Arcellx: The Best Is Yet To Come (NASDAQ:ACLX)

I have Arcellx covered (NASDAQ:ACLX) at its IPO in January. Arcellx is a clinical-stage biopharmaceutical company developing cancer immunotherapies. It features novel D-domain technology that makes traditional cell therapies such as CAR-Ts safer and more effective. Recent ASCO data showed that there are “more traditional” CAR-T candidates still better than Johnson & Johnson and Legend Biotech, including the former Carvykti, an approved product.

“Pretty much however you split the updated data, CART-ddBCMA efficacy results are consistent with class leader Cilta-Cel (Carvykti) – best response, [minimal residual disease] Negativity and permanence,” SVB Securities wrote, according to Fierce. The patient population was arguably more difficult to manage, with a high rate of extramedullary involvement and appeared safer in contrast to Carvykti, which has a black box warning for ACLX cytokine release syndrome.

The ACLX D domains are used in chimeric antigen receptor (CAR) constructs and result in “higher transduction efficiency, high cell surface expression, and low tonic signaling”. The first two points relate to enhancing the molecule’s CAR-T efficacy and the last to its increased safety.

Transduction is the viral ability to transfer genetic material; cell surface expression of CAR-Ts is enhanced by the simpler structures of the D domain; and tonic signaling refers to the activation of T cells, which can cause unwanted immune feedback. Arcellx has these D-domains, which are small, fully synthetic, hydrophobic and stable binding agents, in contrast to conventional binders, which are biological, single-chain variable fragment (scFv) binding CAR-T cells, which have narrow applicability and have high toxicity. These D domains can be produced in large batches with great consistency and tailored to each cancer situation.

The company is at a fairly early stage, with only preliminary data available from one of its two ongoing Phase 1 studies. This is the Company’s first product candidate, CART-ddBCMA. It targets the B-cell maturation antigen (BCMA) and is being evaluated in a phase 1 proof-of-concept study “iMMagine” for relapsed or refractory (r/r) multiple myeloma (MM) in patients with either minimal Response or evaluates disease progression within 60 days of last treatment. The study “demonstrated an overall response rate of 100% and a low durability.” The company plans to proceed directly to a pivotal study next year. Preliminary data has shown good safety, with only a grade 3 CR and a decent toxicity profile. The data compares very well to two other CAR-T programs, JNJ’s LEGEND-2 and CERTITUDE-1. Your data is available here. You’ll notice that the sample sizes didn’t vary greatly in strength, but ACLX did a marginally better job on both ORR and CR.

Its other assets are all product candidates in earlier pre-clinical stages.

What makes newcomer Arcellx stand out among numerous CAR-T companies and probably hundreds of cell therapy companies? According to their own statements, they have the first “controllable CAR-T” in the clinic. This is the benefit where they treated the first patient this year. According to the company, this contains “a linker protein that would allow physicians to control the dose and frequency of CAR-T cell therapy after administration.” Already his first study using data from a more traditional CAR-T has beaten the “class leader” in BCMA-directed therapy, Janssen’s Cilta-Cel. These are some of the reasons ACLX is bullish despite a late entry. This and the tremendous demand for life-changing CAR-T therapies currently on the market.

How does the controllable technology work? CART is a highly effective treatment with great benefits, however, when the cancer mutates, the disease reappears. Arcellx has a two-part therapy called SparX that attaches to cancer cells and pulls the CAR-T to that cell. If the cancer mutates, Arcellx simply has to infuse the patient with a new batch of these SparX proteins, and they will bind to the mutated cancer cell and once again attract the CAR-Ts to them.

While the data of the traditional CAR-T they released is good, their core USP lies in the SparX technology, which will have data next year.

finance

ACLX has a market cap of $841 million and cash reserves of $307 million. Research and development expenses were $23.4 million while general and administrative expenses were $9.2 million. That gives them a cash runway of almost 10 quarters at current prices.

bottom line

ACLX is an interesting company. It’s put up an uphill battle against bigger and earlier competitors, and while it has excellent specs, it really sets the bar pretty high. Its next-gen CART is its key product, so we’ll see how this product candidate fares before taking a call.

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