Topline Summary
Nurix Therapeutics (NASDAQ:NRIX) is a biotech company specializing in the development of protein degraders, which are intended as a new class of cancer therapeutic exploiting known targets, some of which have currently approved targeted agents already approved. While their approach is novel and interesting, with very early signs of efficacy, there are some concerns, and the aggressive valuation of the company makes me want to watch and wait, rather than jump in just yet.
Pipeline Overview
The main flagship being studied by NRIX is a series of drugs attempting to harness “targeted degradation,” where by a single molecule developed by the company simultaneously binds the protein of interest and an E3 ligase called cereblon.
E3 ligases, once activated, place a molecule called ubiquitin onto proteins, ultimately making them fated for destruction via the proteasome. It’s a classical, hugely important pathway for removing excess proteins in normal cell function, and NRIX hopes to hijack the system to get rid of important cancer targets.
What might be the advantage of this approach? For starters, if a protein has developed a mutation that makes it resistant to binding of approved targeted therapies, then this would be a completely independent way of targeting it, in theory allowing us to overcome any relevant mutation that is disrupting the binding of active site drugs.
Second, this approach potentially allows for deactivation of targets that we have not been able to attack using our targeted therapies. Proteins that have an important function that does not rely on some kind of enzymatic activity, or proteins like GTPases that have never been amenable to competitive inhibition (RAS is a classic example).
BTK degraders
With that out of the way, the 2 most advanced projects in the pipeline for NRIX target Bruton’s tyrosine kinase (BTK), a critical target currently used in treatment of B-cell malignancies like chronic lymphocytic leukemia. One of these molecules, NX-5948, targets only BTK, while NX-2127 targets both BTK and IKZF, thought to be the target of immunomodulatory drugs like lenalidomide, another important treatment option in certain B-cell malignancies.
These 2 degraders have been shown in preclinical models to potently downregulate BTK even in the face of challenging resistance mutations that continue to be a problem for patients. In a poster at ICML 2023, NRIX demonstrated sustained BTK degradation using NX-5948 in a small group of patients with relapsed/refractory B-cell malignancies. This phase 1a study is ongoing, with results anticipated in the near future, possibly at this year’s ASH meeting.
Another poster at ICML focused on the phase 1 study for NX-2127 suggested that BTK inhibition could induce disease control, according to a few case reports, including 2 patients who had 4 prior lines of therapy. There was a concerning signal of atrial fibrillation, which was observed in 6 out of 37 patients who received the drug, 3 of which were grade 3 or higher. High-grade neutropenia (reduction in infection-fighting neutrophils) was also observed at pretty high rates, with 16 of 37 patients having grade 3 higher neutropenia.
Other projects
NRIX is also working on a targeted protein expression elevator, targeting CBL-B for degradation, with the hopes of keeping this E3 ubiquitin ligase from inactivating immune cells. This approach has demonstrated preliminary efficacy in preclinical models, but we have yet to hear about its progress in human trials.
Financial Overview
At the end of Q2 2023, NRIX held $59 million in case and equivalents, with another $222.2 in marketable securities. Total current assets reached $290 million. They recognized $30.7 million in licensing and collaboration revenue, faced up against $57.4 million in operating expenses. After interest income, the net loss for the quarter was $24.2 million.
Likely, this net loss is not going to be this low in future quarters, since licensing revenue was a singular event. We can count on future quarters looking more like Q2 2022, where NRIX had a net loss of $45.4 million.
One critical thing missing from the Q2 filing is the recent infusion of cash from an announced collaboration agreement with Seagen, which brought in $60 million upfront and has the potential to be a $3.4 billion deal, which would bring total current assets up to $350 million.
With that in mind, the company has somewhere between 7 and 8 quarters of cash on hand to fund operations.
Strengths and Risks
The rationale for protein degradation is interesting, giving us a potential avenue to target more drugs than ever before. And from what early signals we’ve seen, things are generally looking good. However, I would stress on anyone getting excited here that this technology is still far from proven, and there are lots of things that can go wrong here. First and foremost, targeted degradation may not provide any therapeutic effect once we’re in bigger clinical studies.
Second, I would watch how the story of that atrial fibrillation signal evolves over time. That’s going to be something that can completely derail their BTK programs if rates remain that high.
The collaborations that NRIX has initiated should help buttress against a rising tide of operating expenses, but they’re still facing large net losses. For the foreseeable future, I would see dilution as a potential risk of an investment I might consider here. There is a lot of time and a lot of catalysts for them to act on here and potentially erode your ground-floor investment. There’s no cash emergency, but if they have good data, you can expect a public offering to follow shortly.
Bottom-Line Summary
Overall, the risk here is the same overall as getting in on any new therapeutic approach: you just don’t know if it’s going to work, and you could potentially miss out on a lot of value if you wait. Considering the current market cap of around $500 million, I think this is a rather strongly valued company, which is most likely driven by the numerous big pharma partnerships NRIX has on deck. So for now this is a bit too pricey to warrant a big jump in, since the upside versus risk is relatively poor. However, if there was a drop in share price without news to justify it, something to more like $4 a share, then this would be an interesting bet to place. So I’m in a watch and wait mode, with cautious optimism for their approach.
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