Trillium Therapeutics - The “Don’t Eat Me” Cure for Cancer

Highlights
  • Immunotherapy cancer treatments - new hope in the quest to cure cancers
  • Anti-CD47 therapies one of most promising immunotherapy niches
  • Stanford and Trillium studies suggest anti-CD47 could treat many cancers
  • Trillium’s SIRPαFc only known CD47 treatment that targets cancer cells with limited effect on healthy red blood cells
  • SIRPαFc Phase 1 clinical study scheduled to begin 2H 2015
  • Institutional investors own 70% of Trillium
  • NASDAQ listing approval in December 2014

By Contributing Editor: Jay Thompson

 

Blocking the CD47 “Don’t Eat Me” Message to Cure Numerous Cancers
 

Over the years researchers have worked to create vaccines to fight cancer but the results have not always been highly effective.  Common approaches to developing vaccines relied on the use of immune cells called dendritic cells.  These dendritic cells are used to introduce cancer protein fragments to T cells.  This introduction is meant to stimulate the body such that it will then successfully identify the cancer cells as diseased and target them for elimination.
 

CD47 is a protein found on the surface of many cells in the human body.  In May 2010, researchers at the University Health Network in Toronto, Ontario filed a patent application that appears to have included the first significant findings related to cancer treatments involving the interaction between SIRPαFc and CD47.  In May 2013, researchers at Stanford University, led by Irving Weissman, MD, published findings that suggest CD47 is critical to tumor survival.  Similar findings have since been confirmed by Trillium Therapeutics (“Trillium”)(TRIL), among others.  CD47 essentially serves as security for cancer cells.  Immune cells (“Macrophage”) that patrol the body seek out and engulf unhealthy cells.  However, CD47 tells the Macrophage that cancerous cells are healthy, thereby successfully defending the cancer cells from the human immune system.  This defensive action by CD47 has been referred to as the “don’t eat me” message.

 

Anti-CD47 treatments are designed to block the “don’t eat me” message and allow the Macrophage to identify and kill cancer cells.  Stanford and others, including Trillium, completed initial studies that successfully blocked the “don’t eat me” message. Once the CD47 “don’t eat me” message was blocked, the Macrophages then successfully disposed of cancer cells.  The image below depicts this interaction between the tumor cell, the Macrophages and Trillium’s anti-CD47 treatment, SIRPαFc.

 

 

Note: All images included within this report have been reproduced from corporate presentations available at the Trillium Therapeutics website, including the February 10, 2015 Corporate Presentation

 

Trillium’s Initial Success – Comparable to Stanford’s Success

 

Trillium’s SIRPαFc checkpoint inhibitor program results show SIRPαFc’s ability to kill cancer cells.  However, Trillium’s SIRPαFc program has not reached the clinical stage yet.  These results can not be relied upon but they appear quite encouraging.

 

 

Trillium’s Success – Beyond Stanford

 

The highlight of Trillium’s SIRPαFc studies thus far is shown in the following three images.  SIRPαFc was found to kill cancer cells while affecting normal healthy red blood cells at a far lesser rate than other commercially available anti-CD47 treatments.  SIRPαFc binds poorly with red blood cells but does bind well and kill Acute Myeloid Leukemia (“AML”) cells. This suggests that anti-CD47 treatments using SIRPαFc could result in a higher quality patient experience.

 

 

Anti-CD47 – A Cure for All Cancers?

 

Pre-clinical findings by Dr. Weissman’s team appear to suggest that the “don’t eat me” message is pervasive in all cancer cells and anti-CD47 treatments may prove to be possible cures for a broad range of cancers.  Weissman stated:

 

“Every cancer cell seems to transmit this “don’t eat me” signal to help it avoid elimination by macrophages.”

 

Trillium plans its first human study in AML.  However, Trillium also believes a wide range of cancers may be possible to cure with anti-CD47 treatments.  The image below outlines Trillium’s findings thus far.

 

 

Clinical Stage

 

Stanford commenced FDA Phase 1 clinical trials in 2014.  As depicted in the image below, Trillium was scheduled to complete its Pre-IND (investigational new drug application) with the FDA in Q4 2014.  Phase 1 clinical trials are then scheduled to begin some time in Q3 2015.

 

 

Summary: 

 

We completed a search for comparable companies, reviewed all relevant patent filings we were able to identify and research competitors identified in Trillium’s SEC filings. The only comparable valuation metric we are aware of that we believe is reasonable to consider when attempting to value Trillium is the $500 million commitment made by Celgene Corporation in a private company, Inhibrx, in July 2012 that had similar pre-clinical anti-CD47 treatments in process at the time.  We note that the $500 million commitment was not an outright purchase of Inhibrx but that this was a very large investment for a treatment that was not even in the clinical stage.  Since this was not an outright purchase of Inhibrx, Celgene appears to have valued the anti-CD47 technology Inhibrx is developing at more than $500 million.

 

In its most recent corporate presentation dated February 10, 2015, Trillium disclosed it had 12 million shares of common stock outstanding on a fully diluted basis.  On February 24, 2015, Trillium’s closing price as quoted by the NASDAQ was $16.00.  We therefore estimate Trillium’s market capitalization, on a fully diluted basis, was $192 million as of February 24, 2015.  We believe the upside case for Trillium’s stock is significant, and an argument for a $500 million valuation can be made based on Celgene’s $500 commitment to Inhibrx.

 

Original Valuation

   Upside

Projected Valuation

Celgene Inhibrx Commitment

        $500M

     $0M

           $500M

Trillium Market Cap

        $192M

   $308M

           $500M

Trillium Stock Price

        $16.00

   $25.67

           $41.67

We rate Trillium's stock a strong buy and have set a target price of $41.67 per share.

 

Further Upside and Context

 

Pharmacyclics (PCYC) has had great success in the past few years and returned a substantial profit for its shareholders.  Rumors of a possible sale of PCYC circulated yesterday. This is a $16 billion company - as of February 25, 2014. We noted a comment in a Bloomberg article that explains that PCYC's cancer treatment, IMBRUVICA, is not a cure. The statement is below.

 

“It is one of the major advances in CLL treatment in the past couple of years,” said Jae Park, an adult leukemia doctor at Memorial Sloan Kettering Cancer Center. “It is not a cure, but it is relatively easily tolerable.”

 

We believe the anti-CD47 treatment Trillium is researching is designed to be a cure.  It is not a treatment that is designed to delay or decrease the effects of cancer or just comfort a patient as they die. If PCYC, which has a very effective drug, and is much further along than Trillium, is worth $16 billion, and PCYC does not have a drug that is a "cure" than what would a cure for cancer be worth? We believe a cure is worth much more than $16 billion.

 

Cautionary

 

We see upside in Trillium’s stock based on the analysis outlined above.  However, our research of Trillium’s patents and its management team is not complete. We believe the patent application by University Health Network ("UHN") filed in May 2010, which Trillium appears to have exclusive rights to, is the foundation for Trillium's research of its SIRPaFc anti-CD47 treatment. Trillium stated in its SEC filings that there are 8 relevant patent filings related to Trillium's anti-CD47 research that are directly owned by Trillium. We believe the PCT filing on December 17, 2013 outlines the key patent rights (pending) that Trillium owns outrights. We are including the specific SEC disclosure about Trillium's patents that we intend to further research with the assistance of management.

 

"In connection specifically with patent applications relating to SIRPaFc, we control two patent families that comprise eight individual filings. One family has claims that embrace species of SIRPaFc found to have certain therapeutic properties and their use for the treatment of cancer. These patent rights are owned outright by Trillium and national patent filings are planned. Patents emerging from this family will expire in 2033. A second SIRPa patent family was in-licensed on an exclusive basis from co-owners UHN and HSC. This family has been filed in the major markets, including US, Europe, Japan, Canada, Australia, China, and India. The claims cover the use of various forms of SIRPa to treat CD47-positive cancers. Patents in this family begin to expire in the year 2029."

 

As of the date of this report, we have not been able to speak with management about our research.  At this point, we consider the high institutional ownership, approximately 70% according to the most recent corporate presentation, suggests that this due diligence has been completed by these investors.  This provides us with some comfort.  However, we believe public disclosures to this point about management's background have been limited.  We intend to seek out more details about management and will specifically focus on the capabilities of its scientific team in order to form a basis for an opinion as to whether we believe Trillium will sell itself or if it will follow a long term model to complete its clinical testing and eventually manufacture an anti-CD47 treatment itself.

 

Disclaimer: 

 

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Comments

Pretty exciting stuff. Is Skytides going to provide more updates on TRIL?

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