Today at the famous, gorgeous and historic, restaurant “Boeucc” of Milan ( active since 1696), James Oliviero and Garrett Gray, respectively President and Chief Financial Officer of Checkpoint, a US Company founded in 2015, listed on Nasdaq Stock Market since 2017, focused on in-licensing and developing novel immuno-oncolgy and targeted therapies for the treatment of solid tumor cancers, have presented the following reports on the research conducted by the same company.
Cash position: As of June 30, 2024, Checkpoint had $5 million in cash. During July 2024 the company completed a $12 million private placement, which increased their proforma cash to $16.3 million.
Reiterate Buy rating and $27 price target. We look forward to Cosibelimab’s potential approval by the end of 2024.
Valuation and risks to price target achievement. We reiterate our Buy rating and $34 price target.
We acknowledge the large distance between the current share price and our price target, but highlight two key factors: (1) the low share count significantly impacting our NPV (December 2022 1:10 reverse split); and (2) consideration of the implied market cap of approximately $1 billion off of fully diluted shares representing approximately only 1x our projected WW peak revenue estimates for cosibelimab in cSCC only.
Our valuation is based on our clinical net present value (NPV) model, which is currently driven solely by cosibelimab in cSCC.
We believe potential upside exists not only from additional market penetration into cSCC, but also the addition of additional indications, such as NSCLC and beyond as comp Libtayo continues to expand its market reach, and cosibelimab could represent a formidable competitor based on the asset’s mechanism of action and Checkpoint’s pricing strategy, if approved.
This model allows us to flex multiple assumptions affecting a drug’s potential commercial profile. Factors that could impede reaching our price target include failed or inconclusive clinical trials or inability of the company to secure adequate funding to progress its drugs through the development pathway.
On Monday, Checkpoint announced 2Q24 financial results and provided a corporate update. Given the CRL issued by FDA was related only to issues with the CMO, we expect approval of cosibelimab on the December 28 PDUFA date. We maintain our Buy rating and $4 price target.
Oliviero and Gray have expressed the following opinion and valuation on the above presentation:
With an expected approval in late December, we expect cosibelimab to be commercialized by mid-2025.
The question remains though: by whom? We believe cosibelimab is a partnerable asset given the substantial revenue opportunity for PD-(L)1 products and the opportunity for combination therapies.
Perhaps having an approval in hand will trigger discussions? Alternatively, the Company can go it alone, assuming material financing ($50M+) is available; the labeled indication for cosibelimab will be accessible with a relatively small commercial infrastructure. Either way, December will represent an inflection point for Checkpoint.
All we have to do now is wait.
INVESTMENT THESIS AND VALUATION
