Kitov Pharmaceuticals (KTOV)

Transcription

1 Company Update January 25, 2017 Kitov Pharmaceuticals (KTOV) Kitov Pharmaceuticals Announces Acquisition of TyrNovo On January 23, 2016 Kitov Pharmaceuticals (NasdaqCM: KTOV) announced the acquisition of TyrNovo (private) and the preclinical oncology asset NT219, a dual-targeting agent that inhibits insulin receptor substrates 1 and 2 (IRS 1/2) and signal transduction activator of transcription 3 (STAT3) pathway antagonist. During the conference call, Kitov presented positive preclinical results describing the use of NT219 to overcome resistance to certain targeted cancer therapies. With these promising results, Kitov is set to develop combination cancer treatment regimens able to overcome resistance, improve efficacy relative to monotherapy, and increase the potential patient population. This acquisition diversifies Kitov s pipeline and provides a foothold in the oncology space, which has potential of delivering significant long-term value to the Company. Kitov Pharmaceuticals Acquire a Majority Stake in TyrNovo. On January 23, 2016, Kitov Pharmaceuticals announced the acquisition of TyrNovo for $3.8 million. The specifics of the deal include $2 million dollars in cash $1.8 million dollars in newly issue stock, amounting to 6.8% of Kitov s issued and outstanding shares. Under terms of the agreement, Kitov has the ability to obtain additional equity stake in the company at a future date. An additional $3 million investment into TyrNovo is expected between for the advancement of an IND filing and potential initiation of clinical trials. As of June 30, 2016, Kitov had $8.4 million on hand and in July 2016 raised $10.7 million. Taking into account projected cash burn for the second half of 2016, the Company has a pro forma cash balance of about $16 million. NT219 is an Antagonist of IRS1/2 and STAT3 Pathway in Treatment Refractory Cancers. Resistance to targeted small molecule therapy and other chemotherapies is a constant issue in the clinic. It is often the case that treatment with targeted therapy leads to either accumulation of de novo mutations, acquired resistance, or activation of alternative pathways that ultimately result in bypass of the original suppression. TyrNovo developed NT219 as a small molecule that promotes the degradation of IRS 1 and 2 with concomitant inhibition of STAT3 pathway activation. Analysts Jerry Isaacson, Ph.D. (AC) (646) jisaacson@lifescicapital.com Market Data Price $2.98 Market Cap (M) $22 EV (M) $3 Shares Outstanding (M) 7.5 Avg Daily Vol 95, week Range: $ $4.55 Cash (M) $19.0 Net Cash/Share $2.53 Annualized Cash Burn (M) $6.1 Years of Cash Left 3.1 Debt (M) $0.0 Short Interest (M) 0.30 Short Interest (% of Float) 4.0% Financials FY Dec 2014A 2015A 2016A EPS H1 NA NA (0.39)A H2 NA NA NA FY NA NA NA IRS 1 and 2 mediate mitogenic and anti-apoptotic signaling from the insulin-like growth factor 1 receptor, insulin receptor, and other oncoproteins. NT219 induces serinephosphorylation and proteasome degradation of IRS 1 and 2. Additionally, NT219 induces inhibition of STAT3, a mediator of growth factor signaling that ultimately induces survival, angiogenesis, and immune evasion in cancer. Activation of this particular factor is linked to tumor survival in response to targeted cancer therapy. Therefore, a treatment regimen that combined NT219 with existing targeted therapies could enhance their efficacy. Expected Upcoming Milestones Q Anticipated NDA and submission to the FDA for KIT-302. Q Top-line results from kidney function trial. Q Expected FDA approval decision for KIT-302. For analyst certification and disclosures please see page 5 Page 1

2 Preclinical Data Supporting NT219 in Combination with Approved Oncology Drugs. In a conference call presentation associated with today s announcement, Kitov showed three preclinical studies describing the use of NT219 in combination with three separately approved targeted cancer therapies for the treatment of head and neck cancer and pancreatic cancer. In the first study, Kitov presented data outlining the use of NT219 in combination with Roche s (VTX: ROG.VX) Tarceva (erlotinib) in a PDX model of head and neck cancer. A graph of tumor volume over time in the model for multiple treatments is shown in Figure 1. As evident in the yellow line, NT219 (n=8) treatment on its own is comparable to vehicle (n=8) treated mice, depicted by the blue line. While mice treated with Tarceva, depicted with the red line, show initial benefit, tumor growth continues overtime. Notably, mice treated with Tarceva in combination with NT219, represented by the green line, resulted in halted growth of the implanted tumor (n=8). 2 mice in this group were considered to have complete responses. Figure 1. Efficacy for the Combination of NT219 and Tarceva in a Head and Neck Cancer Model Source: Company presentation Kitov also presented data showing restoration of sensitivity in a PDX model of pancreatic cancer that is refractory to gemcitabine. The red line in Figure 2 depicts tumor growth in mice implanted with pancreatic cells treated with gemcitabine (n=15), and closely tracks tumor growth in vehicle (n=7) and NT219 (n=7) treated mice, represented by the blue and yellow lines, respectively. By comparison, mice treated with the combination of NT219 and gemcitabine, depicted by the green line labeled responders, experienced cytostatic effects on tumor growth, suggesting continued sensitivity. Page 2

3 Figure 2. Efficacy for the Combination of NT219 and Gemcitabine in a Model of Pancreatic Cancer Source: Company Presentation Finally, Kitov presented a PDX model of head and neck cancer where patient derived PBMCs were injected in mice 6 days after treatment. As shown in Figure 3, Eli Lilly s (NYSE: LLY) Erbitux (cetuximab) and vehicle treated mice, labeled blue and red, respectively, resulted in comparable tumor growth and survival. By contrast, mice treated with NT219, depicted in the yellow line, experienced initial benefit compared to vehicle and Erbitux, but ultimately progress. Most importantly, the green line in Figure 3 shows that resistance to the monotherapy with either NT219 or Erbitux can be overcome by combined treatment with both of these therapies (n=3). As a whole, these data highlight the potential use of Kitov s NT219 as in combination with existing targeted cancer therapies for patients that become refractory to initial therapy. Figure 3. Efficacy for the Combination of NT219 and Erbitux in a PDX model of Head and Neck Cancer Source: Company Presentation Page 3

4 Market Opportunity for Kitov s NT219 in Certain Small Molecule and Chemotherapy Resistant Cancers. As we have outlined above, NT219 has the potential of being combined with various approved cancer therapies that are initially effective but to which many patients develop resistance. Combined use of NT219 with existing therapies may lead to extended duration of anti-tumor effects thereby increasing patient survival. Current annual sales for approved therapies such as Tarceva and Erbitux are outlined in Figure 4 and are representative of the potential available market for NT219. In the future, Kitov plans to establish partnerships with the companies who market some of these therapies, with plans to potentially pursue such indications as non-small cell lung cancer (NSCLC), pancreatic, colorectal, and head and neck cancers. Figure 4. Annual Sales of Certain Cancer Therapies Source: LifeSci Capital and Company Reports Kitov is working on filing an IND for NT219 and plans to initiate a Phase I clinical trial to evaluate NT219 in combination with approved treatments in certain, as yet undetermined solid tumors. The current strategic plan is to leverage the management team s experience in order to develop NT219 taking the shortest way to market, replicating the strategy employed in the development of lead product candidate KIT-302. Risk to Invesment We consider an investment in Kitov to be a high-risk investment. Kitov is currently in clinical-stage development and does not have any marketed or approved products. While Kitov has successfully completed a pivotal Phase III study with its lead candidate, this does not guarantee regulatory approval. Regulatory approval to market and sell a drug does not guarantee that the drug will penetrate the market, and sales may not meet expectations. As a clinical-stage biopharmaceutical company, Kitov is not profitable and may need to seek additional financing from the public markets, which may results in dilution of existing shareholder value. Page 4

5 Analyst Certification The research analyst denoted by an AC on the cover of this report certifies (or, where multiple research analysts are primarily responsible for this report, the research analyst denoted by an AC on the cover or within the document individually certifies), with respect to each security or subject company that the research analyst covers in this research, that: (1) all of the views expressed in this report accurately reflect his or her personal views about any and all of the subject securities or subject companies, and (2) no part of any of the research analyst's compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed by the research analyst(s) in this report. DISCLOSURES This research contains the views, opinions and recommendations of LifeSci Capital, LLC ( LSC ) research analysts. LSC (or an affiliate) has received compensation from the subject company for producing this research report. Additionally, LSC expects to receive or intends to seek compensation for investment banking services from the subject company in the next three months. LSC (or an affiliate) has also provided non-investment banking securities-related services, non-securities services, and other products or services other than investment banking services to the subject company and received compensation for such services within the past 12 months. LSC does not make a market in the securities of the subject company. Neither the research analyst(s), a member of the research analyst s household, nor any individual directly involved in the preparation of this report, has a financial interest in the securities of the subject company. Neither LSC nor any of its affiliates beneficially own 1% or more of any class of common equity securities of the subject company. LSC is a member of FINRA and SIPC. Information has been obtained from sources believed to be reliable but LSC or its affiliates (LifeSci Advisors, LLC) do not warrant its completeness or accuracy except with respect to any disclosures relative to LSC and/or its affiliates and the analyst's involvement with the company that is the subject of the research. Any pricing is as of the close of market for the securities discussed, unless otherwise stated. Opinions and estimates constitute LSC s judgment as of the date of this report and are subject to change without notice. Past performance is not indicative of future results. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The opinions and recommendations herein do not take into account individual client circumstances, objectives, or needs and are not intended as recommendations of particular securities, companies, financial instruments or strategies to particular clients. The recipient of this report must make his/her/its own independent decisions regarding any securities or financial instruments mentioned herein. Periodic updates may be provided on companies/industries based on company specific developments or announcements, market conditions or any other publicly available information. Additional information is available upon request. No part of this report may be reproduced in any form without the express written permission of LSC. Copyright Page 5