G1 Therapeutics: CRC Topline Is A High Risk-Reward Binary Event

G1 Therapeutics (NASDAQ:GTHX) sells Cosela or trilaciclib, a myelosuppression agent approved in February 2021 as an adjunct to chemotherapy in later stage small cell lung cancer patients (ES-SCLC, extensive-stage small cell lung cancer). Unlike other myeloprotection agents that are lineage-specific, trilaciclib protects chemotherapy patients from all three kinds of hematologic reactions – neutropenia, anemia and thrombocytopenia.

This multilineage myeloprotection mechanism differentiates trilaciclib from other standards of care, which only address one or the other of these blood deficiencies. Not only that, studies have shown that trilaciclib can actually handle these deficiencies better than those individual cares. HCPs love this because it costs them less and it protects the patient better. No wonder trilaciclib was quickly given exceptional reimbursement with a permanent J-code.

However, Cosela sales have been less than stellar. In 3Q2021, the company noted some of the headwinds that may have caused this:

• Lack of access to top-tier accounts and high-quality relationships

• Variable geographic sales performance

• Slow return to in-person visits and external engagements outside the office

These were harsh sell-assessments during the end of the peak covid season, and this helped us understand why Cosela may not have taken off as much as it could have. Mainly, I focused on the lack of top-tier accounts, which is the bane of many a small pharma with a new product. This is a main reason these companies are forced to sell out to big pharma with big networks.

In 3Q2022, however, the company lists the following headwinds:

• Understanding of burden of myelosuppression

• Embedded existing reactive paradigm

• Need for education across multiple functions within customer organization

This list, in my opinion, is more subdued, probably less harsh and thus less honest than the one from last year. Does this mean the earlier headwinds no longer exist? Have they got access to top tier accounts? Is their geographic sales performance more evened out today? I can understand the third issue no longer exists in that specific format. But I doubt the others, especially that first one, is fully resolved for it not to be included in the list of headwinds. But I also think including that paints an unflattering picture of the company – hence the omission this year.

In last year’s earnings call, the company did mention that many of the top 100 organizations are being targeted by their 15-person sales team (that they hired after they parted ways with Boehringer Ingelheim, unsatisfied with the latter’s sales efforts). Maybe they are becoming more successful; the company now says 60 of those accounts are on board as of the last quarter. It should be noted that compared to last year’s November quarter’s Cosela revenue of $3.6mn, this year’s November quarter’s net Cosela revenue is $8.3mn. That is not huge, in dollar amounts, but it is still nearly triple last year’s amount. Last year, I said, somewhat conservatively, that “Off the top of my head, they will probably be able to make $40-$50mn in 2022 off of Cosela.” I think I wasn’t too much off the mark.

Around mid-June, when PRESERVE 1, the metastatic colorectal cancer (mCRC) trial, was fully enrolled, the stock went up considerably. The trial will be read-out in early 2023. PRESERVE 1 is a randomized placebo-controlled pivotal Phase 3 trial of trilaciclib in 326 patients with metastatic CRC receiving first line trilaciclib or placebo administered prior to FOLFOXIRI (a combination of fluorouracil (5-FU), folinic acid, oxaliplatin and irinotecan) and bevacizumab. mCRC is a much larger market than ES-SCLC. There are 30k US patients every year for the latter indication. According to the American Cancer Society’s 2022 estimates, there are:

• 106,180 new cases of colon cancer

• 44,850 new cases of rectal cancer

That is about 150k patients with CRC, with a market size of $20bn. “Approximately, 22% of CRCs are metastatic at initial diagnosis, and about 70% of patients will eventually develop metastatic relapse.” That means, since this is the incidence rate, there are over 105,000 mCRC patients at any given time, which is more than 3 times the ES-SCLC number. Also, since trilaciclib is tumor-agnostic by hypothesis – see here, here and here, and the comments section of my last article for a discussion – and has 12 more years of patent protection, approvals in these labels are very possible. Of course, not all treatment settings and tumor types will work out. However, I expect that a number of them will work out. The company provided partial data from a mechanism of action trial of trilaciclib at the San Antonio Breast Cancer Symposium to be held in early December. Abstracts are now available – see page 520. Although the trial was in TNBC patients, the data appears to show how trilaciclib may have a role in T-cell infiltration independent of tumor type. Hence the enthusiasm surrounding the stock price when the trial was enrolled. Unfortunately, there’s no phase 2 data available for this indication, so not much can be predicted about the data.

The other indication is 1st line Triple negative breast cancer (TNBC), where a pivotal 250 patient study is ongoing, and will be completed by mid-2024. There are approximately 28,000-56,000 TNBC patients in the US every year. Phase 2 data is available for the gemcitabine plus carboplatin (GCb) combo with trilaciclib, which is also the same indication+drug combo for the PRESERVE 2 study. Data is as follows:

Patients and methods: Patients were randomized (1:1:1) to group 1 [GCb (days 1, 8); n = 34], group 2 [trilaciclib prior to GCb (days 1, 8); n = 33], or group 3 [trilaciclib (days 1, 8) and trilaciclib prior to GCb (days 2, 9); n = 35]. Subgroup analyses were performed according to CDK4/6 dependence, level of programmed death-ligand 1 (PD-L1) expression, and RNA-based immune signatures using proportional hazards regression. T-cell receptor (TCR) β CDR3 regions were amplified and sequenced to identify, quantify, and compare the abundance of each unique TCRβ CDR3 at baseline and on treatment.

Results: Median overall survival (OS) was 12.6 months in group 1, not reached in group 2 (HR = 0.31; P = 0.0016), 17.8 months in group 3 (HR = 0.40; P = 0.0004), and 19.8 months in groups 2 and 3 combined (HR = 0.37; P < 0.0001). Efficacy outcomes were comparable regardless of cancer CDK4/6 dependence status and immune signatures. Administering trilaciclib prior to GCb prolonged OS irrespective of PD-L1 status but had greater benefit in the PD-L1-positive population. T-cell activation was enhanced in patients receiving trilaciclib.

Conclusions: Administering trilaciclib prior to GCb enhanced antitumor efficacy, with significant improvements in OS. Efficacy outcomes in immunologic subgroups and enhancements in T-cell activation suggest these improvements may be mediated via immunologic mechanisms.

The data is very good and is predictive of the potentially positive outcome of the PRESERVE 2 study. The phase 2 patient population is large enough, the p-value, hazard ratio and OS values are strong enough to instill confidence in me. Recently, the company provided some early data from the ADC trial, as we discussed in the TPT chatroom, but that data is not relevant. What is relevant to PRESERVE 2 is the above data from December 2020 which has the same indication + drug combo.

Trilaciclib now presents a pipeline-in-a-molecule opportunity, with a number of registrational, phase 2 and earlier stage trials planned or ongoing. Their nearest data readout is for phase 2 2L/3L TNBC (ADC Combo), 1L Bladder (PD-L1 Combo), and Neoadj TNBC (MOA Study), all of which topline by 4Q. The latter two have even completed enrollment.

Financials

GTHX has a market cap of $309mn and Cash, Cash Equivalents, and Marketable Securities of $123.0 million. Operating expenses for the third quarter of 2022 were $45.1 million, which includes Cost of goods sold expense of $1.1 million, Research and development (R&D) expenses of $19.6 million, and Selling, general, and administrative (SG&A) expenses of $24.4 million. At that rate, the company has cash for just another couple more quarters. However, they just successfully closed a $50mn stock offering.

About this offering, we had an interesting discussion in our TPT chatroom. The focus was: why raise this small amount of money now instead of just two months back when the stock price was double? One TPT member thought this was as a leverage against a potential buyout, but another member suggested that certain terms of their loan facility may have required them to have these funds. The discussion concluded that the offering may have been poorly timed by the company.

GTHX also has a $25mn ATM facility, still unused. Trilaciclib was approved in China in July, triggering a milestone payment of $13mn and double digit royalties on net sales. They have nearly $500mn in milestone payments if they get more approvals in partnered countries in Asia.

Bottomline

The quick truth is this: if trilaciclib can expand its labels into a couple other high value indications, GTHX will survive, even grow. If it doesn’t – if the mCRC data doesn’t turn out well – GTHX will collapse. At this point of time, it is tough to say how PRESERVE 1 will turn out, since we have no prior data in the same indication.