Kintara Therapeutics Could Be a Great Short-Term and Long-Term Play

Some of you might have already heard of Kintara Therapeutics but if not, then you’re going to want to tune in to what I’m writing here. In this analysis, I will be sharing with you the potential the company holds and why it’s currently an undervalued growth stock. For more analyses, feel free to give me a follow here and be notified whenever I post! Company Overview of Kintara Therapeutics Kintara Therapeutics (NASDAQ: KTRA) is a clinical-stage drug development company focused on the treatment of cancer. Their mission is to benefit patients by developing and commercializing anti-cancer therapies for patients whose solid tumors exhibit features that make them resistant or unlikely to respond to currently available therapies. VAL-083 – first-in-class, small-molecule, DNA-targeting chemotherapeutic that has been found to have anti0cancer activities against various cancers, including brain tumors and ovarian cancers. DNA-targeting agents work by binding with a cancer cell’s DNA and interferes with the process of protein production required for the growth and survival of cancer cells. This treatment has been evaluated for more than 40 Phase 1 and Phase 2 clinical studies by the U.S National Cancer Institute. In the initial development of this treatment, KTRA will be focusing on patients whose tumors exhibit biological features that make them resistant to currently available therapies. Kintara’s corporate development strategy is to “advance VAL-083 on an indication-by-indication basis and then to consider out-licensing when it has matured enough to warrant proper licensing valuations.” “These interim data updates at the AACR Annual Meeting continue to demonstrate VAL-083's potential as a game-changing treatment option for GBM patients," – Saiid Zarrabian, Kintara’s CEO, on VAL-083 Phase 2 REM-001 – a photodynamic therapy (PDT) for the treatment of rare, unmet medical needs, particularly tumors that can be reached by its light delivery fibre device that this therapy uses. This therapy is comprised of three parts- the laser light source, the light delivery device and the drug, REM-001. By utilizing light-sensitive compounds, or photosensitizers that when exposed to specific wavelengths of light, act as catalysts to produce a form of oxygen that induces local tumor cell death. KTRA believes that REM-001 therapy is effective in the treatment of CMBC patients and has several advantages over other forms of treatment for this disease. CMBC is cutaneous metastatic breast cancer, a disease that affects individuals with advanced breast cancer. Kintara’s Recent Financials Revenue – Kintara has not generated any revenues to-date and don’t expect to until the approval and marketing of the drug. This is prevalent across many clinical stage companies that have not commercialized their product, so I am not too concerned with this.  R&D Expenses – Kintara had a slight decrease in expenses to $3.63M for the year ended June 30, 2020, from $3.66M for the same period in 2019. The decrease was attributed to the lower preclinical research, personnel and intellectual property expenses and partially offset by higher clinical development costs. Looking at the TTM, the company’s R&D expenses were at $9.08M, a drastic change from the previous year’s value. I think the increase can be interpreted as good since it signifies the clinical development and drug manufacturing of their therapies/treatments. We can expect R&D expenses to increase as they move through their trials, and they costs are incurred relating to their development of REM-001 and VAL-083. Liquidity Position – From their recent 10-Q, they reported $15.7M in its cash position for the nine months ending March 31 which has increased by drastically from their cash position at the beginning of the nine-month period. Increased cash came from a private placement in three closings for aggregate net proceeds of approx. $21.6M in later 2020. Kintara reported current assets and liabilities of $16.6M and $2.5M respectively, which puts them at a high current ratio and thus should be able to cover their short-term obligations. Debt – For 3Q2021, 2Q2021, 1Q2021 and 4Q2020, Kintara had debt ratios of 0.145, 0.142, 0.11, and 0.910 respectively. The expanding ratio can often mean that Kintara is making room to support future growth opportunities. I’m not too worried with these ratios since they’re generally low and the company has a larger margin of total assets Target Markets for Kintara’s Treatments VAL-083 Glioblastoma multiforme (GBM) is a fast-growing and aggressive brain tumor and according to the Central brain Tumor Registry of the U.S GBM occurs with an incidence of 3.20 per 100,000 persons. Current treatment for patients with GMB include invasive brain surgery followed by radiation and oral chemotherapy. Based on information GlobalData reported in 2018, there is a projected market opportunity for GMB of approx. $800M and estimated to reach $1.8B by 2027. Ovarian cancer is the 5th most common cancer in women and is the leading cause of death among women diagnosed with gynecological malignancies. Although they are still in pre-clinical, there are future plans for a phase 1/2 and multicentre study of VAL-083 in patients with Recurrent Platinum Resistant Ovarian Cancer (ovarian cancer resistant to platinum-based chemo). Ovarian cancer projects global sales of approx. $4.2B in 2024. REM-001 Cutaneous metastatic breast cancer (CMBC) presents an estimated market opportunity of approx. $500M for the treatment, according to 2018 assessment from Charles River Associates. Given that there are no prospective clinical studies that have led to FDA approval for CMBC treatment and no anticipations of competitors in this niche market, Kintara can really capture this market and capitalize on the limited treatment options available which is chemotherapy or radiotherapy. Basal cell carcinoma nervous system (BCCNS) is a rare and serious condition characterized by the formation of multiple and recurring cutaneous basal cell carcinoma lesions. Cancer.net reported in 2020 that approx. 1 in 40,000 individuals in the U.S have an underlying genetic condition that causes BCCNS. Short-Term and Long-Term Catalysts to Look out for Previous Trading History - Following the conclusion of their safety study of VAL-083 in patients with recurrent malignant glioma back in 2015, Kintara, previously known as DelMar Pharmaceuticals, gave insight into the results at the 2016 annual meeting of the society of clinical oncology (ASCO). Their overall data presented was positive which saw their stock open nearly 10% higher the following day. A further look shows that the stock reached a high of $107 in a 2-week span, representing a 66% increase since before the company presented their findings. A key thing to note here is that the stock’s volume was significantly lower than the volume it’s trading at nowadays, which can help with driving momentum upon positive news. These findings are meant to highlight what good news can do to a stock like KTRA Safety Study of VAL-083 “The purpose of this phase 2 study is to determine the safety and the maximally tolerated dose of VAL-083 in combination with a standard of care radiation regimen when used to treat newly diagnosed GBM patients…” After starting in December 2017, the study should be ending with the est. primary completion date being June 2021, so we should be expecting news on this in the next month or so Similar to the study conducted in 2015, I think that when data of this study comes out, we’ll see the stock price pick up momentum. Study of VAL-083 in Patients with MGMT Unmethylated, Bevacizumab-naïve Glioblastoma “The purpose of this phase 2, two-arm, biomarker-driven study is to determine if treatment of O-6-methylguanine-DNA methyltransferase (MGMT) unmethylated glioblastoma with VAL-083 improves overall survival (OS), compared to historical control, in the adjuvant or recurrent setting” The start date was in January 2017, and the est. completion date is Sept 2021 GBM AGILE for VAL-083 Started in July 2019, the est. primary completion date is set for December 2023 Phase II/Phase III response adaptive trial designed to evaluate several “treatment arms” and allows for identification or disapproval or therapies more quickly GBM AGILE is a unique approach to clinical trials made possible by the partnership and collaboration of clinicians, researchers, governments etc. Strategic partners for GMB AGILE include the National Brain Tumor Society, National Foundation for Cancer Research, and Asian Fund for Cancer Research This trial may help to accelerate VAL-083’s time to trial completion and is cost-effective due to the expense sharing protocol A Major Risk Factor Investors Should Consider Kintara may never achieve commercialization of their products.  Given it’s a clinical stage company, they have not yet begun to market any of their products and have not generated any revenues from their products. Their products will continue to require additional testing and investment before any commercialization. If any of their product candidates fail, then that will negatively impact their financials. Even if all goes well, it is not for years until commercialization and until we start seeing revenues. What do the Analysts Say? Based on ratings from 3 analysts, they all hold a BUY recommendation and the median target price being $6.50 based on 4 analysts’ forecasts. Final Thoughts on Why KTRA can be a Short-Term and Long-Term Play With Kintara’s advancement on their VAL-083 pipeline and the conclusion of one of their clinical phases coming up, I think this stock has already begun to gain momentum and will continue to. Their news so far on their development shows the company’s commitment to their corporate strategy, and their strong balance sheet for a clinical-stage company strengthens their position. This stock can be a great play for both the short and long-term and the overall stock sentiment has been positive thus far. For those interested in a short-term play, I would look to build a position now and wait on the news that should be coming out soon. This short-term play is on the basis that news is positive and seeing what good news has done to this stock before I expect it to be the same. Depending on your risk tolerance and investment goals, I would set up an exit strategy by taking gains on the way up and setting stop losses. Some key things to look for in a technical analysis of the stock is for it to retest that $2.40 and a potential break past the resistance of $2.60 for a breakout. If it continues trading downwards these next few days and crossing down over the moving average, then I think it’s consolidating before breaking out into a new trend. To sum it all up, Kintara has a strong balance sheet and I believe that as they continue to advance their product pipeline, that grants, and loans will be made available to continue their work and keep the company going. With VAL-083 targeting such a specific market, if they’re able to complete the study and make it to commercialization, there is little to no competition amongst other companies. Sources: VAL-083 Pipeline Photo Pipeline Overview Photo KTRA Phase 2 Recent News Safety Trial Summary KTRA Stock History KTRA 10K KTRA 10Q March 2021 Analyst Coverage Clinical Trial Information

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Kintara Therapeutics Could Be a Great Short-Term and Long-Term Play

bullish

Some of you might have already heard of Kintara Therapeutics but if not, then you’re going to want to tune in to what I’m writing here. In this analysis, I will be sharing with you the potential the company holds and why it’s currently an undervalued growth stock.

For more analyses, feel free to give me a follow here and be notified whenever I post!

Company Overview of Kintara Therapeutics

Kintara Therapeutics (NASDAQ: KTRA) is a clinical-stage drug development company focused on the treatment of cancer. Their mission is to benefit patients by developing and commercializing anti-cancer therapies for patients whose solid tumors exhibit features that make them resistant or unlikely to respond to currently available therapies.

VAL-083 – first-in-class, small-molecule, DNA-targeting chemotherapeutic that has been found to have anti0cancer activities against various cancers, including brain tumors and ovarian cancers. DNA-targeting agents work by binding with a cancer cell’s DNA and interferes with the process of protein production required for the growth and survival of cancer cells. This treatment has been evaluated for more than 40 Phase 1 and Phase 2 clinical studies by the U.S National Cancer Institute. In the initial development of this treatment, KTRA will be focusing on patients whose tumors exhibit biological features that make them resistant to currently available therapies. Kintara’s corporate development strategy is to “advance VAL-083 on an indication-by-indication basis and then to consider out-licensing when it has matured enough to warrant proper licensing valuations.”

  • “These interim data updates at the AACR Annual Meeting continue to demonstrate VAL-083's potential as a game-changing treatment option for GBM patients," – Saiid Zarrabian, Kintara’s CEO, on VAL-083 Phase 2

REM-001 – a photodynamic therapy (PDT) for the treatment of rare, unmet medical needs, particularly tumors that can be reached by its light delivery fibre device that this therapy uses. This therapy is comprised of three parts- the laser light source, the light delivery device and the drug, REM-001. By utilizing light-sensitive compounds, or photosensitizers that when exposed to specific wavelengths of light, act as catalysts to produce a form of oxygen that induces local tumor cell death. KTRA believes that REM-001 therapy is effective in the treatment of CMBC patients and has several advantages over other forms of treatment for this disease. CMBC is cutaneous metastatic breast cancer, a disease that affects individuals with advanced breast cancer.

Kintara’s Recent Financials

Revenue – Kintara has not generated any revenues to-date and don’t expect to until the approval and marketing of the drug. This is prevalent across many clinical stage companies that have not commercialized their product, so I am not too concerned with this. 

R&D Expenses – Kintara had a slight decrease in expenses to $3.63M for the year ended June 30, 2020, from $3.66M for the same period in 2019. The decrease was attributed to the lower preclinical research, personnel and intellectual property expenses and partially offset by higher clinical development costs. Looking at the TTM, the company’s R&D expenses were at $9.08M, a drastic change from the previous year’s value. I think the increase can be interpreted as good since it signifies the clinical development and drug manufacturing of their therapies/treatments. We can expect R&D expenses to increase as they move through their trials, and they costs are incurred relating to their development of REM-001 and VAL-083.

Liquidity Position – From their recent 10-Q, they reported $15.7M in its cash position for the nine months ending March 31 which has increased by drastically from their cash position at the beginning of the nine-month period. Increased cash came from a private placement in three closings for aggregate net proceeds of approx. $21.6M in later 2020. Kintara reported current assets and liabilities of $16.6M and $2.5M respectively, which puts them at a high current ratio and thus should be able to cover their short-term obligations.

Debt – For 3Q2021, 2Q2021, 1Q2021 and 4Q2020, Kintara had debt ratios of 0.145, 0.142, 0.11, and 0.910 respectively. The expanding ratio can often mean that Kintara is making room to support future growth opportunities. I’m not too worried with these ratios since they’re generally low and the company has a larger margin of total assets

Target Markets for Kintara’s Treatments

VAL-083

  1. Glioblastoma multiforme (GBM) is a fast-growing and aggressive brain tumor and according to the Central brain Tumor Registry of the U.S GBM occurs with an incidence of 3.20 per 100,000 persons. Current treatment for patients with GMB include invasive brain surgery followed by radiation and oral chemotherapy. Based on information GlobalData reported in 2018, there is a projected market opportunity for GMB of approx. $800M and estimated to reach $1.8B by 2027.
  2. Ovarian cancer is the 5th most common cancer in women and is the leading cause of death among women diagnosed with gynecological malignancies. Although they are still in pre-clinical, there are future plans for a phase 1/2 and multicentre study of VAL-083 in patients with Recurrent Platinum Resistant Ovarian Cancer (ovarian cancer resistant to platinum-based chemo). Ovarian cancer projects global sales of approx. $4.2B in 2024.

REM-001

  1. Cutaneous metastatic breast cancer (CMBC) presents an estimated market opportunity of approx. $500M for the treatment, according to 2018 assessment from Charles River Associates. Given that there are no prospective clinical studies that have led to FDA approval for CMBC treatment and no anticipations of competitors in this niche market, Kintara can really capture this market and capitalize on the limited treatment options available which is chemotherapy or radiotherapy.
  2. Basal cell carcinoma nervous system (BCCNS) is a rare and serious condition characterized by the formation of multiple and recurring cutaneous basal cell carcinoma lesions. Cancer.net reported in 2020 that approx. 1 in 40,000 individuals in the U.S have an underlying genetic condition that causes BCCNS.

Short-Term and Long-Term Catalysts to Look out for

Previous Trading History - Following the conclusion of their safety study of VAL-083 in patients with recurrent malignant glioma back in 2015, Kintara, previously known as DelMar Pharmaceuticals, gave insight into the results at the 2016 annual meeting of the society of clinical oncology (ASCO). Their overall data presented was positive which saw their stock open nearly 10% higher the following day. A further look shows that the stock reached a high of $107 in a 2-week span, representing a 66% increase since before the company presented their findings. A key thing to note here is that the stock’s volume was significantly lower than the volume it’s trading at nowadays, which can help with driving momentum upon positive news.

  • These findings are meant to highlight what good news can do to a stock like KTRA
  1. Safety Study of VAL-083
    • “The purpose of this phase 2 study is to determine the safety and the maximally tolerated dose of VAL-083 in combination with a standard of care radiation regimen when used to treat newly diagnosed GBM patients…”
    • After starting in December 2017, the study should be ending with the est. primary completion date being June 2021, so we should be expecting news on this in the next month or so
    • Similar to the study conducted in 2015, I think that when data of this study comes out, we’ll see the stock price pick up momentum.
  2. Study of VAL-083 in Patients with MGMT Unmethylated, Bevacizumab-naïve Glioblastoma
    • “The purpose of this phase 2, two-arm, biomarker-driven study is to determine if treatment of O-6-methylguanine-DNA methyltransferase (MGMT) unmethylated glioblastoma with VAL-083 improves overall survival (OS), compared to historical control, in the adjuvant or recurrent setting”
    • The start date was in January 2017, and the est. completion date is Sept 2021
  3. GBM AGILE for VAL-083
    • Started in July 2019, the est. primary completion date is set for December 2023
    • Phase II/Phase III response adaptive trial designed to evaluate several “treatment arms” and allows for identification or disapproval or therapies more quickly
    • GBM AGILE is a unique approach to clinical trials made possible by the partnership and collaboration of clinicians, researchers, governments etc.
      • Strategic partners for GMB AGILE include the National Brain Tumor Society, National Foundation for Cancer Research, and Asian Fund for Cancer Research
    • This trial may help to accelerate VAL-083’s time to trial completion and is cost-effective due to the expense sharing protocol

A Major Risk Factor Investors Should Consider

Kintara may never achieve commercialization of their products.  Given it’s a clinical stage company, they have not yet begun to market any of their products and have not generated any revenues from their products. Their products will continue to require additional testing and investment before any commercialization. If any of their product candidates fail, then that will negatively impact their financials. Even if all goes well, it is not for years until commercialization and until we start seeing revenues.

What do the Analysts Say?

Based on ratings from 3 analysts, they all hold a BUY recommendation and the median target price being $6.50 based on 4 analysts’ forecasts.

Final Thoughts on Why KTRA can be a Short-Term and Long-Term Play

With Kintara’s advancement on their VAL-083 pipeline and the conclusion of one of their clinical phases coming up, I think this stock has already begun to gain momentum and will continue to. Their news so far on their development shows the company’s commitment to their corporate strategy, and their strong balance sheet for a clinical-stage company strengthens their position.

This stock can be a great play for both the short and long-term and the overall stock sentiment has been positive thus far. For those interested in a short-term play, I would look to build a position now and wait on the news that should be coming out soon. This short-term play is on the basis that news is positive and seeing what good news has done to this stock before I expect it to be the same. Depending on your risk tolerance and investment goals, I would set up an exit strategy by taking gains on the way up and setting stop losses. Some key things to look for in a technical analysis of the stock is for it to retest that $2.40 and a potential break past the resistance of $2.60 for a breakout. If it continues trading downwards these next few days and crossing down over the moving average, then I think it’s consolidating before breaking out into a new trend.

To sum it all up, Kintara has a strong balance sheet and I believe that as they continue to advance their product pipeline, that grants, and loans will be made available to continue their work and keep the company going. With VAL-083 targeting such a specific market, if they’re able to complete the study and make it to commercialization, there is little to no competition amongst other companies.

Sources:

  1. VAL-083 Pipeline Photo
  2. Pipeline Overview Photo
  3. KTRA Phase 2 Recent News
  4. Safety Trial Summary
  5. KTRA Stock History
  6. KTRA 10K
  7. KTRA 10Q March 2021
  8. Analyst Coverage
  9. Clinical Trial Information
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