800-742-7730     This email address is being protected from spambots. You need JavaScript enabled to view it.     Offices     News     Family of Companies

NHLD logo
NAM Logo
NationalInsurance Logo
vfin logo
GC logo

Checkpoint Therapeutics, Inc. - Initiation Note

Checkpoint Therapeutics, Inc.

BUY (OTCQX: CKPT, $10.75)

Early in the Clinic, But Drugging Proven Targets Reduces Risk and Hastens Pace of Development: Initiating BUY/$18 TP

May 18, 2017

Jonathan Aschoff, Ph.D.

212.417.8277

This email address is being protected from spambots. You need JavaScript enabled to view it.


We are initiating coverage of Checkpoint Pharmaceuticals, Inc. with a Buy rating and 12 month target price of $18. Checkpoint’s lead candidate, CK-101, is a 3rd-generation covalent EGFR inhibitor initially in development for non-small cell lung cancer (NSCLC) and currently in Phase 1. Checkpoint’s other assets are preclinical and include PARP inhibitor CK-102, anti-PD-L1 antibody CK-301, anti-GITR antibody CK-302, BET inhibitor CK-103, and an anti-CAIX antibody. To be conservative, given the portfolio’s early stage, our valuation is based solely upon projected future revenue to Checkpoint from our projected US co-promotion revenue and EU royalties from CK-101 in NSCLC, CK-102 in breast and ovarian cancer, and CK-301 in NSCLC, with success elsewhere (CK-103, CK- 302, and anti-CAIX antibody) serving as potential upside to our valuation.

The most important investment catalysts for Checkpoint, for the time being, are its future clinical data readouts. Phase 1 CK- 101 results in NSCLC are expected in 2H17 such that Phase 2 can begin by YE17, and we note the absence of any Phase 1 safety concerns thus far. If CK-101 shows strong efficacy early in Phase 2, we would expect Checkpoint to design and submit a straightforward Phase 3 protocol while finishing Phase 2, such that Phase 3 could potentially start by YE18. Streamlining clinical development is facilitated by drugging proven targets with which the FDA is already familiar, as the agency is more likely to allow Phase 3 to begin after success in a single Phase 1/2 trial. Preclinically, CK-101 shows a competitive selectivity for mutant EGFR over wild-type EGFR and a reduced selectivity in this regard with other 3rd-generation EGFR TKI’s has led to the termination of several would-be competitors.

Checkpoint is addressing multiple large market opportunities with a broad array of drug candidates. The multiple indications for drugs targeting PD-L1 and PD-1 currently amounts to about $5B in sales, with a projected CAGR of over 20% through 2025, clearly a large market in which a mere 1% market share amounts to about $300M in revenue in 2025. The current market for CK-101 can be approximated by the roughly 40,000 mutant EGFR NSCLC patients that competitor Tagrisso could potentially treat, which amounts to a $5B opportunity at Tagrisso’s price. The over $1B CK-102 market opportunity in the US in BRCA positive ovarian cancer is currently addressed by 3 other PARP inhibitors, Lynparza, Rubraca, and Zejula. The is also an over $2B CK-102 market opportunity in the US in BRCA positive breast cancer.

We project the US launches for CK-101, CK-102 and CK-301 to occur in 2021, 2022, and 2022, respectively, and for the EU launches of same to occur in 2022, 2023, and 2023, respectively. Our financial projections and timing of launches take into account the more rapid clinical pace we expect of drugs directed at known targets and about a 20% WAC price discounting to peer drugs, conservatively assuming that Checkpoint’s drugs do not necessarily demonstrate a Phase 3 clinical advantage to their closest peers. A main competitive strategy for Checkpoint is to develop its own combination therapies, such that it can win in the marketplace on price compared to drugs sold individually by competitors and potentially better efficacy.

Checkpoint had about $32M in cash at the end of 1Q17, sufficient to support its activities through 2018, by our projections.

CKPT


Request Document


Important Disclosures

This publication does not constitute and should not be construed as an offer or the solicitation of any transaction to buy or sell any securities or any instruments or any derivatives of the securities mentioned herein, or to participate in any particular trading strategies. Although the information contained herein has been obtained from recognized services, and sources believed to be reliable, its accuracy or completeness cannot be guaranteed. Opinions, estimates or projections expressed in this report may make assumptions regarding economic, industry, company and political considerations, and constitute current opinions, at the time of issuance, which are subject to change without notice.

This report is being furnished for informational purposes only, and on the condition that it will not form a primary basis for any investment decision. Any recommendation(s) contained in this report is/are not intended to be, nor should it / they construed or inferred to be, investment advice, as such investments may not be suitable for all investors. When preparing this report, no consideration to one’s investment objectives, risk tolerance and other individual factors was given; as such, as with all investments, purchase or sale of any securities mentioned herein may not be suitable for all investors. By virtue of this publication, neither the Firm nor any of its employees shall be responsible for any investment decisions. Before committing funds to ANY investment, an investor should seek professional advice. Any information relating to the tax status of financial instruments discussed herein is not intended to provide tax advice, or to be used by anyone to provide tax advice. Investors are urged to consult an independent tax professional for advice concerning their particular circumstances. Past performance should not be taken as an indication or guarantee of future performance, and no representation or warranty, either expressed or implied, is made regarding future performance.

National Securities Corporation (NSC) and its affiliated companies, shareholders, officers, directors and / or employees (including persons involved with the preparation or issuance of this report) may, from time to time, have long or short positions in, and buy or sell the securities or derivatives (including options) thereof, of the companies mentioned herein. One or more directors, officers, and / or employees of NSC and its affiliated companies, or independent contractors affiliated with NSC may be a director of the issuer of the securities mentioned herein. NSC and / or its affiliated companies may have managed or co-managed a public offering of, or acted as initial purchaser or placement agent for a private placement of any of the securities of any issuer mentioned in this report within the last three (3) years, or may, from time to time, perform investment banking or other services for, or solicit investment banking business from any company mentioned in this report.

This research may be distributed by affiliated entities of National Securities Corporation (NSC). Affiliated entities of NSC may include, but are not limited to, vFinance Investments, Inc., National Asset Management and other subsidiaries of our parent company, National Holdings Corporation.

The securities mentioned in this document may not be eligible for sale in some states or countries, nor be suitable for all types of investors; their value and the income they produce if any, may fluctuate and/or be adversely affected by exchange rates, interest rates or other factors. Furthermore, NSC may follow emerging growth companies whose securities typically involve a higher degree of risk and more volatility than the securities of more established companies. This report does not take into account the particular investment objectives, financial situation or needs of individual investors. Before acting on any advice or recommendation in this material, the investor should exercise independent judgment as to whether it is suitable in light of his/her particular circumstances and, if necessary, seek professional advice. Past performance should not be taken as an indication or guarantee of future performance, and no representation or warranty, express or implied, is made regarding future performance.

Additional information relative to securities, other financial products, or issuers discussed in this report is available upon request. Neither this entire report, nor any part thereof, may be reproduced, copied or duplicated in any form or by any means without the prior written consent of National Securities Corporation. All rights reserved. NSC is a member of both the Financial Industry Regulatory Authority (FINRA) and the Securities Investors Protection Corporation (SIPC).

For disclosures inquiries, please call us at 1-800-417-8000 and ask for your NSC representative, or write us at National Securities Corporation, Attn. Supervision Department, 410 Park Avenue, 14th Floor, New York, NY 10022, or visit our website at www.nationalsecurities.com

NHLD logo
NAM Logo
NationalInsurance Logo
vfin logo
GC logo

Newsletter Sign Up

News letter