selected as the final candidate for its CLDN6 program in December 2022. CLDN6 has emerged as a highly attractive therapeutic target in oncology, with expression across a variety of malignant tumor cells but rarely in healthy tissue. We view the competitive landscape as limited, with the main competition being BioNTech (BNT211) and Amgen (AMG 794). Context argues that, based on preclinical data, CTIM-76 displays superior CLDN6 selectivity and activity compared to competitors. The company has initiated Investigational New Drug (IND) enabling studies with CTIM-76, and plans to file an IND application in Q124.

Management has disclosed that in the ongoing Phase II OATH trial for endometrial cancer, liver enzyme elevations were observed in a few patients and, although not considered serious adverse events, they would have required additional analyses resulting in increased costs and trial delays. We remind readers that liver enzyme elevation was the primary reason that the underlying immediate-release version of ONA-XR was previously pulled from clinical trials (see our initiation note for more details) and the extended-release version had been pitched as a safer alternative. As part of this decision, the collaboration with the Menarini Group (ELONA trial) has also been terminated.

We have withdrawn our estimates and valuation for Context and will reintroduce our revised valuation in due course. We note that this new pipeline focus frees up some of the company’s cash, extending the cash runway to end 2024 according to management (from early 2024 previously).

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.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2023 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

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.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2023 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

More on Context Therapeutics

View All

Latest from the Healthcare sector

View All Healthcare content

Research: Healthcare

Sareum Holdings — 2023 to be a year of clinical transition

Following a tumultuous H123 marked by UK regulatory challenges for SDC-1801, Sareum has pivoted to Australia as a clinical trial destination. With the trial application filed and awaiting confirmation (expected in Q223), we anticipate the long-due Phase Ia trial to commence by mid-2023, followed by the crucial Phase Ib study in 2024, if initial safety data are positive. The operating loss during the period increased c 72% y o y to £1.75m, reflecting increased investment in the preparation for clinical studies. We expect this figure to rise with trial commencement. This will likely translate to a material increase in cash burn in the coming months (vs the H123 run rate of £1.3m) and we expect Sareum will need to raise additional funds before the end of CY23 (H123 cash balance of £2.9m). We see initiation of the Phase I study as a key catalyst for a potential re-rating.

Continue Reading
Sareum Holdings_resized

Subscribe to Edison

Get access to the very latest content matched to your personal investment style.

Sign up for free