MEDICENNA – A MOONSHOT FOR PANCREATIC CANCER TREATMENT

Medicenna (MDNA – TSX) is a textbook moonshot.

The definition of a moonshot is a long shot with a BIG upside.  Which is exactly what Medicenna is.  This is a small Canadian biotech stock that has a chance to strike gold.

Medicenna has a patient with pancreatic cancer remission–for 2 years! Immediately, that is screaming out multi billion-dollar potential!

But! This is a moonshot, not a high probability success, at least not yet. We are still at an EXTREMELY early stage of drug development.

But on Saturday Nov 9, management is presenting an update on its research at the Society for Immunotherapy of Cancer (SITC) in Austin Texas. There will be data from a couple new patients and an update on existing patients. It could be a big catalyst for the stock–or not.

Medicenna’s drug, called MDNA11, is in a Ph1/2 trial. They have dosed 14 patients – not a big sample.  The response rate of those patients is good but not great – four out of fourteen have responded or 28.6% – this drug doesn’t work for everyone.

Nevertheless, a long-term pancreatic cancer remission is impressive. This is an extremely tough disease.

The patient is still in complete remission after 104 weeks – and the drug even worked a second time after the patient recurred after a treatment break.

Source: Medicenna Investor Presentation

If Medicenna can show this sort of efficacy in more patients, the stock is going a HUGE winner.

But getting there will take time. The mixed response of patients so far, something that, as I’ll explain, is not unexpected, hints that it may be a bumpy road.

Which is why I all it a moonshot. An outside chance at a big win. With a prize that is worth the risk.

MDNA11 – WHAT’S OLD IS NEW AGAIN

MDNA has two product candidates, MDNA11 and MDNA55.  MDNA55, which I’m not going to talk about here, is actually further along in its development. It just had some positive Ph2 results and is Ph3 ready.

Source: Medicenna Investor Presentation

But I’m not going to talk about MDNA55.  What is going to drive the stock, and what is the reason to think about buying Medicenna TODAY, is the earlier stage MDNA11. Medicenna is basically telling you that themselves, as they are looking to partner MDNA55 while they develop MDNA11 themselves.

MDNA11 is form of a molecule our immune system already produces, called interleukin-2 (IL-2).

IL-2 performs a very important immune function. It makes the body produce more T-cells and NK cells. These cells are cancer-killing.

The science behind MDNA11 is simple: if you introduce more IL-2 into the body you will produce more T-cells and NK cells and get a better immune response.

This is not a new idea. Various forms of synthetic IL-2 have been in drug trials since the 90s. They have shown to work but also to be very toxic. You have to administer the drug in an ICU, and even if the patient came in healthy, they can’t always handle the side effects.

Where Medicenna’s innovation comes in is with the engineering of an IL-2 that is more tolerable. They are using a new technique that engineers their “next-gen” IL-2 to have the same function but less side effects. It also only needs to be dosed every 2-weeks.

The tech comes from Stanford, where researchers won a Nobel prize for the discovery.

Source: Medicenna Investor Presentation

The big takeaway is that Medicenna has engineered a molecule that should act just like IL-2 but with much lower toxicity.

We know from past IL-2 studies that this class of drug isn’t going to work for everyone.  Remember, forms of IL-2 have been around for a long time. There is a lot of historical data on efficacy.

Medicenna has said as far back as 2022, and they reiterated again at a conference this year, that MDNA11 will “provide long-term benefits to about 10% to 15% of the patients that have melanoma or renal cell carcinoma”.

The big benefit is that for that 15% that it works for, about 1/2 of those will have “a long-term cure”.

This is exactly what we saw with the single pancreatic cancer remission. 104 weeks and going strong – very much a long-term cure.

ALONE OR IN TANDEM

Medicenna’s study, called ABILITY-1, is designed to test out the drug against multiple different types of cancer and at a range of doses to get better information about how the drug works.

The study has 2 arms, one where MDNA11 is used by itself (monotherapy) and one where it is used with Merck’s big drug, Keytruda.

Source: Medicenna Investor Presentation

The data that we have seen so far is from the monotherapy.  It is working exactly as we would have hoped.  MDNA11 has decent efficacy overall, it works some of the time, and when it works it can work extremely well.

[As of the] March 22, 2024, data cut-off date, MDNA11 has demonstrated a response rate of 29% (4 partial responses) and a clinical benefit rate of 50% (4 partial responses, and 3 stable diseases > 24 weeks).

Here is what the data looks like patient by patient, up to March 22nd. There are a couple of real outliers here, the one that we mention and one other and then a few other responses where we need to see more time pass.

Source: Medicenna Investor Presentation

I should point out that a lot of the patients so far are on a low dose. This is Ph1, which is primarily concerned about safety.

On the other hand, the two most successful patients were on the two lowest doses.  That is unusual and is probably something Medicenna needs to investigate to determine why.

The second big success we’ve seen was in another difficult to treat indication, melanoma. While this patient has not been a complete response (at least so far) it did see complete response of the target lesion and has had a continued reduction of the non-targets even 11-months into the treatment.

Source: Medicenna Investor Presentation

Much as with the pancreatic cancer remission this is a durable response – lasting 44 weeks and still going (and as the slide says “continuing to reduce”).

This is all very positive stuff. But I want to keep it in perspective. I’ve read some sensational claims about MDNA11 being a “cure’. This is at best too early and at worst an exaggeration.  There is one patient that has a very long response. A second patient has had a fairly long response. I don’t want to diminish what has been accomplished, it indicates HUGE potential.  But let’s not get ahead of ourselves.

I would characterize the results so far as a very good start, especially when you consider: A. so far these are lower dosed patients, B. they are using MDNA11 all by itself, instead of with other drugs that are known to work and C. These are already very sick patients that have failed other types of treatment.

A DYNAMIC DUO?

The next data will be how MDNA11 does with Keytruda.  This is Merck’s big multi-billion dollar drug. Medicenna’s May 31st press release said that the first dose level of the combination therapy was completed for 3 patients and that “No dose limiting toxicities were observed in any of the 3 patients during the observation period”.

In other words, no dose limiting toxicities, or DLTs:

Source: Medicenna Investor Presentation

That’s really what is important here, that the drug isn’t showing an interaction with Keytruda and that side effects are manageable. We already know that Keytruda is best-in-class  We have a good indication from the monotherapy that MDNA11 is doing what was hoped.

If the two drugs are tolerable together, Medicenna could be set up for some impressive efficacy results in the coming months.  If MDNA11 can add to Keytruda efficacy and become an add-on to it, that would be a MASSIVE addressable market for Medicana.

Medicenna is now approved to enroll the next 3 patients at the next dose level of the combo study (90kg vs 60g/kg for the first dose), which should be happening now or shortly.

BETTER THAN VEGAS

In a nutshell, that’s the story.

Coming up the news flow should continue for both the monotherapy and the combo.

Source: Medicenna Investor Presentation

I don’t want to downplay risks here, which is why I keep bringing up the small sample size so far and the limited data.  We just can’t be sure. For instance, we don’t know what it was about these two particular patients that gave them such a great response while other patients did not. It is always possible that this long 104-week response was a fluke and won’t be replicated.

On the other hand, IL-2 is a known entity. It has been shown to work and the science knows how it works. And it is not surprising that it doesn’t work for everyone but that when it does work, it works very well. Nothing here is out of line with expectations.

What we do know is that if the data holds up, this is “best-in-class” stuff, which means the $-value of the drug could be significant.

Source: Medicenna Investor Presentation

Medicenna has C$42M of cash. Their burn rate is very low. They went through just over $11M of cash in the first 9 months of their current fiscal year.

Source: Medicenna Investor Presentation

With 80M shares outstanding the stock has a market cap of C$190M at its current price of $2.35. That is not small for an early-stage biotech. But then again, most early stage biotechs aren’t offering this kind of data.

Bottom line, the stock has BIG-TIME upside if they can show more results like they have shown so far. Its early though.  Really early. A few bad datapoints and the market will punish the stock severely.

In other words, it’s a moonshot. Don’t risk any more than you can afford, but if you like to play the tables, Medicenna might be worth a gamble.

I’M LONG 10k SHARES AT $2.60