Viral diseases continue to pose some of the greatest challenges to modern medicine and therefore antiviral therapies are becoming an important, emerging area of pharmaceutical research. For many viral diseases, prophylactic vaccines are unlikely to be developed in the near future. Fortunately, effective antiviral therapies have been developed for many of these viruses. In this article, we decided to evaluate Chimerix, Inc. (CMRX), a small-cap biopharmaceutical company engaged in the discovery, development, and commercialization of oral antiviral therapeutics for various medical needs.
Company Overview
Chimerix is based in Durham, North Carolina, and was founded in 1996. The company licensed lipid-conjugation technology from the University of California that has been shown to improve the potency of antivirals, and has to date pushed two drug candidates into the clinic. The first drug candidate is CMX001, a lipid-conjugate of cidofovir (brand name Vistide), manufactured by Gilead Sciences (GILD). CMX001 has successfully completed a Phase II trial for the prophylaxis against cytomegalovirus (CMV) reactivation in hematopoietic stem cell transplant (HSCT) patients. CMX001 is also in development for the prevention of viral infection in solid organ transplant patients, and as a bioterrorism measure to prevent smallpox. The second drug candidate is CMX157, a lipid-conjugate of tenofovir (brand name Viread), developed and marketed by Gilead Sciences for the treatment of Human Immunodeficiency Virus (HIV). CMX157 has been licensed to Merck (MRK) for development of novel HIV combo therapies that could have certain advantages over Gilead's industry-leading regimens.
The Company's Assets
1. CMX001 - Chimerix's lead asset, CMX001, is a phospholipid derivative of Gilead's cidofovir that can potently kill a wide range of dsDNA viruses. Chimerix has received fast-track designation from the FDA for the CMV, adenovirus (AdV), and smallpox indications for CMX001. CMX001 has been most extensively tested as a prophylactic against CMV infection in patients who have received a HSCT. In the Phase II, CMX001 reduced the risk of CMV reactivation by 72%. Chimerix had predefined as a subgroup those patients who were CMV negative at baseline and in this group CMX001's efficacy was even more striking. CMX001 100mg BIW (twice a week) was safe and well tolerated in the trial, with the frequency of adverse events being similar to placebo. Importantly, there was no myelosuppression observed for CMX001. This is a side effect produced by currently available CMV antivirals that can be particularly problematic for HSCT patients.
In September, Chimerix initiated a Phase III SUPPRESS trial. 450 CMV seropositive adult HSCT patients will be enrolled to test CMX001 as a prophylactic against CMV reactivation. The primary objective of the study is the rate of clinically significant CMV infection through the first 24 weeks post‐transplant. Secondary endpoints include clinical and virologic evidence of double‐stranded DNA (dsDNA) viral infections including adenovirus, BK virus (BKV), and other herpes viruses. Chimerix reports that enrollment is following internal projections and top line data should be available in mid-2015.
In addition to SUPRESS, Chimerix is required to conduct a second, confirmatory study with clinical endpoints to obtain full approval for CMX001. Recent scientific, medical, and regulatory discussions have focused Chimerix efforts toward a second pivotal study in renal transplant recipients, a high‐risk patient population with a significant un‐met medical need. A proposed study in renal transplants could offer an opportunity to evaluate CMX001's impact not only on the prevention of CMV but also against BK virus, known to be associated with kidney dysfunction in HSCT and solid organ transplant patients. Management noted that if discussions with the Food and Drug Administration (FDA) continue according to plan, the company plans to finalize the design for the study during first half 2014.
In addition to the company's development of its lead candidate, CMX001, for transplant recipients, CMX001 is also being developed as a medical countermeasure in the event of a smallpox release, with the potential to provide an important therapeutic option for the 80 million people in the U.S. currently estimated to be immunocompromised, or a household contact of a contraindicated individual, and thus not candidates to receive a smallpox vaccine. Chimerix is actively pursuing development of CMX001 for the prevention and treatment of smallpox under the "Animal Efficacy Rule", which allows the FDA to rely on efficacy data from animal models of human disease in the development and approval of a compound.
2. CMX157 - Chimerix's second Asset, CMX157, is a lipid-modified prodrug of Gilead's tenofovir, an antiviral agent approved for the treatment of HIV and hepatitis B chronic. CMX157 is being developed as an antiviral therapy against HIV, and has a much improved potency and resistance profile than tenofovir, is dosed once weekly, and might be devoid of the renal and bone toxicities typically observed with tenofovir. Chimerix completed a Phase I study of CMX157, which demonstrated favourable safety, tolerability and a good drug distribution profile.
In 2012, Chimerix granted Merck an exclusive worldwide license to develop and commercialize CMX157. The deal included a $17.5MM upfront payment from Merck, $151MM of potential milestone payments, and a tiered royalty on net sales ranging from high single digits to low double digits. Merck intends to put CMX157 together with other compounds in the portfolio to develop a once-weekly oral combo therapy for HIV.
Market Potential
- HSCT - The Center for International Blood and Marrow Transplant Research (CIBMTR) estimates that over 20,000 HSCTs are performed annually in the U.S., and the European Group for Blood and Marrow Transplantation estimates a similar number in the E.U. Stem cell transplants have grown considerably over time (approximately 4% annually in the U.S. since 2000), given that they are the only way to treat certain conditions such as leukemias, lymphomas, and other cancers of the immune system. Within allogeneic transplants, the subset with unrelated donors has grown at a faster rate than other subsets within HSCT, which may suggest a greater role for antivirals as they are needed to suppress viruses when greater immunosuppression is utilized. The CIBMTR estimates that there were 8,860 allogeneic HSCTs and 9,026 autologous HSCTs in the U.S. during 2010. Of those, approximately one-quarter were pediatric patients, while three-quarters were adults. 70% of allogeneic recipients, and 40% of autologous recipients are estimated to be at high risk for CMV reactivation and therefore would be appropriate for prophylactic therapy such as CMX001.
- HIV - According to the Centers for Disease Control and Prevention (CDC), around 1.1 million people are HIV positive, and about 50,000 are infected every year. Every HIV infected person requires treatment according to his medical condition, because the HIV mutates and develops resistance to the prescribed drug. In 2011, only 28% of HIV positive people were receiving HIV treatment in the U.S. According to EvaluatePharma, the HIV market will grow from $17.5 billion in 2012 to $20.6 billion in 2016, where it will peak. It then sees it tapering off to about $18 billion in 2018. The reasons for the projected slowdown could be the reduction in the number of new cases, and newer drugs that provide a good treatment for the disease and its symptoms.
Competitive Landscape
There are two major competitive agents in development for CMV prevention; letermovir from partners Merck and AiCuris, and TransVax from partners Astellas (OTCPK:ALPMF) and Vical (VICL).
- Merck/AiCuris' Letermovir - During 2012 Merck licensed letermovir (AIC246) from AiCuris. Letermovir is a viral terminase inhibitor that specifically kills the CMV virus. Results from a Phase II trial of letermovir for CMV prevention in HSCT patients were released in February 2012. The Phase II enrolled 133 CMV-positive allogeneic human blood precursor cell patients and they were randomized to receive placebo, letermovir 240 mg/day or letermovir 120 mg/day for 84 days. Letermovir appeared safe and well tolerated, with fewer patients on letermovir having either one treatment emergent adverse events (AE) or an AE-prompted discontinuation. Based on these data, AiCuris expects partner Merck will begin a Phase III trial for letermovir. While letermovir antiviral activity is specific to CMV, CMX001 is effective against a very wide range of double stranded DNA viruses.
- Vical and Astellas' TransVax - TransVax, a DNA-based prophylactic vaccine for CMV reactivation in immunocompromised patients, has also produced proof-of-concept data. Vical initiated Phase I trials with bivalent and trivalent (three plasmid) developmental candidates, each formulated with a poloxamer that enhances cellular uptake and expression. While data from these trials indicated that both formulations were safe, the bivalent vaccine (a.k.a. TransVax) induced higher levels of antibody and T-cell responses, and was selected for future studies. Vical has partnered TransVax to Astellas, which initiated in June a multinational Phase 3 registration trial of TransVax, in approximately 500 HCT patients.
In addition, the HIV competitive landscape is becoming more crowded and complicated as treatment trends evolve. According to the Pharmaceutical Research and Manufacturers of America (PhRMA), there are currently 73 separate HIV/AIDS treatments in clinical trial or under review by the FDA in the U.S., including 40 antivirals, 25 vaccines, 4 cell or gene therapies, and 4 immunomodulators. Gilead's Viread (tenofovir) is currently the cornerstone of HIV treatment. Compared with Viread, CMX157 has much-improved antiviral potency, can overcome Viread resistance mutations, has a much longer half-life, can be dosed orally once weekly, and should be devoid of the renal and bone toxicities that long-term treatment with Viread typically leads to.
Summary: Reasons to Buy the Stock
- Compared with the currently available therapies and agents in clinical development, CMX001 has the best antiviral potency, the broadest antiviral coverage, a more convenient dosing schedule, and most importantly, a much more favorable tolerability profile, which could enable longer-term use in the prevention setting. CMX001 is expected to reach the market by early 2016 and become the market leader in the prevention setting for HSCT.
- The annual growth for U.S. HSCT was 4% for the 10-year span between 2001 and 2011. The allogeneic transplants particularly have been growing faster. The faster-growing allogeneic transplant in HSCT will heighten the need for minimizing post-transplant complications, including viral infections, an overall trend favorable for CMX001.
- CMX001's phase II data provided strong proof of concept, and with the Phase III of very similar design to the Phase II, the Phase II results strongly suggest that CMX001 should be able to hit the Phase III endpoint.
- William Blair analysts have initiated coverage on Chimerix with a "Buy" rating and a price target of $28 a share, representing potential upside of 83% from where the stock is currently trading.
Potential Risks:
- Generally, patients remain at high risk during the first 100 days following their transplant and can readily acquire infections during that period, which can be serious and even life threatening due to their weakened immune systems. As a result, it is likely that the company will observe severe adverse outcomes during its Phase 3 trial for CMX001, including patient death. If a significant number of study subject deaths were to occur, regardless of whether such deaths are attributable to CMX001, the company's ability to obtain regulatory approval for CMX001 may be adversely impacted.
- CMX157, which is being developed as a potential treatment for HIV, is far earlier in its development, and is currently in stage one clinical trials, meaning that it is still being screened for safety and has not yet been fully tested for efficacy.
Financial Outlook
The company ended the third quarter 2013 with $116.9 million in cash and $11.3 million in debt. Net loss for the quarter was $6.7 million, with a per share loss of $0.26. The current cash should sustain operations through the data release from SUPPRESS expected by mid 2015. However, the company may need to seek additional capital in order to continue to fund its operations in the future. Such financing could be dilutive to stockholders or impose debt covenants and obligations.
Bottom Line
The Phase III SUPPRESS Trial in CMV started and data remains on track for mid-2015. The outcome of the SUPRESS trial is poised for success given 1) solid data in phase II, and 2) a phase III trial optimized for success. Details on a second confirmatory study are expected in 1H14, with comments to date suggesting a possible prevention trial in solid organ transplant patient. Prevention of CMV in HSCT patients remains the main driver for the company. That said, at the current valuation, Chimerix seems to be undervalued based solely on CMX001's potential as a CMV prophylactic in HSCT.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. (More...)
Additional disclosure: Biomed Group is a group of investment professionals and writers. This article was written by Amit Cohen. This information is not to be construed as an offer to buy or sell any security mentioned on this article.
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