Celcuity Inc (NASDAQ:CELC) is a cancer-focused biotech company working on one significant pipeline candidate across a wide array of malignancies. They're operating in a field with a mixed history, seemingly under the radar of Seeking Alpha analysts. Today, I want to take a first look at their pipeline and see what prospects lie ahead. Is this late-stage biotech worth your time?

Pipeline Overview

Gedatolisib

The sole pipeline candidate being pursued by CELC is an inhibitor of class I PI3K in addition to mTOR, with potential differences observed in terms of pharmacokinetics and mechanism of action of other approved PI3K and mTOR inhibitors that are available. Simultaneous targeting of PI3K and mTOR is hoped to overcome several obstacles related to other agents that more selectively target one of the enzymes, or one of the specific isoforms (ie, PI3K delta).

Both of these targets have a fraught history in cancer research, as they contribute to massively important signaling pathways in oncogenesis and progression. This is why we've seen a lot of interest in the pathway, but success has been hard to find, with development hampered by toxicity concerns and limited benefit due to acquired resistance.

CELC is hoping to build out a safer, more potent inhibitor. And they've demonstrated a fair amount of encouraging early evidence that gedatolisib could be the answer. It is delivered by IV infusion, as opposed to most other PI3K inhibitors that are administered orally. This can help reduce exposure to the liver, which in turn explains the reduction in adverse events like high-grade hyperglycemia that is associated with drugs like alpelisib, duvelisib, and idelalisib.

It has Breakthrough Therapy designation for hormone receptor-positive advanced breast cancer after progression on other lines of therapy, and a phase 3 trial in this setting is enrolling, with topline data readouts anticipated as early as the second half of 2024.

The designation and ongoing pivotal study are based on early-stage findings, including B2151009, which demonstrated an objective response in the majority of patients treated with gedatolisib in the second line and beyond. Responses were observed regardless of PIK3CA mutational status, as well.

CELC is also intending to initiate a phase 3 trial investigating gedatolisib versus placebo in combination with fulvestrant and a CDK4/6 inhibitor in patients with advanced breast cancer that is endocrine therapy resistant.

Gedatolisib is also being explored in patients with prostate cancer. A phase 1b/2 study in patients with metastatic CRPC after prior androgen receptor inhibition and no docetaxel is ongoing, with first data anticipated in the first half of 2025.

Financial Overview

As of their most recent quarterly filing, CELC held $31.2 million in cash and equivalents, with another $146.4 million in investments rounding out liquid current assets. They incurred $22.5 million in operating expenses for the quarter, which led to a net loss of $21.6 million after considering interest income and interest expense.

This also does not take into account the proceeds from an underwritten public offering, which yielded around $60 million, in addition to more loans that could bring in another $62 million. With these assets on hand and the cash burn rate, the implied cash runway for CELC is around 11 quarters, assuming costs remain steady, and this runway could be extended further depending on how much of the loan the company chooses to tap.

Strengths and Risks

Strength - Gedatolisib does appear to be truly differentiated from other PI3K inhibitors

Looking at the early clinical trial experience, the tolerability profile of gedatolisib looks remarkable, when stood against other PI3K inhibitors that have been plagued by high-grade toxicities over the past decade. This, and not a lack of efficacy, has been the key weakness of this entire class of agent. CELC is poising itself well to deliver on the promise of targeting this pathway while maintaining an acceptable tolerability profile.

Risk - Mixed history for PI3K inhibition in cancer medicine

In one way, you might view the market's reticence to dip into the PI3K bucket as a strength, but I mark it as a risk, since even a whiff of bad news relating to safety would cause an outsized bad reaction in terms of share price valuation. When a class of agents is distrusted, that creates more beta for the stock, in my experience, so it is important to recognize that CELC stock could be in for even more of a rollercoaster than you would normally expect.

Risk - Jumping from phase 1 to phase 3 carries inherent risk

CELC had impressive response rates in their phase 1 trial of gedatolisib for breast cancer. However, it's important to keep in mind that low patient numbers in these studies can create unexpectedly strong or weak efficacy findings. When you jump straight into a phase 3 trial, it is difficult to nail down what improvement is needed to make the trial a success, and we've seen numerous examples over the years where a once-promising agent fails to live up to expectations, and that ends up being an expensive, sometimes catastrophic mistake. A would-be investor should remain wary of getting too excited about the possibilities surrounding this phase 3 readout.

Strength - Cash position is sufficient to get through a key data-related catalyst

With a public offering in the books and more loans they can bring on, CELC has set itself up to carry through key catalysts and hopefully find themselves in a position of strength to get over the next hump. Of course, this hinges on positive findings for their phase 3 trial in particular, which is a risky proposition.

Bottom-Line Summary

When I first looked at CELC, I nearly scoffed at the prospect of developing yet another PI3K inhibitor, as these agents just haven't moved the needle that much in the grand scheme. However, they have definitely generated some impressive early data, and that bodes well enough for their phase 3 trial to be of high interest. I am very wary about making that jump from phase 1 to phase 3, as that represents an outsized risk to the project.

However, CELC is poised to capitalize on serious opportunities here, and at a market cap of around $500 million, the market would seem to be pricing in some of that opportunity. To me, there is absolutely room to grow from here pending positive data readouts. But one should be wary that the floor is very far below these levels. For a few months, the company may be in a holding pattern that creates a better buying opportunity, but I also feel that CELC is worthy of a "Buy" sentiment right now at these prices. I would absolutely keep in mind the risks that the company has taken on, though, in going straight to phase 3 study. But there's a very high ceiling for them and not that long before we find out the fate of gedatolisib.