Checkpoint: PDUFA Date Catalyst Makes This A Must Watch (NASDAQ:CKPT)

Aug 20, 2023

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Checkpoint Therapeutics (NASDAQ:CKPT) has made some great progress lately with respect to its advancement of its drug known as cosibelimab. That is, it has already been able to file a Biologics Licensing Application [BLA] to the FDA, seeking U.S. marketing approval for this drug as a treatment for patients with metastatic and locally advanced cutaneous squamous cell carcinoma [cSCC]. A Prescription Drug User Fee Act [PDUFA] date of January 3, 2024 has already been established for review of this drug. Long-term data was recently released reinforcing the ability for cosibelimab as being a good drug to treat this patient population. Not only that, but it might have a competitive advantage over other drugs in the same PD-1/PD-L1 class. That is, the mechanism of action [MOA] of cosibelimab is a bit different than compared to other PD-1/PD-L1 inhibitors targeting cSCC. Thus, such a difference in MOA might allow it to create a competitive advantage in terms of safety and possibly pricing power.

As I stated above, Checkpoint Therapeutics has already been able to submit its Biologics Licensing Application [BLA] of cosibelimab to the FDA for the treatment of patients with metastatic cutaneous squamous cell carcinoma [cSCC] or locally advanced cSCC who are not eligible for curative surgery or radiation. Not only was it able to submit the BLA of this drug for this patient population, but the FDA has already established a PDUFA date of January 3, 2024 for it. This is going to be a major inflection point for this biotech, as the FDA will decide by then whether or not its drug cosibelimab should be approved for this indication. Cutaneous squamous cell carcinoma is a type of skin cancer which develops in the squamous cells that make up the middle and outer layers of the skin. It is typically not life-threatening, although it can possibly become aggressive. What do I mean by that? Well, it can start to grow large or spread to other parts of the body. In that case, it can become deadly. Consider that there are about 1 million cases of cSCC in the United States. About 40,000 cases of which will become advanced and from there it is estimated that about 15,000 people will die from it each year. Typically, a curative resection can be done to completely remove it. However, with cancer spreading and returning this may not always be possible. What is a curative resection? A curative resection means a type of surgery that is done in order to remove all cancerous tissue of the skins [sometimes even some of the healthy tissue around it as well]. Therefore, as you can see, it is somewhat deadly. However, even if not deadly, it can still cause major issues for these cSCC patients. Such issues could be cosmetic deformities such as tumors arising on the head or neck of a patient and red skin on certain spots.

The FDA will decide upon whether or not cosibelimab should be approved to treat these locally advanced and/or metastatic cSCC patients. Should U.S. marketing approval be given, Checkpoint Therapeutics believes that it can generated around $1.6 billion in the U.S. alone. The reason for the BLA filing of cosibelimab is because back in January of 2022 it was able to announce that the primary endpoint of a phase 1 multicohort study was met. That is, in January 2022 cosibelimab achieved a confirmed objective response rate [ORR] of 47.4% based on independent central review of 78 metastatic cSCC patients enrolled in the cohort using the Response Evaluation Criteria in Solid Tumors version 1.1 [RECIST 1.1] criteria. In June of 2022, Checkpoint announced positive interim results from its locally advanced cSCC cohort, with cosibelimab achieving a confirmed ORR of 54.8% based on independent central review of 31 patients enrolled in this cohort. These were good response rates as is, but the thing is that the response rates got even better in the long run. How so? Well, Checkpoint Therapeutics released additional long-term results from the phase 1 multi-cohort study. In both cases, with respect to locally advanced cSCC and metastatic cSCC, response rates improved. A few of the improvements were as follows:

As you can see in both instances, long-term data provided proof that the complete response rate improved. Not only that, but in addition it was also noted that the median duration of response [mDOR] has not yet been reached.

There are a lot of other PD-L1 drugs out there on the market like Merck (MRK) with Keytruda and Sanofi (SNY) Libtayo, which are also approved for cSCC. The key question to ask is, How will Checkpoint Therapeutics be able to compete against it. I believe that there are two ways it might be able to do so. As a PD-L1 it has a two-prong approach in that it binds to PD-L1 to reactivate the body's T-cell anti-tumor response for starters. Secondly, it also has a function Fc domain that can activate the body's natural kill cells [NK] cells to eradicate tumors. Another way where cosibelimab might be able to compete against other PD-1 inhibitors might be with an improved safety profile. That is, thanks to this drugs ability to not interrupt the body's PD-1/PD-L2 pathway, which is believed to contribute to its low rate of autoimmunity. What does this mean? This means that it might end up being safer to give cosibelimab to high-risk cSCC patients. Such high-risk patients might be with those with receiving a solid organ transplant or autoimmune disease. With an improved safety profile [fewer immune system-related toxicities] over other approved PD-1/PD-L1 drugs, this might be enough in providing a competitive advantage over the other drugs like Keytruda or Libtayo. Furthermore, another possible edge could be pricing power. That is to have the drug priced with a reduced discount, although this remains to be seen.

According to the 10-Q SEC Filing, Checkpoint Therapeutics had cash and cash equivalents of $4.8 million as of March 31, 2023. The thing is that despite this cash on hand, it needed to raise additional cash, thus it has been continuing to raise cash with registered direct offerings. I believe it should be okay in the near-term, at least for the next few months. That's because just today, July 31st of 2023, it announced a $10 million registered direct offering priced At-the-Market. It should be well capitalized for now, but my belief is that it will need to raise additional cash at least a few months before the PDUFA date of January 3, 2024. The reason why I think it will do so is because it will need to have cash on hand in order to commercialize the drug, should it ultimately be approved by the FDA.

There are several risks that investors should be aware of when investing in Checkpoint Therapeutics. The first risk to consider would be with respect to the PDUFA date of January 3, 2024, which has been established by the FDA to review cosibelimab for the treatment of patients with locally advanced and/or metastatic cutaneous squamous cell carcinoma [cSCC]. That's because there is no assurance that Checkpoint will receive U.S. marketing approval of cosibelimab for this indication. A second risk to consider would be competition amongst other approved PD-1 inhibitors such as Sanofi with Libtayo and Merck with Keytruda. The premise is that safety and pricing power [pricing discount] of cosibelimab may provide a competitive edge for Checkpoint for this cSCC patient population, but this remains to be seen. A third and final risk would be with respect to the financial position that it is in. That's because over the course of 2023 it had to raise cash a few times. It enacted a cash raise just today, so it should be good for several months, however it is my belief that it will likely need to enact a cash raise again before the end of 2023.

Checkpoint Therapeutics has potential to receive U.S. marketing approval of cosibelimab for the treatment of patients with locally advanced and/or metastatic cutaneous squamous cell carcinoma [cSCC]. A PDUFA date of January 3, 2024 has been established, by which is the date the FDA will decide upon whether or not cosibelimab should be approved for the treatment of these cSCC patients. If this company is able to receive FDA approval for this drug then it will be able to tap into a potential market opportunity of $1.6 billion. However, as I indicated above, it won't be easy because of competition from Merck and Sanofi. The good thing is that Checkpoint might be able to create a competitive edge in terms of safety of cosibelimab, along with pricing power.

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