Corbus Pharmaceutical Holdings, Inc. (CRBP)

[stockguard]

A good look at the company with follow up remarks.

Long Ideas | Healthcare
Now Corbus Joins The NASH Fray
Oct. 8, 2018 10:35 PM ET|6 comments | About: Corbus Pharmaceuticals Holdings, Inc. (CRBP), Includes: GLMD, MDGL
Christiana Friedman

Long only, event-driven, biotech, healthcare
(607 followers)
Summary
Corbus Pharmaceuticals' licensing deal with Jenrin opens the door to the NASH market.

NASH is 4x the size of Corbus's currently addressable market with lenabasum.

CRB-4001, the flagship of 600 endocannabinoid compounds Corbus has licensed, has the same MOA Rimonobant without the psychoactive effects.

The main value proposition for the stock is still lenabasum, with Phase III results on systemic sclerosis due in March 2020.

Corbus Pharmaceuticals (CRBP) made some waves last month after news of a deal with Jenrin Discovery gave it access to 600 compounds targeting the endocannabinoid system. The number 600 is good for headlines, especially for a company that since its inception has only had a single pipeline candidate, renamed twice along the way from resunab, to anabasum, now known as lenabasum. The 600 compounds are, of course, a big deal, but the more important news in terms of near-term shareholder value is CRB-4001. CRB-4001 transforms Corbus from being seen primarily as a cannabis stock to now becoming a NASH stock.

NASH, or non-alcoholic steatohepatitis is an enormous market, projected to be worth about $20 billion annually by 2025. That’s about 4x the size of Corbus’s combined addressable markets before the acquisition of CRB-4001. For reference on how NASH-focused stocks can move when they reach the later clinical development stages, see Madrigal (MDGL) and Galmed (GLMD), for example (whose company names are practically mirror images of each other).

ChartCRBP data by YCharts
While Corbus jumped as high as 64% on the news, on a longer term chart the move actually wasn’t all that impressive considering everything that has happened in 2018, the latest being CRB-4001. Shares were as high as $10 at the beginning of 2018. Since then, the following has happened:

Now we are almost a full year closer to lenabasum’s Phase III data readout for systemic sclerosis scheduled for about 17 months from now according to the trial filing.
Open label extension data for the ongoing Phase II trial was published in Q2 in which 77% of patients achieved a clinically meaningful reduction in skin thickness, the trial’s primary endpoint.
Orphan designation was granted in the European Union and the US for dermatomyositis.
A second Phase 3 study is about to commence in dermatomyositis as well.
A $25M grant was given to Corbus by the Cystic Fibrosis Foundation to help fund its ongoing CF trial.
A Phase 2 study began in systemic lupus erythematosus.
Granted, two equity financings were made since shares topped, and those have negatively affected shares obviously. However, those were back in March and October 2017. Even so, the share price still looks quite low considering the advances made over the last two years, plus the Jenrin licensing deal.

CRB-4001
But onto newer pastures. What’s the big deal with CRB-4001? NASH. The drug is an inverse agonist of the CB1 receptor, the same receptor associated with the psychoactive effect from cannabis. Except, the psychological effects of CB1 come from those receptors in the brain. There are additional CB1 receptors in different organs, including the liver. Since CRB-4001 doesn’t cross the blood-brain barrier in significant amounts, it is not expected to cause any psychological effects, in other words no high.

Preclinical studies have shown the stimulation of fat clearance in mouse models of NASH, and more potent stimulation of pancreatic islet cells, the ones responsible for insulin production, meaning it also has potential as a diabetic treatment. Rimonobant, also a CB1 inverse agonist, was banned for psychiatric side effects because it crossed the blood-brain barrier and stimulated the CB1 receptors in the brain. Corbus believes that CRB-4001 is more potent than Rimonobant, with much fewer side effects because it only minimally crosses the barrier.

Also critical is that CRB-4001 wouldn’t really be competing with any other NASH drug on the market because its mechanism of action is much different than Madrigal’s or Galmed’s NASH drugs, which target entirely different systems.

True, there isn’t much reason to get too excited about CRB-4001 just yet, because it’s only preclinical. A Phase II trial though is planned for late next year with the endpoint of liver fat clearance, and this is when we should know if the drug can be taken more seriously as anything more than purely speculative.

Back to Lenabasum
Meanwhile, while all this early stage work will be going on with CRB-4001, we will be getting closer to the completion of Phase III for lenabasum on systemic sclerosis, the most obvious and near-term value proposition for the stock. By the time the Phase II on CRB-4001 begins, we will only be a few months away from a Phase 3 data readout.

Systemic sclerosis is about 3x more prevalent than cystic fibrosis for which lenabasum is also being tested. CF gets much more attention, though systemic sclerosis is a much deadlier disease, with a survival rate of only 55% at 10 years post diagnosis. Cystic fibrosis patients live to an average of 37 years by comparison. Lenabasum, if approved, would be the first drug ever targeting systemic sclerosis.

What about the danger of further near-term dilution? Unlikely. The company has $65 million in cash and the Jenrin transaction is not expected to affect cash flow through the end of 2019. At last year’s cash burn rate, there is enough cash now to last up and through the upcoming Phase III readout for lenabasum in early 2020. If there will be another financing, always possible, it would most likely occur right around the Phase 3 readout.

At this point I believe the biggest risk for Corbus is beta conditions in the stock market which make speculative stocks like Corbus vulnerable from unrelated margin calls and the like. There is no need to go all in now, nor get too excited about CRB-4001 specifically just yet. Equity markets are getting more volatile lately and if Corbus couldn’t reach new highs on the Jenrin deal, then immediate upside may be limited at this point, until we get nearer to the Phase III results.

Come 2020 I believe Corbus will be a completely different stock. The safety profile of lenabasum is nearly pristine with no serious adverse events, and only 19% of subjects experiencing any adverse events at all. Systemic sclerosis is a highly lethal disease with no treatment besides standard immunosuppression. The Phase II trial data are already long term when combined with the open-label extension, with the longest data stretching out 2 years since the start. If the Phase III efficacy data can get anywhere close to the open label extension data, lenabasum for systemic sclerosis will be a shoe-in just for the risk/reward profile. Then investors can start focusing more on CRB-4001, which, for now at least, is just a bonus to the main value proposition.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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https://seekingalpha.com/article/4210575-now-corbus-joins-nash-fray