Why This Bay Area Biotech Could Be the Best-in-Breed for 2017

June 14, 2017
By Mark Terry, BioSpace.com Breaking News Staff

Shanthi Rexaline, a writer for Benzinga, thinks that San Francisco Bay Area’s Calithera Biosciences may be “best-in-breed,” which is another way of saying, the best stock choice in biotech. Let’s look at Rexaline’s argument.

First off, the iShares NASDAQ Biotechnology Index (ETF) has been up about 10.55 percent so far this year. The NYSE ARCA Biotech Index has grown 18.81 percent, and the SPDR S&P Biotech has popped 20.43 percent. Which isn’t bad, especially compared to the S&P 500, which grew only 8.37 percent to date. The year-to-date improvement in the NASDAQ Composite has hit 14.54 percent.

So how about Calithera? So far this year, Calithera has increased 337 percent. Shares are currently trading at $13.45.

Calithera focuses on discovering and developing small molecule drugs against tumor metabolism and tumor immunology. On June 7, the company announced that the U.S. Food and Drug Administration (FDA) had granted Fast Track designation to its CB-839 in combination with everolimus as a treatment for metastatic renal cell carcinoma in patients who have received two or more prior lines of therapy. CB-839 is a first-in-class, oral, selective, potent inhibitor of glutaminase which is being evaluated in Phase I/II clinical trials for solid tumors, including renal cell carcinoma, triple negative breast cancer, non-small cell lung cancer, and melanoma.

“We are pleased that CB-839 has been granted Fast Track designation, demonstrating the FDA’s commitment to facilitate the development and expedite the review of our glutaminase inhibitor as an important new therapy for patients with relapsed renal cell carcinoma,” said Susan Molineaux, president and chief executive officer of Calithera, in a statement. “We look forward to initiating a global randomized trial of CB-839 in combination with everolimus for the treatment of renal cell carcinoma in the second half of 2017.”

Another big boost for company stock was when Claithera inked a collaboration and license deal with Incyte for Calithera’s CB-1158, another arginase inhibitor. Incyte paid Calithera $45 million upfront and made an $8 million equity investment in the company at $4.65 per share.

Another factor is that in May, Calithera expanded an existing collaboration deal with Bristol-Myers Squibb to evaluate Bristol-Myers’ Opdivo in combination with Calithera’s CB-839 in non-small cell lung cancer (NSCLC) and melanoma. Studies have suggested that CB-839 may stimulate the effects of checkpoint inhibitors as well as potentially reverse tumor resistance to checkpoint inhibitors.

Calithera was founded and is helmed by Susan Molineaux, who has a doctorate in molecular biology and began her career in drug development at Merck . Before founding Calithera, Molineaux founded Proteolix, which was acquired by Onyx Pharmaceuticals in November 2009 for $800 million. Before that, she was vice president of Biology at Rigel Pharmaceuticals , and prior to that, vice president of Biology at Praelux.

In a November 2016, the San Francisco Business Times wrote, “In the case of Calithera, the math goes something like this: Investors poured $105 million into the upstart’s coffers between when Molineaux founded the company in 2010 and its 2014 IPO last year. The company spent $23.7 million on research and development and reported a $32.6 million loss from operations, with $72 million in cash, equivalents and other investments in hand.”

Rexaline writes that after receiving Fast Track designation, “the momentum seen in the stock strengthened, taking it to a multi-year intra-day high. Contending that returns are an important criterion in designating a stock as a best-in-breed, Calithera Biosciences is passing with flying colors.”