Forum Topics CU6 CU6 Bull Case

Pinned straw:

Added 12 months ago

Received this note from Frazis Capital Partners for anyone not yet subscribed to his email updates

Clarity Pharmaceuticals

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This is the most exciting company I’ve come across in Australia lately. Clarity has been steadily releasing data from patients treated with their copper therapies with late stage prostate cancer.

Clarity has been on a bit of a tear lately. If their data continues to hold, this is still early days, and it remains a fraction of the value of recent acquisitions in the space with early stage data.

I will send out a note on the space shortly.

Current players include Novartis, which entered the space through their US$2 billion acquisition of Endocyte, Lantheus, which offers a radiodiagnostic, and Telix which is rapidly gaining diagnostic share from Lantheus. The whole space itself is growing fast and expanding into new areas.

M&A activity has been intense.

Two days ago Bristol Myers Squibb bought RayzeBio for US$4.1 billion, with early stage data for their alpha-particle emitting Actinium-based radiotherapy targeting gastroenteropancreatic neuroendocrine tumors. The company is enrolling patients in a Phase III trial.

And Novartis paid $2 billion for Endocyte in late 2018 with only Phase II data. This has proved a big winner, with first year revenues for their first product Pluvicto forecast at over US$1 billion.

Point Biopharma, in partnership with Lantheus, was itself bid for by Eli Lilly for US$1.4 billion - again with only Phase II data. Last week Point’s data came in a little soft, leaving open space for new entrants like Clarity.

This is going to be a large market. In prostate cancer, the trend is towards increased monitoring and (where possible) fewer surgeries and hormone therapy, which involves the unwelcome side effects of incontinence, impotence, low testosterone and depression.

These companies are focused on heavily pre-treated patients. But the hope is that these targeted treatments, with their milder side effects, will move further up the treatment timeline, which could double or even triple industry revenues.

This will take time, given the high hurdle for changing standard-of-care, but is looking more likely than ever today.

In the meantime, a steady rise in the incidence of prostate cancer, combined with an increase in monitoring, suggests the market will expand significantly regardless.

In a space where companies with promising data are being acquired for billions of dollars, and Clarity’s early indications look best-in-class, the company’s post-runup US$340 million valuation looks cheap.

And just today (28 Dec 23) the share price reached an all time high of $2 before settling back down to $1.89

I presume the rally was on the back of coverage from this email update.

Michael Frazis of Frazis Capital Partners is known for ignoring financial metrics in favour of more unconventional measures of customer satisfaction, loyalty, addressable markets and ideas that involve cutting edge technology and science. His style is more inline with ARK invests Cathie Wood

For the record, I'm not as enthusiastic as Frazis on the growth of the PSMA market, I think the rise of drugs such as Ozempic could slow the rate of growth in Prostate Cancer and the underperformance from Lantheus and Telix is evidence of this. Frazis could be just a victim of wanting to catch the CU6 uptrend late in the cycle while ignoring his bad call on Paul Hopper's Radiopharm Theranostics.

[held]

topowl
Added 12 months ago

I'll be frank, the personalities involved in this one and the voices that have spoken to me about it worry me.

The price starts going up when the lunches and booze start going down in Sydney.

IMO, people should be very careful.

Ultimately, I think it's a biotech speccy and an all or nothing proposition.

Good luck though honestly to whoever is taking a punt, but personally I'm looking for investment opporunities not speculative ones.

Sorry, I know it sounds harsh....




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edgescape
Added 12 months ago

@topowl Definitely agree the spec biotech world is the wild west of the ASX.

Anyway I try however to keep an open mind with biotechs and always like getting in early before everyone else.

I'm not sure where you got your thoughts on Clarity being "questionable" and I will respectfully ignore that comment till you can give some credible source. Instead I will try to sum up my points below from previous straws.

After a few hard-earned lessons, some metrics I like to use are the following (bear in mind I may be wrong)

  • Recruitment progress on trials which indicate future demand and scaling for the treatment
  • No contingency payments on trial and revenue milestones to other parties if the company licensed the technology as opposed to owning the technology.
  • Cash reserve and burn rate.
  • Licensing agreements and milestone payments from commercial agreements with large pharma.
  • Geographic reach.


I think Clarity ticks the first 3 points. But would like to highlight the first point is still too early like what Frazis mentioned in his update.

The Secure trial is still at stage Phase I/IIa and only have less than 5 patients enrolled. So they may be still slow with distributing the Cu67 therapy even with the agreement with Northstar. On the other hand, Secure is part of the EAP (Expanded Access program) but haven't heard much on how this part is going again possibly due to the previous point.

The diagnostic is progressing however Cu64 is easier to obtain than Cu67 since Cu64 only requires a Cyclotron which is more common than a Rhodotron (used for Cu67). For example, Australia has a Cyclotron operated by CSIRO in Lucas Heights (??) but no Rhodotron which means any treatment needs to be done overseas (closest Rhodotron is in Singapore). So obviously Clarity PSMA treatment is excluded from Australia by default until somehow a Rhodotron gets shipped out over here - and hence this is the part which worries me as now their geographic reach is very limited to possibly Europe, Asia and America. For a Rhodotron to be deployed here, I think the Australian Government need to step in and provide some funding.

Finally it is strange Frazis did not pick up on Clarity earlier and instead went with Hopper's Radiopharm which did not "own" much of their technology in contrast to Clarity

I do want to mention I agree Radiopharm is one to avoid as they don't own the technology like Clarity and hence have to make milestone payments.

I'm also not a buyer at the current price until either all 5 points are met or the price goes back to $1.40

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edgescape
Added 12 months ago

I'll be frank, the personalities involved in this one and the voices that have spoken to me about it worry me.

@topowl Would you mind citing a source supporting this statement? I had to go back and re-read your post as that is a pretty big yet very vague statement to make against a listed company - profitable or not.

With regard to current holdings in the last week, I've checked on capital IQ pro and couldn't find much.

Unless I see adverse information that is in the public domain, I will trust my research and continue to hold.

Also Lantheus is working on a Cu64 diagnostic/therapy called LNTH-1363S. Although early stage, I see this is further validation of Clarity's current platform and interest in this area.

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