In a March 18 research note, H.C. Wainwright & Co. analyst Andrew Fein purported that Constellation Pharmaceuticals Inc.'s (CNST:NASDAQ) "strong and balanced pipeline plus internal discovery capabilities are underappreciated by the Street" and "should continue to generate differentiated drug candidates to drive value in the long term."
Fein discussed the pipeline and the significant upside inherent in it.
First, data readouts are expected soon in the company's two lead programs, CPI-1205 for prostate cancer and CPI-0610 for myelofibrosis, both indications with significant unmet medical need and high occurrence rates.
As for the former, a Phase 1b data update is to be presented in a poster at the annual American Association for Cancer Research meeting on April 1 with more findings released later in 2019. Regarding the latter , Phase 2 interim data are to be presented in Q2/19 along with additional results in H2/19.
Also expected in H2/19 is a data update for the Phase 2 portion of the company's ProSTAR study, in which CPI-1205 is being evaluated in combination with enzalutamide versus enzalutamide alone for metastatic castration-resistant prostate cancer.
Additionally, both CPI-1205 and CPI-0610 could be advanced into firstline therapies as part of a combination regimen. Fein noted that H.C. Wainwright's $18 per share price target is based entirely on CPI-1205 as a secondline prostate cancer treatment and CPI-0610 in myelofibrosis, "which leaves ample upside as free call options."
Second, another of Constellation's assets, CPI-0209, a second-generation EZH2 inhibitor, is slated to enter the clinic in mid-2019. Before it does, the company will present clinical data which support the indications chosen to be pursued with this therapeutic. "The broad implications of BET and EZH2 epigenetic processes in human diseases suggest tremendous indication expansion potential," Fein commented. Based on that and CPI-0209's "superior preclinical profile," the company could perhaps expand into lymphomas and other solid tumors as well.
About the company's epigenetics platform, Fein concluded that it "should continue to fuel [the] internal pipeline while driving external business development opportunities and should command a premium for the valuation of the company by the Street."
Fein reported Constellation's recently announced financials. The biopharmaceutical firm generated no revenue in Q4/18 or in full-year 2018, and reported a $19.9 million and a $59.9 million net loss, respectively. Research and development costs were $16.6 million in Q4/18 and $48.8 million in 2018. At year-end 2018, the company had $114.6 million in cash and cash equivalents.
H.C. Wainwright has a Buy rating and an $18 per share price target on Constellation, whose current share price is around $11.25.
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Disclosures from H.C. Wainwright & Co., Constellation Pharmaceuticals Inc., Earnings Update, March 18, 2019
Investment Banking Services include, but are not limited to, acting as a manager/co-manager in the underwriting or placement of securities, acting as financial advisor, and/or providing corporate finance or capital markets-related services to a company or one of its affiliates or subsidiaries within the past 12 months.
I, Andrew S. Fein, Li Wang Watsek and Alicia Yin, Ph.D., certify that 1) all of the views expressed in this report accurately reflect my personal views about any and all subject securities or issuers discussed; and 2) no part of my compensation was, is, or will be directly or indirectly related to the specific recommendation or views expressed in this research report; and 3) neither myself nor any members of my household is an officer, director or advisory board member of these companies.
None of the research analysts or the research analyst's household has a financial interest in the securities of Constellation Pharmaceuticals, Inc. and Epizyme, Inc. (including, without limitation, any option, right, warrant, future, long or short position).
As of February 28, 2019 neither the Firm nor its affiliates beneficially own 1% or more of any class of common equity securities of Constellation Pharmaceuticals, Inc. and Epizyme, Inc.
Neither the research analyst nor the Firm has any material conflict of interest in of which the research analyst knows or has reason to know at the time of publication of this research report.
The research analyst principally responsible for preparation of the report does not receive compensation that is based upon any specific investment banking services or transaction but is compensated based on factors including total revenue and profitability of the Firm, a substantial portion of which is derived from investment banking services.
The Firm or its affiliates did not receive compensation from Constellation Pharmaceuticals, Inc. for investment banking services within twelve months before, but will seek compensation from the companies mentioned in this report for investment banking services within three months following publication of the research report.
The Firm or its affiliates did receive compensation from Epizyme, Inc. for investment banking services within twelve months before, and will seek compensation from the companies mentioned in this report for investment banking services within three months following publication of the research report.
H.C. Wainwright & Co., LLC managed or co-managed a public offering of securities for Epizyme, Inc. during the past 12 months.
The Firm does not make a market in Constellation Pharmaceuticals, Inc. and Epizyme, Inc. as of the date of this research report.
