ITUS Corp (ITUS) Stock: A Pleasant Surprise Adds Tremendous Value!

ITUS Corp (NASDAQ: ITUS) provided a pleasant surprise for investors yesterday when the company announced an update surrounding their CAR-T therapy. At the moment, the company is working to drive innovation in the oncology space through the use of CAR-T therapy as a targeted treatment for solid tumor types. In particular, the company is working to prove that its therapy is a potential option for those suffering with ovarian cancer.

ITUS Provides Update On CAR T Program

As mentioned above, ITUS is currently in the process of developing a CAR-T therapy with the initial indication being to treat ovarian cancer. In a press release issued Tuesday morning, the company announced that data from a preclinical study supports the potential submission of an IND application (an application allowing for testing in human subjects) with the FDA a full year ahead of schedule.

Initially, ITUS expected to submit the IND surrounding its CAR-T therapy by the end of 2019 or early in 2020. However, due to a number of factors, including incredible progress in a preclinical study being conducted at the Moffitt Cancer Center (the institute that is quickly cementing its place as the leader in CAR-T therapy development), the company is now expecting to request a pre-IND meeting with the FDA by the end of July of this year, meaning that the IND application is likely going to take place well ahead of schedule.

Also in the release, the company announced that Robert Wenham, M.D. has joined the team to lead the clinical trial. Dr. Wenham is the Chair of Gynecological Oncology at Moffitt. Dr. Wenham received his MD from the University of Texas, Southwestern, completed his Obstetrics and Gynecological Residency at Harvard, and his Gynecological Oncology Fellowship at Duke.

Dr. Wenham joins a stellar team at Moffitt which includes, Dr. Jose Conejo-Garcia, and Dr. Linda Kelley, Dr. Daniel Abate Daga, and Dr. Marco Davilla. The experience and accomplishments of this team are considerable, and the team is excited to move this therapy forward for patients.

R&D Results

In the release, ITUS provided some of key the results that it has seen from the R&D activities at the Moffitt Cancer Center. During the R&D activities, several groups of tumor free, female mice were intra-peritoneally infused with increasing concentrations of the murine CAR-T construct and their health status was monitored for a period of up to 5 months. The purpose of these studies was to determine if these animals were in anyway harmed or injured by the therapy. The FDA wants developers to verify the safety of therapies in animals before testing them in humans. Here are the key data points provided from the research:

  • None of the treated mice showed any signs of pain or stress, difficult breathing, increased respiratory rate, reduced movement, reduced grooming or feeding, dehydration, anorexia or any other signs of distress. This proved to be the case in both the control group and the treatment group.
  • None of the mice, treated or in control, showed any signs of weight loss.
  • In the cohort that had periodic blood draws for measurement of liver function, kidney function and metabolic function, none of the mice showed any abnormal values.
  • T-cells were shown to induce the expected inflammatory response as indicated by increasing serum IL-6 (interleukin-6).
    Analysis of the ovaries showed that 60% of treated mice had significant damage to their ovaries. This showed that the CAR-T treatment was successfully attacking the ovaries, indicating strong efficacy.

In a statement, Dr. Amit Kumar, CEO at ITUS, had the following to offer with regard to the CAR-T development program:

We are extremely pleased with the progress of our program, and we are thrilled at the prospect of beginning human trials considerably ahead of schedule. Should our technology be the first demonstration of CAR T efficacy in humans, afflicted with a solid tumor, the benefit to patients could be tremendous and the value for ITUS shareholders could be equally dramatic.

Why This News Is So Significant

The news released by ITUS yesterday wasn’t just an update, this really is a big deal for multiple reasons:

First and foremost, the big news here is that the plan surrounding the development of the company’s CAR-T therapy program has sped up by a full year at such an early stage in the process. This is a key validation of the company’s work in the space as well as their passion surrounding providing patients with a better option in the fight against ovarian cancer.

The accelerated pace of the plan speaks volumes when it comes to the potential efficacy and safety surrounding the CAR-T technology that ITUS is developing with Moffitt. It also speaks volumes about the passion and commitment of both ITUS and the Moffitt team members taking part in the program.

The principal investigator for human trials has already been identified. Of course, the clinician that will hold this position, Dr. Wenham has reviewed the data and the plan and is looking forward to moving forward with human trials at the Moffitt Cancer Institute.
Finally, this acceleration says something about ITUS’s leadership, especially Dr. Kumar who took over as CEO about a year ago. As we have followed the company we have noticed that he has consistently delivered and made tremendous progress. We expect he and ITUS can continue to deliver.

Talking Valuation

To put it bluntly, we believe that ITUS is currently highly undervalued. To get an idea of what the company could grow to be, just take a look at Kite and Juno. To give you a little back story on these, Kite only had one leukemia product approved when it was acquired by Gilead Sciences for $11.9 billion. Juno on the other hand had no approved treatments, but has leukemia and lymphoma trials ongoing. Recently, Juno Therapeutics was acquired by Celgene Corporation in a deal that valued the company at $9 billion.

Interestingly, both of these companies had something in common with ITUS. Their flagship treatments, the assets that fetched such high valuations, were CAR-T therapies, the same type of therapy ITUS is working on. Interestingly, both of these acquisitions surrounded CAR-T therapies as a treatment for liquid tumor cancers. However, CAR-T has yet to be proven effective in solid tumor types. However, preclinical data suggests that ITUS may change this, and that could prove to be overwhelmingly valuable.

To date, we believe the valuation we’ve seen with ITUS has had little to do with CAR-T. In fact, the primary source of the valuation given to the company at the moment has to do with their cancer diagnostics arm. However, considering the significance of the news, ITUS is becoming a validated player in the CAR-T space, which should and we believe eventually will be reflected in its value.

Now, we’re not saying that ITUS deserves a valuation of $11.9 billion or even $9 billion at the moment. However, we believe that the company’s valuation of around $60 million today represents a steep discount to the true value of the company and its assets.

Coming Catalysts

Another very important thing to remember here is that the update represents coming catalysts. In general, when company’s at this stage have their pre-IND meeting with the FDA, file their IND applications, receive approval of their INDs and begin human trials, we tend to see significant inflections in value. Interestingly, every one of these catalysts could take place within the next three quarters given the acceleration of the plan to develop this CAR-T treatment. In fact, we even have rough estimates of when two of these catalytic events may take place. In particular, the company expects to request the pre-IND meeting with the FDA by the end of July. Once the meeting is set, it is expected that the meeting will actually take place between October and November. Both of these events could lead to dramatic gains in value for ITUS.

Other Factors To Consider

While the spotlight is currently on the ovarian cancer indication for the CAR-T development program at ITUS, data suggest that this treatment could prove to be effective in other solid tumor types. In fact, evidence indicates that the same product may work on breast cancer, lung cancer, prostate cancer, pancreatic cancer and more; only adding to the intrinsic value of the asset.
Also, it’s important to keep in mind that Ccheck is continuing forward in a positive way. In fact, Dr. Kumar has said that he hopes to have initial discussions with the United States FDA to map out the regulatory and commercialization strategy surrounding this innovative cancer diagnostics option by the end of the year.

Final Thoughts

Considering the recent news surrounding the CAR-T development program at ITUS, exciting times are ahead for the company and its investors. With multiple catalysts around the corner in both the CAR-T and cancer diagnostics spaces, now may be the perfect time to get involved!

CNA Finance has a business relationship with ITUS. To view relevant disclosures, click here.

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