sanjeri
sanjeri
Merus N.V. (NASDAQ:MRUS) is definitely a biotech to keep an eye on in the 1st half of 2024. That's because there are two potential catalysts that, I believe, could cause its stock price to trade higher.
It is expected that the biotech will release results from its phase 1/2 eNRGy trial for the treatment of patients with NRG1+ cancer in the 1st half of 2024. Specifically, the focus is on targeting non-small cell lung cancer [NSCLC] and pancreatic ductal adenocarcinoma [PDAC] patients who express NRG1. Should positive data be released from this study, that would be a very positive development, but an even more important one to happen would be the ability to file a Biologics Licensing Application [BLA] to the FDA for zenocutuzumab for the treatment of NSCLC and PDAC patients with NRG1 mutation.
I believe that if such a filing were to happen, not only would it bring Merus N.V. one step closer to having an approved drug, but it could also significantly increase shareholder value.
Another important program to keep an eye on is petosemtamab, which is being developed as a monotherapy to treat patients with 2nd-line head and neck squamous cell carcinoma [HNSCC]. The importance of this program is the potential to possibly receive Accelerated Approval from the FDA using an overall response rate [ORR] endpoint and then convert that to a "full" approval using an overall survival [OS] endpoint. This is another solid program in place, which may result in an increase in the share price.
As I stated above, zenocutuzumab is being advanced in the phase 1/2 eNRGy trial for the treatment of patients with NRG1+ cancer. The two specific targeting indications are NRG1+ non-small cell lung cancer [NSCLC] and Pancreatic Ductal Adenocarcinoma [PDAC] patients. The global non-small cell lung cancer market is projected to reach $36.9 billion by 2031. Such patients have cancerous growth in the lungs and experience a host of issues.
Then, the pancreatic cancer market is expected to surpass $7.4 billion by 2032. Even if only focused on a specific patient population for pancreatic cancer, it would still be a big market opportunity. Why is that? That's because it is said that PDAC is the most common type of pancreatic cancer, accounting for more than 90% of cases.
However, such market opportunities must be further broken down because of a more narrow focus on treatment. The goal for Merus is to use zenocutuzumab for NSCLC and PDAC patients that express NRG1. The thing is that the market opportunity won't be large, but if Merus is successful in clinical testing, then there is a good chance it will be the treatment of choice specifically for these patients. For example, 21,858 tumor specimens examined over a 3-year period revealed that there was a 0.2% incidence of NRG1-positive tumors. The greatest incidence among all being NSCLC.
Still, this program using zenocutuzumab as a monotherapy is being advanced rapidly. The use of this is being explored for the treatment of the patient population in the ongoing phase 1/2 eNRGy trial.
One item to point out is that there is no combination involved here with respect to this study, as this drug is being given to patients as a monotherapy only. The potential here for further advancement of this program, plus the possibility of a stock price increase, would be two catalyst opportunities. The first of which is that additional results from this phase 1/2 eNRGy trial are going to be released in the 1st half of 2024. Whether or not such data ends up being positive remains to be seen, but if prior data is any indication, then there is a good shot at success. Why do I say that? That's because prior results from this study showed that patients who took zenocutuzumab benefited a lot. Such prior positive data was released at the European Society for Medical Oncology [ESMO] Congress 2023 with a cut-off date of July 31st, 2023. The following data was achieved:
Besides the positive data generated to date, there is another thing to note, which is that Merus had a very productive meeting with the FDA. Quite generous, in my opinion, because after such a meeting, it was noted that the final data to be released in the 1st half of 2024 may be enough for a BLA filing of zenocutuzumab for the treatment of NRG1+ PDAC and NSCLC patients. My belief is that if a BLA filing of this drug is achieved for the treatment of both of these patient populations, then it should be viewed in a positive manner by the market.
Another positive development for this program already achieved would be that the FDA has already given this drug FDA Fast Track Designation for both patients with NRG1+ pancreatic cancer who progressed after systemic therapy or with no other treatment alternatives and patients with NRG1+ NSCLC who progressed after prior systemic therapy.
Lastly, there is a possible expansion opportunity as it relates to this particular drug. The expansion opportunity relates to the possibility of targeting other solid tumor types, irrespective of NRG1 status. For instance, Merus is advancing the use of zenocutuzumab in combination with enzalutamide or abiraterone for the treatment of patients with castration-resistant prostate cancer [CRPC]. Patients are being monitored for now in this cohort of testing, but a positive outcome here would definitely advance the use of this drug beyond the scope of only targeting patients with NRG1-expressing tumor types.
According to the 10-K SEC Filing, Merus N.V. had cash, cash equivalents and marketable securities of $411.7 million as of December 31st, 2023. The reason for the cash on hand is because it has been able to raise funds through several financial instruments over the last few years.
In particular, two of the most recent financial transactions achieved were an ATM offering and an underwriting agreement with several financial institutions. The first of which was the $63.8 million of aggregate net proceeds obtained in May 2023 with respect to an "at-the-market" program based on a Sales Agreement with Jefferies. The next set of aggregate proceeds of $162.2 million was obtained through an underwriting agreement in August 2023 with Jefferies LLC BofA Securities, Guggenheim Securities, and William Blair & Company.
This biotech is in excellent shape when it comes to having enough cash to reach several milestones in the coming years. Why is that? That's because it believes that it has enough cash on hand to fund its operations into 2027.
The first risk to consider would be with respect to the full data set from the phase 1/2 eNRGY trial, which uses zenocutuzumab for the treatment of patients with NRG1+ NSCLC and PDAC. Even though Merus was able to achieve positive objective response rate [ORR] data at ESMO 2023, there is no assurance that the next set of data will turn out to be good.
A second risk to consider would be with respect to the possibility of being able to file a Biologics Licensing Application [BLA] based on the expected data from the phase 1/2 eNRGy trial. Even if the data is highly successful, there is no guarantee that a BLA filing for zenocutuzumab will happen. Nor, that this drug will ultimately be approved to treat both of these patient populations.
A third risk to consider would be with respect to the release of interim efficacy data from the phase 1/2 study using petosemtamab + Keytruda [pembrolizumab] for the treatment of patients with 1st-line advanced PD-L1 positive Head and Neck Squamous Cell Carcinoma [HNSCC]. A planned data update for this program is expected in Q2 of 2024. If positive results are achieved targeting this patient population, then it could mean further advancement into phase 3 clinical testing. The risk here is that if positive safety/efficacy data is not achieved from this cohort, then it is highly unlikely that such phase 3 testing will even occur.
Besides the ability to use petosemtamab as a monotherapy for the treatment of patients with 1st-line advanced PD-L1+ advanced HNSCC, Merus is making a move towards going after 2nd-line HNSCC patients. There are two instances being explored here for this program and these studies are as follows:
The point here is that data updates from both of these programs are a fourth risk to consider. Should negative data be released from them, then it would be a major setback for the advancement of this particular drug for these patients. On the flip side, it is a good thing that this company has already been able to achieve proof-of-concept with zenocutuzumab for the treatment of patients with NRG1+ NSCLC and PDAC.
Merus N.V. has a pretty extensive pipeline and I believe that it can do well with its program using zenocutuzumab for the treatment of patients with NRG1+ tumors. Again, the narrow focus is to specifically target NSCLC and PDAC patients who have this expression. With data expected any day now in the first part of 2024, I believe there is room for the stock price to trade higher. From there, an additional increase in value could be achieved with the potential of a Biologics Licensing Application [BLA] being filed for zenocutuzumab for the treatment of both of these patient populations.
Merus N.V. is likely going to continue to advance the use of this drug with the money it has. However, one other possible catalyst that may come about is if it can find a partner who is actually willing to fund it. That's because it is on the lookout to obtain a commercialization partnership agreement with the purpose of bringing this drug to patients who desperately need it the most. This is not just a claim that I'm making up; instead, it is something that has been noted by the company itself. A partnership is not guaranteed to happen, but it could end up being a possible catalyst to keep an eye on regardless.