Trade Insights

*** Service update: We’ll now be sending Trade Insights once a week on Sundays. We sincerely appreciate your business and hope this newsletter helps give you ideas for short and long term investments in biotech companies. We’re open to feedback if there is anything you feel we can do to improve your experience and the value you receive. ***

• Liking the setup here for a swing into the initial clinical P1 data updates for CLN-049 and CLN-619 slated for mid-2023
• The stock is currently trading in the middle of its 52-wk range ($7.30-15.89)
• Interestingly, the stock set its 52-wk low on 5/11/22 the day before announcing a strategic agreement through which Taiho will acquire Cullinan Pearl and co-develop/commercialize it’s lead program (CLN-081/TAS6417)
• Something that stands out is that there was a surge in volume and CGEM’s stock price with 14M shares traded on 5/12/22 (367K 10-day avg presently)
• Furthermore, the stock continue to trend up from there before setting a 52-wk high at $15.89 on 7/20/22
• This indicates, in our view, that investors were likely aligned with management on this decision and agreed it was in the best interest of shareholders
• Since then the stock has not traded lower than $9.68 making this a critical level of support for us

Background:

• Clinical-stage biotech company developing virus-like drug conjugates (VDCs) (a novel class of therapies) for the treatment of multiple cancer indications.
• Initial development of AURA’s VDC tech platform is to treat tumors of high unmet need in ocular and urologic cancers 
  • Lead asset Bel-sar = In a P3 study in early-stage choroidal melanoma (a vision- and life-threatening form of eye cancer where standard of care with radiotherapy leaves patients with severe comorbidities, including major vision loss)
• Bel-sar is designed to selectively target and destroy cancer cells and activate the immune system with the potential to create long-lasting anti-tumor immunity

Relevant Developments: 

• Presented interim data from the P2 study of Bel-sar as a 1L therapy for patients with early-stage choroidal melanoma; 10/3/22
  • Hosted a virtual investors day as well 
  • Preliminary analysis of the data supported tolerability up to three cycles of therapy and showed a dose-dependent anti-tumor response
• Announced the global P3 trial design with suprachoroidal route of administration following the positive P2 interim data; 11/10/22
• Raised over $92M in an oversubscribed equity offer at $12/share (no warrants); 11/30/22
• Click here to listen to the latest investor conference at Cowen on 3/8/23 

Highlights from record 4Q/FY22 earnings reported 3/15/23

• U.S. Food and Drug Administration (FDA) Grants Fast Track Designation for bel-sar for the treatment of choroidal metastasis
• Bel-sar’s second ocular oncology indication to receive this designation as well
• Global P3 trial in primary choroidal melanoma on track to begin dosing in 1H23
• Strong financial position with over $188M in cash as of 12/31/22 paving a runway into 2025

Catalysts

• Start dosing in the global P3 study (1H23)
• Initial P1 data for Bel-sar in bladder cancer (2H23)

Technicals/Notes:

• Liking the setup here for a swing trade into 2Q23 with dosing expected to being in the global randomized  P3 trial in Primary Choroidal Melanoma
• The stock is presently trading at the lower end of its 52-wk range ($9.43-24.83) with no discernible red flags, in our view, since AURA set its 52-wk high on 8/17/22
• Of note this coincided with 2Q22 earnings which the company reported on 8/11/22
• We are particular eager to see initial results from the company’s P1 study of Bel-sar in bladder cancer given its an area of unmet need
• As we saw with SESN which appreciated from $1 to $5+ as it approached its expected FDA approval of Vinicum for Bladder cancer
• Initial P1 data for Bel-sar in this indication is expected in 2H23 and we expect this to be a meaningful catalyst

• Support: The share price we monitor to remain bullish on a position, this serves as our mental stop loss
• Resistance: The share price we monitor to indicate a potential breakout zone
• Time Frame: A rough estimate on the amount of time a stock will take to reach our price target
• Core Positions: For this evenings copy of our core position updates, click here
• Trade Updates: For stocks on previous emails or SMS alerts that aren’t on this evenings email, click here
• *Risk estimates are rough estimates we use to gauge the potential volatility of a stock
• Red: High risk, most speculative play.
  Generally companies with market caps under
  $100M and weak cash positions (under $20M)
• Yellow: Medium risk. Decent cash position (over $20M),
  present a decent trade-setup, and ideally have catalysts
• Green: Lower risk relative to yellow and red rated trades.
  These trades are supported by strong underlying
  fundamentals and have upcoming catalysts. Ideally,
  there is a nice technical setup too.