Investors Unhappy as Caladrius Biosciences Kills Phase III Oncology Program, Lays Off 40 in SoCal
January 8, 2016
By Mark Terry, BioSpace.com Breaking News Staff
In light of recent advances in immuno-oncology therapies, Basking Ridge, NJ-based Caladrius Bioscience, Inc. announced Wednesday that it will end its Phase III study of CLBS20 monotherapy for the treatment of recurrent Stage III or Stage IV metastatic melanoma. The company will shift its focus onto its CLBS03 drug for type 1 diabetes.
The shift will result in laying off about 40 people at its Irvine, Calif. facility. In addition, the company updated its financial guidance for 2016. It announced total 2015 revenues of approximately $23 million, an increase of about 28 percent from 2014. It projected 2016 revenues to exceed $30 million, an increase of more than 30 percent compared to 2015, which is nonetheless lower than the $32.95 million analysts were expecting.
Caladrius notes that oncology has been significantly effected by the advent of immuno-oncology-based combination therapies. “The treatment paradigm in metastatic melanoma was transformed during the course of 2015 by the accelerating adoption of multiple immune checkpoint inhibitors used as monotherapy and in combination treatments,” said David Mazzo, Caladrius’s chief executive officer, in a statement. “These new drugs have significantly improved outcomes in metastatic melanoma and therefore have altered the opportunity for a monotherapy such as CLBS20 in a landscape that is quickly converting to combination therapies.”
The company will continue to seek licensing or partnership deals for CLBS20, but is otherwise halting that program. It is shifting its focus and resources onto CLBS03, a T regulatory (Treg) cell therapy candidate for type 1 diabetes. It plans to start a Phase II study in adolescents with recent-onset type 1 diabetes in the first quarter of this year in collaboration with Sanford Research.
“The opportunity provided by polyclonal T cells in the treatment of autoimmune diseases is compelling and we are excited to be at the forefront of this technology’s development and to be working with recognized leaders in the field, such as Drs. Jeffrey Bluestone and Stephen Gitelman of the University of California, San Francisco and Dr. Kevan Herold of Yale University,” said Mazzo in a statement. “We believe CLBS03 has the potential to be paradigm-changing in the treatment of recent-onset diabetes and, potentially, other autoimmune diseases.”
Caladius Biosciences , which has been on a pretty steady downward trend for the last year, dipped after the news. Shares traded on Feb. 19, 2015 for $4.17, dropped to $2.95 on May 21, then hit $1.15 on Aug. 7. Shares recovered slightly to $1.97 on Sept. 11, then slid to $1.08 on Jan. 4, 2016. Shares are currently trading for $0.42.
Recent analysis by iStreetWire notes that's Caladrius’s previously sunny projections are looking pretty cloudy these days. Sell-side analysts have projected earnings per share (EPS) for 2016 at $-0.98 for the company, with a long-term growth of -0.28 percent.
It also brought up the term “Cockroach Effect,” saying, “Cockroach Effect is a market theory that suggests that when a company reveals bad news to the public, there may be many more related negative events that have yet to be revealed. In the case of earnings surprises, if a company is suggesting a negative earnings surprise it means there are more to come.” These are clearly analysts with a pessimistic outlook.
Not all would agree, however. Corvus Business reported today that Aegis analysts reaffirmed a “buy” rating for Caladrius, with a $2 price target, which would represent a 185.71 percent upside potential.