Cellectar Biosciences (CLRB) is a late-stage scientific biotech firm (not a “damaged biotech”) that not too long ago reported constructive knowledge for his or her lead therapeutic, Iopofosine I 131, for the therapy of Waldenstrom’s macroglobulinemia (“WM”), which is an unusual gradual rising kind of non-Hodgkin lymphoma. WM usually inflicts these over the age of 60 and people with WM succumb to the most cancers inside 5-10 years. Whereas I attempt to keep away from science performs round right here, the outcomes had been fairly outstanding and supply hope for these with WM who’ve unsuccessfully tried two prior traces of remedy. The FDA has granted Iopofosine each orphan drug and quick monitor designations, Cellectar plans to file a brand new drug utility (NDA) within the second half of this yr with an accelerated 6 month approval timeline.
One of many advantages of remedies for uncommon ailments is the affected person inhabitants tends to be tightly concentrated inside specialised well being care communities and as a result of R&D improvement prices, extraordinarily excessive pricing is norm in orphan medication to recoup that funding over a small affected person inhabitants. Cellectar is within the strategy of transitioning from a scientific stage biotech to a business one (assuming FDA approval), they’re outsourcing a lot of the manufacturing and solely spending $25MM to face up a gross sales and business assist staff. Absolutely the variety of sufferers is comparatively small, however once more, this can be a excessive priced remedy (a fast google search, the median orphan drug prices $200k+ yearly).
Doing a little bit again of the envelope math (full warning, this might be wildly off), if 1500 new sufferers are recognized with WM yearly and 80% finally obtain a third line therapy, then CLBR’s annual affected person market phase is about 1200 individuals. If 2/3rds of these find yourself taking Iopofosine at $250k (made up quantity, barely above the median orphan drug, I have not seen administration point out pricing anyplace, please appropriate me if they’ve) a chunk, that is $200MM in annual income. Moreover, Cellectar is operating a Part 2 examine for Iopofosine in sufferers with a number of myeloma (“MM”) and central nervous system lymphoma, plus a Part 1b examine is simply kicking off for pediatric sufferers with mind tumors. In the event that they’re capable of repeat the success in WM, this might change into a a lot bigger income alternative.
Cellectar has a messy and complicated capital construction. In September, they raised capital through a non-public placement for $24.5MM by promoting Sequence E-1 convertible most well-liked inventory that converts to inventory at a strike worth of $1.82/share (CLRB at the moment trades for ~$3.40/share), stapled to the Sequence E-1 prefs had been two tranches of warrants, designed to behave as milestone funds to offer funding for Cellectar publish constructive WM examine outcomes and the second tranche publish FDA approval. The tranche A (train deadline 10 days publish constructive knowledge, or 1/19) has a strike worth of $3.185/share and if absolutely exercised, will herald $44.1MM to Cellectar. The second tranche, tranche B, has an train worth of $4.7775/share and would herald $34.3MM if CLRB receives FDA approval and the warrants are fully exercised. This personal placement was designed to be large enough to get the corporate to its business part the place it might probably be self funding. CLRB does have extra warrants, one tranche, the “2022 frequent” is within the cash with a $1.96 strike and expires in 2027, the others are all properly out of the cash and may typically be ignored.
Above is my try on the share depend math and proforma money assuming the tranche A & B warrants are absolutely exercised (to be extra conservative, you possibly can take extra burn into consideration for the reason that FDA approval trigging the tranche B warrants will not come till someday within the first half of 2025). However I get a present proforma enterprise worth within the mid-$80MMs for a remedy that might do $200+MM in annual gross sales, that appears low-cost to me.
Disclosure: I personal shares CLRB
