January 21, 2021 - 5:38pm EST by
2021 2022
Price: 5.50 EPS 0 0
Shares Out. (in M): 50 P/E 0 0
Market Cap (in $M): 276 P/FCF 0 0
Net Debt (in $M): -122 EBIT 0 0
TEV ($): 153 TEV/EBIT 0 0

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ONCT Therapeutics, Inc (ONCT)



Oncternal Therapeutics Inc (ONCT) is a clinical stage drug development company with 2 promising new oncology candidates.  Lead asset Cirmtuzumab is a ROR1 targeted mAb (monoclonal antibody) and was recently validated by two large M&A transactions at 10-20x the valuation of ONCT despite having inferior clinical data.  TK-216 is a first-in-class small molecule inhibiting the biological activity of ETS-family transcription factor oncoproteins in a variety of tumor types.  The write up below will focus on Cirmtuzumab which we believe highlights an extreme valuation differential, however we are also positive on TK-216.


Due to the scarcity of clinical stage Receptor tyrosine kinase-like Orphan Receptor 1s (ROR1s), ONCT should re-rate significantly higher in line with other new and promising oncology assets. 


Novel and new target method of actions (MOA) are a driving force in the advancement of treating cancer.  When an oncology target MOA is validated, there is a scramble to identify competing versions undiscovered by market participants. Recent exciting targets include KRAS, CD47 and TIGIT.  The commensurate valuation uptick of MRTX on the back of Amgen data or the ALXO/TRIL uptick on the back of Forty Seven’s Magrolimab data and subsequent acquisition by Gilead as well as the RCUS/MREO valuation change on the back of TIGIT data from Roche are predicate examples.  We think the next target of excitement is ROR1, and ONCT is the leader with Cirmtuzumab, a naked mAb of ROR1.  


Validation for ROR1 came in the form of Merck’s acquisition of VelosBio for $2.8B in November (Velos acquisition).  VelosBio’s primary asset is VLS-101, an anti-body drug conjugate (ADC) targeting ROR1.  VeloBio was developed and spun out from ONCT while ONCT was still a private company.  The companies effectively share the same DNA as the backbone of the VelosBio ADC is Cirmtuzumab.  


Velos recently presented monotherapy data in Mantle Cell Lymphoma (MCL) with an ORR of 47%.  At the same medical conference, in our opinion, ONCT presented better data than Velos.  ONCT reported an 87% ORR in the same MCL setting with Cirmtuzumab in combination with BTK inhibitor ibrutinib.  We also note that Cirmtuzumab in combination appears to have a better safety profile than ibrutinib alone.  


Further stoking the excitement around ROR1,  Boehringer Ingelheim acquired a privately held ROR1 company NBE Therapeutics for $1.4B one month after the Velos deal (NBE aquisition ). NBE only entered the clinic in October and has no human data yet.  ONCT took advantage of a modest increase in its valuation to substantially enhance its small $21M cash position into a $122M war-chest.  At $5.50, ONCT sports a $275M market cap and $150M enterprise value. We believe the science, clinical data and recent validation should cause a significant re-rating for ONCT.


Company background/history

ONCT was formed in 2016 to license and develop ROR1 targeted therapeutics  which were developed in Tom Kipps lab at UCSD (UCSD PR  and Oncteral PR ).  ROR1 is an active signal transducing transmembrane protein essential for normal fetus development. The ROR1 gene is shut off before birth and there is no known physiological function for ROR1 in adult life.  When a cancer expresses ROR1, the cancer tends to be aggressive and difficult to treat. The licensing deal with UCSD included Cirmtuzumab, which was in the clinic in CLL, in addition to development rights for antibody-drug conjugates (ADCs), CAR-Ts and bi-specific antibodies.  As a result of encouraging data for all four programs coupled with a limited budget, ONCT decided to split into two companies in 2017.  


ONCT retained Cirmtuzumab and the ROR1 CAR-T programs while VelosBio got the ADC and bi-specifics.  ONCT does not maintain any economic interest in VelosBio.  ONCT came public via reverse merger in March 2019 into the shell of GTx (GTx ONCT Merger). Reverse mergers avoid the IPO roadshow and public cross over financings, keeping this development story under the radar.


Cirmtuzumab efficacy data 

Cirmtuzumab (CIRM) is a ROR1 monoclonal antibody (mAb) currently being studied in two hematological oncology settings, relapsed/refractory (R/R) Mantle Cell Lymphoma (MCL) and (R/R) Chronic Lymphocytic Leukemia (CLL).  The ongoing P 1/2 CRILL trial is single arm combination of CIRM+ ibrutinib (BTK inhibitor that is the standard of care). Impressive data was recently updated at ASH (American Society of Hematology) in December in MCL with encouraging signs in CLL (ASH 2020 Cirmtuzumab).    


  • MCL data from CRILL P1/2 trial update of Cirmtuzumab+ ibrutinib 

    • N=15.  MCL had an ORR of 87% (13/15), CR of 57% (7/12 evaluable) in Part 1, 47% (7/15) CR for Part 1+Part 2 (Note includes 3 patients in Part 2 with short follow up as of cutoff date); 

    • CRs durable ranging 5-25+ months as of cutoff date

    • 100% CBR maintained (7 CR+ 6 PR + 2 SD) 

    • Median progression-free survival (PFS) was not reached, with the 95% confidence interval above 17.5 months, after a median follow-up of 12.1 months.

  • CLL data from CRILL P1/2 trial update of Cirmtuzumab+ ibrutinib 

    • N=56. CLL (49 went from mono CIRM to CIRM+BTK (ibrutinib)

    • ORR of 92% (45/49), CR of 2% (1/49), 100% CBR (1 CR+ 44 PR+ 4 SD) 

    • The median PFS was not reached for patients with treatment naïve CLL (n=19) after a median follow-up of 16.6 months, and median PFS was 29.5 months for patients with relapsed/refractory CLL (n=30) after a median follow-up of 17.1 months.


Benchmark of BTK monotherapy implies Cirmtuzumab provides material incremental benefit. 

Historical data published for single-agent ibrutinib for 370 patients with relapsed/refractory MCL, who had received a median of two prior therapies, reported an ORR of 66%, CR rate of 20%, PR rate of 46%, and median PFS of 12.8 months (Rule et al., 2017, British Journal of Haematology Link ). 


Clearly randomized control trials need to be run to truly confirm the magnitude of CIRM’s benefit.  We recognize cross-comparing trials is not “good science”, but it offers a helpful guidepost in early stages without a control arm. 



Cirmtuzumab safety data

Equally important to the efficacy of a therapeutic is the associated safety profile.  The safety data looks very good for CIRM and when used in combination with ibrutinib it is possible that safety is actually improved. 



ADC vs. mAb toxicity

The construction of the VelosBio antibody drug conjugate creates a potentially problematic toxicity profile.  It looks manageable on its own in monotherapy, but overlaps with the same side effects of ibrutinib.  Per ASH 2020 data, VLS-101 had Grade 3+ neutropenia of 53%.  Grade 4 neutropenia occurred in 9/32 (28%) patients and Grade 3 neutropenia in 8/32 (25%)VLS-101 uses an MMAE construction to deliver the cell kill which is known to have neutropenic adverse events (MMAE Tox). 


Per ibrutinib’s prescribing data,In 645 patients with B-cell malignancies who received IMBRUVICA (ibrutinib) as a single agent, grade 3+ neutropenia occurred in 23% of patients.” The stacking of neutropenia toxicity could prove problematic for VLS-101 and may explain why we haven’t seen a combo study with ibrutinib. Conversely, grade 3+ neutropenia for CIRM+ibrutinib of 12.7% is less than published ibrutinib monotherapy.


Combination vs. monotherapy

While ONCT’s data looks superior, note that VLS-101 is being run as a monotherapy while Cirmtuzumab is being run in combo therapy.  Typically, monotherapy activity is the gold standard of efficacy in oncology.  However, this may be the case where combo therapy is more important.  BTKs (ibrutinib, acalabrutinib) are impressive, relatively new approved therapies in hematological malignancies that are being used extensively in front-line and second-line treatment settings.  As a result, it is imperative to play nice as a combo partner with ibrutinib or else be relegated to later lines of therapy. 

There are reasons to believe that Cirmtuzumab ameliorates the toxicity of BTKs while Velos VLS-101 may have an increased toxicity profile.  If this proves true, VLS-101 may be stuck in late line usage with a much smaller market opportunity.  


ONCT believes When you shut down ROR1 with Cirmtuzumab, it shuts down NF Kappa beta and Stat 3 which lowers inflammatory cytokine levels. The safety data in the chart above is tolerable and looks better than ibrutinib alone. Randomized controlled trials will be needed to bear this out but it is certainly encouraging with respect to management’s thesis.  (Ibrutinib prescribing info)


The bottom line: Cirmtuzumab efficacy and safety data looks very solid relative to VLS-101 and has a tox profile that fits well into the current standard of care. 


ONCT vs. Velos

In the wake of Merck’s $2.8B acquisition of VelosBio (Velos Acquisition), how does Cirmtuzumab efficacy compare to VLS-101? 


Per the table below, Cirmtuzumab data looks materially better than VLS-101 in combo. The Velos MCL (and DLBCL) data looks good while the CLL data looks just okay.  VLS-101 reported an ORR of 47% (7/15) and a CR of 13% (2/15) in (MCL). In DLBCL, VLS-101 had an ORR of 80% (4/5) and a CR of 40% (2/5). Patients were late stage with 4 median lines of prior treatment. Below is a summary of the data we have as of December 2020 (ASH 2020 VLS-101 Abstract).  



Deeper pipeline


In addition to the mAb ROR1, ONCT is developing both a ROR1 CAR-T and a ROR1 CAR-NK therapy.  These are exciting program concepts that we think have solid scientific rationale.  While preclinical, they combine a very promising target (ROR1) with cutting edge modalities (CAR-T and CAR-NK).  Natural Killer (NK) cells have sparked incredible interest and promising early data for companies like FATE and NK/ImmunityBio.  The same is true for CAR-T be it allogenic or autologous (Kite (acquired), Juno (acquired), ALLO, CLLS, DTIL, BLUE).


ONCT recently announced a collaboration with Karolinska Institutet in Stockholm, Sweden, to advance novel ROR1 targeting cell therapies focused on CAR-T cells and CAR-NK (Natural Killer) cells from the laboratory into the clinic (ONCT PR) .  Of note, NK cells were discovered at the Karolinska Institutet.  Additionally, ONCT has a collaboration with Shanghai Pharma and a grant from California Institute of Regenerative Medicine (CIRM) to advance ROR1 CAR-T. The program is expected to enter the clinic in China in H2 2021 targeting both heme and solid tumors. 


BMY is also advancing a ROR1 CAR-T therapy which came to them from their acquisition of Juno.  Juno licensed the ROR1 CAR-T program from Fred Hutchinson Cancer Research Center. However, we believe we have not heard much about this program in the 5 years since it entered the clinic due to toxicity issues (Clinical Trial).  We understand the issue arises from a non-humanized antibody used in the contruction while CIRM is fully human and we expect the ONCT programs to avoid such toxicity. 


TK-216 in R/R Ewing Sarcoma 

  • TK-216 is a targeted ETS oncoprotein inhibitor developed in-house at ONCT

  • Ewing Sarcoma is an aggressive, rare, pediatric oncology that massively overexpresses the ETS protein 

  • Ewing sarcoma Phase 1 expansion cohort data update is coming 1H 2021  

  • Early P1 data of 42% CBR (10/23) and 9% CR (2/23) is not terribly exciting, but this is a very aggressive tumor.  The five-year survival of patients who are diagnosed with non-metastatic disease is between 50% and 70%. Patients diagnosed with metastatic disease have five-year survival between 18% and 30%. The prognosis for patients with recurrent Ewing sarcoma is particularly poor, and five-year survival after recurrence is approximately 10 to 15%

  • Should TK-216 ultimately gain approval, it would come with a Pediatric Priority Review voucher, worth approximately $100M based on recent PPR sales.

  • Small market but huge need


TK-216 in other tumors

  • Will expand beyond Ewing Sarcoma into larger markets, AML, Prostate and DLBCL

  • Preclinical data in additional ETS-driven tumors 1H 2021


Cirmtuzumab in breast cancer – solid tumor

While the current excitement in ROR1 is focused on hematological cancers, Cirmtuzumab is also in a P1b in HER2 negative breast NCT02776917

First in human data should be forthcoming in H1 2021 



We have met with management several times and this is a significant part of our enthusiasm for ONCT.  CEO Dr. Jim Breitmeyer has a track record of success and  has been with the company since its founding.  We believe ONCT has a cogent strategy for advancing the platform. We hold the rest of the management team in equally high regard. 



Back-to-back multibillion dollar M&A in the same ROR1 target highlights the undervaluation of ONCT and the market should soon wake up to the disparity.  While early, Cirmtuzumab’s data is better than competitor data and its safety profile leads us to front line/large market opportunities. ONCT is well funded to execute and advance its ROR1 and ETS family (TK-216) therapies.  With cash runway through 2022 we believe ONCT is now well financed.  At the comparable $2.8B takeout valuation of VelosBio, ONCT would be worth $55 per share.  

I do not hold a position with the issuer such as employment, directorship, or consultancy.
I and/or others I advise hold a material investment in the issuer's securities.


  • Market recognition of the read through of Merck acquiring VelosBio for $2.8B and Boehringer Ingelheim acquiring NBE Therapeutics for $1.4B
  • Clinical updates from the P1/2 trial of Cirmtuzumab in MCL and CLL
  • First in-human clinical update from Cirmtuzumab in breast cancer
  • TK-216 P1 expansion cohort data update
  • First in-human ROR1 CAR-T dosing in China
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