If you follow Cellectar Biosciences (NASDAQ: CLRB), you’ve seen a pretty rough few days. In fact, over this period, the stock has given up about 30% of its value. While declines can happen for many reasons, this particular fall in value was unwarranted. In fact, the drop in value seems to be the result of a misleading article published by the financial outlet, SeekingAlpha.com.
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In the article, the author outlined cherry picked data and information from the company’s recent reporting of data on CLR-131. While the data in the release was overwhelmingly positive, with a Phase 2 study in a very difficult indication meeting its primary efficacy endpoint, the misleading article took top positions in Google and quickly circulated through Twitter and StockTwits. Within minutes, the damage was done.
Nonetheless, the good news is that the sharp and highly-unwarranted selloff in CLRB creates a tremendous opportunity in light of great data. Below, I’ll go over and provide a rebuttal to the Seeking Alpha article mentioned above. Here’s how I see it:
Where Seeking Alpha’s Article Was Seriously Misleading
In the article, the author provided the following bullet points:
- The overall response rate (ORR) in multiple myeloma (MM) patients was 34.5% across all doses and 42% in non-Hodgkin lymphoma patients across all doses. The ORR was 30% in DLBCL patients and 33% in CLL/SLL/MZL patients.
- On the safety front, the most common serious/life-threatening treatment-related adverse events in MM patients were thrombocytopenia (65%), neutropenia (41%), leukopenia (30%), anemia (24%) and lymphopenia (35%).
- The trial has been expanded to assess a two-cycle dosing regimen aimed at improving the response rates.
- Investors appear to be reacting to the response rate in MM, reported in May 2019 at 50% (all partials) (cohort 6) and a 100% disease control rate (responders + stable cancer) although the update data are across all cohorts.
The first bullet point here is complete and accurate. The responses to CLR-131 were very positive, outpacing standard of care, which we’ll touch on a bit later. The problems start with the second bullet point listed.
The bullet point outlines serious or life-threatening treatment-related adverse events. When simply reading the bullet point out of context, it looks horrible. However, the truth of the matter is that all of these events are expected in today’s standard of care treatments as well. The truth is that due to the fact that there were no occurrences of cardiotoxicities, neurological toxicities, infusion site reactions, peripheral neuropathy, allergic reactions, cytokine release syndrome, keratopathy, renal toxicities, or changes in liver enzymes, the safety profile here is actually quite favorable.
Considering how this bullet point was laid out, there’s a strong chance that it caused adverse event-related fears among investors, starting the push for the declines that we’ve seen in CLRB as of late.
Moving on to the next point, the author writes “The trial has been expanded to assess a two-cycle dosing regimen aimed at improving the response rates.” Sure, this is true, but the way that it’s said here is very misleading.
First and foremost, simply saying that the company is making a change in order to improve response rates insinuates that current response rates may not be enough for FDA approval. However, that’s not true. The truth of the matter is that the responses seen by Cellectar in this trial are far better than what we see from treatments on the market with responses ranging from 23% to 29%, and that the drug would likely be approvable as it stands.
The fact that CLRB is moving to a two-dose regimen is actually pretty promising. It tells us that the company has not seen any dose-limiting toxicities and that we have not yet reached the maximum tolerated dose.
Moreover, in the trial, we’re seeing a very clear dose-related effect. As we move through higher dose cohorts, we see stronger response rates as can be seen from the data below:
- Less Than 50m Ci Dose – 0% response rate.
- 50m Ci Dose – 26.3% response rate.
- 75m Ci Dose – 42.8% response rate.
With such a clear relationship between dose and response, increasing the dose only makes sense. Doing so will likely lead to an even better response rate, making the drug even more promising.
Also, currently dosing is provided in two sessions, one on day one and one on day eight. The new dosing regimen will be across four sessions. These will take place on days one, 15, 57 and 71. The fact that doses will be more spread out will likely equate to a reduction in adverse events, making this that much more exciting.
Importantly, the author of the Seeking Alpha article also didn’t mention that the expansion of the trial is not expected to lead to any delays. In fact, on the call where CLRB discussed the data, the company said that it continues to guide for Pivotal Phase 3 work to start in the fourth quarter of this year!
Let’s move on to the next, and likely most damaging statement in the Seeking Alpha article. The bullet point reads:
“Investors appear to be reacting to the response rate in MM, reported in May 2019 at 50% (all partials) and a 100% disease control rate (responders + stable cancer).”
This bullet blatantly suggests that response rates are declining, when that’s not the case. The data reported in May 2019, came from Cohort 6, the highest dose cohort. The data reported a couple of days ago came from an average of all cohorts, some of which weren’t expected to yield a response rate at all due to low dose levels. When all cohorts are averaged, including low dose, less effective cohorts, the overall response is going to fall, but that’s like comparing apples to oranges, we’re talking about two completely different data sets!
After I contacted Seeking Alpha, the article was updated and this bullet point now reads:
“Investors appear to be reacting to the response rate in MM, reported May 209 at 50% (all partials) (cohort 6) and a 100% disease control rate (responders + stable cancer) although the update data are across all cohorts.”
In my view, this statement is even more misleading. Sure, the author put cohort 6 in the statement, but he also said “although the update data are across all cohorts.” This doesn’t say anything about the comparison of apples and oranges he is trying to make here and is about as misleading as it gets.
Here’s The Truth My Friends
The truth of the matter is that Seeking Alpha is a site created for user-generated content. This means that the articles aren’t written by stock analysts ($6.50 average PT on CLRB), PhD level writers, or even stock market professionals. In fact, I have personally trained a neighbor that didn’t know anything about the stock market to write for Seeking Alpha, and he does it to this day! I like the website, there are some great articles there, but you should never make an investment decision on these articles without doing your own research or talking to an investment professional first.
With that said, the data released by Cellectar Biosciences was phenomenal. The trial included patients with a very poor prognosis. These patients had already been through five or more prior lines of therapy and their cancer continued to progress. Any response rate among this population is incredible, but a 34.5% response rate with the potential for even better results at higher doses is light at the end of the tunnel for this patient population.
There’s An Opportunity Here
Due to an overreaction to a misleading article online, CLRB stock has fallen by around 30% when the data released suggest that the stock could have run 30% or more higher should it have been reported properly.
Before the declines, the stock was already trading at an incredible discount. However, with the declines in mind, my view is that this discount is now much larger. With such strong data released, and a Phase 3 trial beginning in the fourth quarter of this year, I believe that there are several positive catalysts ahead of us and that the disconnect between the market cap and the true value of this stock will be realized in time.
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