Gamida Cell Ltd (fka GMDAQ)

[midastouch017]

Gamida Cell: Buying The Dip

https://seekingalpha.com/article/4412009-gamida-cell-buying-dip

Mar. 07, 2021 1:51 AM ETGamida Cell Ltd. (GMDA)

Summary
We are circling back on Gamida Cell. The stock has had a roller coaster ride since we last highlighted it in October.

The company has recently addressed its funding needs.
We update our investment thesis on this small cell therapy concern to account for recent news below.

It is time to revisit Gamida Cell (GMDA). The stock shot straight up after we first profiled it in late October. However, the shares have come back down to earth due to recent weakness in the sector and after its did a couple of capital raises. We update our investment thesis on Gamida below to account for all the major news of the past few months.

Company Overview

Gamida Cell Ltd. (GMDA) is based in Israel and is a clinical stage or 'Tier 4' cell therapy concern. The company is focused on developing treatments for blood cancers and serious blood disorders. The stock currently sells for just north of $8.00 a share and sports an approximate market capitalization of $500 million.

Source: September Company Presentation

The company develops candidates for its pipeline using its proprietary platform that allows it to expand multiple cell types — including stem cells and natural killer or NK cells — while maintaining their original phenotype and potency. The company has two assets in the clinic undergoing evaluation for three indications.

Source: September Company Presentation

The most advanced candidate the company is developing is omidubicel which is a combination of NAM-expanded hematopoietic stem cells and differentiated immune cells that is being evaluated in patients in need of hematopoietic stem cell transplantation or HCST. The company disclosed encouraging Phase 3 trial results in May of last year and then disclosed more encouraging results from that trial in October as well as in February. Omidubicel has both Orphan Drug and Breakthrough Therapy designations for this indiciation.

Source: September Company Presentation

Gamida is currently in the application process (see next section) for this indication. As noted in our last article on Gamida, Piper Jaffray has estimated omidubicel will see peak sales north of $450 million, 6-7 years after launch. Omidubicel is also in much earlier stage development to treat Severe Aplastic Anemia.

Source: September Company Presentation

The other current drug candidate in Gamida's pipeline is GDA-201. This NAM-based immunotherapy is currently being evaluated in Phase 1 study for the treatment of relapsed or refractory non-Hodgkin’s lymphoma (NHL) and multiple myeloma [MM]

Recent Developments

A few notable developments have happened around Gamida since we posted our first profile of it four months ago. In mid-December the company announced that its rolling application for omidubicel won't happened by yearend 2020 as the company had hoped, based on FDA feedback. That application will now be filed in the second half of this year, this pushes back potential commercialization into 2022. A few days later, the company executed a secondary offering at $8.00 per share to raise approximately $65 million. This was followed by another capital raise two months later, this time involving exchangeable senior notes that raised an additional $75 million.

Analyst Commentary & Balance Sheet

The company has seen quite a bit of analyst action since our article of October 27th. On December 16th, RBC Capital reiterated its $12 price target and Buy rating on Gamida. Then following the trial news of February 9th, five analyst firms including Needham and Oppenheimer reissued Buy ratings. Price targets proffered within those ratings ranged between $17.00 to $27.00 a share. Three of those analyst ratings contained significant upward price target revisions.

Here is the commentary from Piper Sandler's analyst who boosted his price target from $13 to $25 on GMDA.

The analyst is citing the company's Phase 3 omidubicel data presented at the TCT Annual Meeting that showed "significantly lowered rate of serious infection" and reduced hospital stay. The analyst adds that along with less stringent HLA matching requirements, omidubicel can dramatically expand access and improve outcomes for HSCT patients, further stating that he is increasing his modeled value on omidubicel to $793 million from $550 million."

Gamida ended the third quarter with just over $70 million in cash and marketable securities on its balance sheet after posting a net loss of just under $15 million. With its two capital raises since then and assuming a similar quarterly burn rate, Gamida should have proforma cash on its balance at the end of FY2020 of between $185 million to $190 million, which means it is well funded to its gets to the commercialization phase and launch of omidubicel

Verdict

While up substantially since our last piece on the company, the shares of Gamida are off more than a third from recent highs. While having the BLA submission for omdubicel being moved back approximately six months was a disappointment, the company has addressed its funding concerns.

The shares also enjoyed strong analyst support and look undervalued just for the long term potential of omidubicel in HCST. I used this week's weakness in the biotech sector and the recent sell-off in the stock, to add some exposure to my holdings in GMDA. I did via a simple covered call strategy utilizing the September $7.50 call strikes. Options are both liquid and lucrative at that call strike. In addition, there are no major catalysts (outside a partnership deal or buyout) on the horizon until the BLA for omidubicel happens sometime in the second half of this year.