See Last Page for Important Disclosures Company Sponsored Research Update Note 07/13/2020 06/30/2020 Source- Yahoo Finance Closing Price (As of 07/10/2020) $3.11 52 Week Range $0.23-$7.03 Average Daily Volume 2,644.209 Shares Outstanding (M) 38.57 Market Capitalization (M) 134.22 Number of Analysts Covering 3 Enterprise Value/Revenue N/A Dec. FY 2018A 2019A 2020E 1Q 0.00A 0.00A 0.00A 2Q 0.00A 0.00A 0.00E 3Q 0.00A 0.00A 0.00E 4Q 0.00A 0.00A 0.00E FY 0.00A 0.00A 0.00E Dec. FY 2018A 2019A 2020E 1Q (0.06)A (0.14)A (0.20)A 2Q (0.45)A (0.24)A (0.19)E 3Q (0.15)A (0.15)A (0.21)E 4Q (0.23)A (0.14)A (0.28)E FY (0.89)A (0.67)A (0.89)E Genprex, Inc. is a clinical-stage gene therapy company developing technologies to treat cancer and diabetes patients with limited treatment options via the delivery of disease combatting genes. The company was founded in 2009 and is headquartered in Austin, TX. Genprex Inc. (NASDAQ: GNPX) Cutting Edge Potential Gene Therapies Targeting Large Markets Hunter Diamond, CFA Aaron Arjmand (Equity Research Associate) [email protected]1441 Broadway, 3rd Floor, New York, NY Investment Highlights: • Genprex is a clinical stage gene therapy company developing novel approaches to cancer and diabetes treatment. Genprex's lead product, GPX-001(formerly called Oncoprex™), will be evaluated in Phase I/II clinical trials for the treatment of non-small cell lung cancer (NSCLC). Results from a Phase I clinical trial show GPX-001 selectively and preferentially targets primary and metastatic tumor cells, and a Maximum Tolerated Dose was additionally quantified. Previous clinical results showed a disease control rate (DCR) of 78% with GPX-001 in NSCLC. GPX-001 may additionally be synergistic with EGFR TKI targeted therapies and with anti-PD1 and CLTA-4 immunotherapies 1 . Genprex is preparing for combination trials with Tagrisso® and Keytruda®, with lung cancer being the leading cause of cancer deaths. • GPX-002, could be the first gene therapy tested in humans for diabetes, GPX-002 is currently in the preclinical stage. GPX-002 is designed to transform alpha-cells into functional beta-like, insulin producing cells in the pancreas, while avoiding an immunological response. Genprex’s novel infusion process uses an endoscope and an AAV vector to deliver the Pdx1 and MafA genes to the pancreas. Preclinical data is encouraging showing GPX-002 restoring normal blood glucose levels over an extended period, holding potential for long term effective treatment or potentially even a cure for diabetic patients. • Genprex received Fast Track Designation (FTD) from the U.S Food and Drug Administration (FDA) on January 21, 2020, for company’s lead drug GPX-001, in combination with osimertinib (AstraZeneca’s Tagrisso®) for treatment of NSCLC patients that progressed on osimertinib alone. Fast Track Designation (FTD) is awarded by the FDA to expedite drug development to address an unmet medical need for a life- threatening disease to facilitate the development and regulatory review of such drug candidates. • Genprex has sufficient capital to achieve key inflection points over next twelve months with approximately $23 million in cash, limiting near term dilution concerns. With a burn rate of approximately $4.5 million in most recent quarter, we believe the company has sufficient capital to launch two important clinical programs, ONC-003 and ONC-004, by the end of this year or early 2021. Price- Volume History Key Statistics Revenue($ in millions) EPS($) Biotechnology Company Description 1-Genprex Investor Presentation 2020
Transcript
See Last Page for Important Disclosures
Company Sponsored Research Update Note 07/13/2020 06/30/2020
Source- Yahoo Finance
Closing Price (As of 07/10/2020) $3.11
52 Week Range $0.23-$7.03
Average Daily Volume 2,644.209
Shares Outstanding (M) 38.57
Market Capitalization (M) 134.22
Number of Analysts Covering 3
Enterprise Value/Revenue N/A
Dec. FY 2018A 2019A 2020E
1Q 0.00A 0.00A 0.00A
2Q 0.00A 0.00A 0.00E
3Q 0.00A 0.00A 0.00E
4Q 0.00A 0.00A 0.00E
FY 0.00A 0.00A 0.00E
Dec. FY 2018A 2019A 2020E
1Q (0.06)A (0.14)A (0.20)A
2Q (0.45)A (0.24)A (0.19)E
3Q (0.15)A (0.15)A (0.21)E
4Q (0.23)A (0.14)A (0.28)E
FY (0.89)A (0.67)A (0.89)E Genprex, Inc. is a clinical-stage gene therapy company developing technologies to treat cancer
and diabetes patients with limited treatment options via the delivery of disease combatting genes. The company was founded in 2009 and is headquartered in Austin, TX.
Genprex Inc. (NASDAQ: GNPX) Cutting Edge Potential Gene Therapies Targeting
Large Markets
Hunter Diamond, CFA Aaron Arjmand (Equity Research Associate) [email protected] 1441 Broadway, 3rd Floor, New York, NY
Investment Highlights:
• Genprex is a clinical stage gene therapy company developing novel approaches to cancer and diabetes treatment. Genprex's lead product, GPX-001(formerly called Oncoprex™), will be evaluated in Phase I/II clinical trials for the treatment of non-small cell lung cancer (NSCLC). Results from a Phase I clinical trial show GPX-001 selectively and preferentially targets primary and metastatic tumor cells, and a Maximum Tolerated Dose was additionally quantified. Previous clinical results showed a disease control rate (DCR) of 78% with GPX-001 in NSCLC. GPX-001 may additionally be synergistic with EGFR TKI targeted therapies and with anti-PD1 and CLTA-4 immunotherapies1. Genprex is preparing for combination trials with Tagrisso® and Keytruda®, with lung cancer being the leading cause of cancer deaths.
• GPX-002, could be the first gene therapy tested in humans for diabetes, GPX-002 is currently in the preclinical stage. GPX-002 is designed to transform alpha-cells into functional beta-like, insulin producing cells in the pancreas, while avoiding an immunological response. Genprex’s novel infusion process uses an endoscope and an AAV vector to deliver the Pdx1 and MafA genes to the pancreas. Preclinical data is encouraging showing GPX-002 restoring normal blood glucose levels over an extended period, holding potential for long term effective treatment or potentially even a cure for diabetic patients.
• Genprex received Fast Track Designation (FTD) from the U.S Food and Drug Administration (FDA) on January 21, 2020, for company’s lead drug GPX-001, in combination with osimertinib (AstraZeneca’s Tagrisso®) for treatment of NSCLC patients that progressed on osimertinib alone. Fast Track Designation (FTD) is awarded by the FDA to expedite drug development to address an unmet medical need for a life-threatening disease to facilitate the development and regulatory review of such drug candidates.
• Genprex has sufficient capital to achieve key inflection points over next twelve months with approximately $23 million in cash, limiting near term dilution concerns. With a burn rate of approximately $4.5 million in most recent quarter, we believe the company has sufficient capital to launch two important clinical programs, ONC-003 and ONC-004, by the end of this year or early 2021.
For the first quarter ended March 31st, 2020, Genprex reported a net loss of $5,566,220, up 157% year over year. The loss per share- basic and diluted was ($0.20) compared to the loss of ($0.14) in the 2019 quarter. The company reported research and development expenses of $1,477,877 compared to $508,042, representing an increase of approximately 191%, we anticipate research and development expenses increasing as the company advances its current and potential product candidates.
Liquidity and Balance Sheet
As of March 31, 2020, Genprex’s cash and cash equivalents were $23,079,591, up 1052.5% from $2,002,492 in the prior year. Current Assets increased to $24,031,796 from $2,976,643 in the prior year. During the quarter ending March 31st, 2020, Genprex issued 13,581,000 of common stock for gross proceeds of $25,731,640. Genprex appears sufficiently capitalized based on its burn rate to achieve key inflection points over the next twelve months.
Competitive Advantage
In January 2020, the company announced that the FDA granted Fast Track Designation for the use of GEN-001 in combination with epidermal growth factor receptor (EGFR) inhibitor Tagrisso® (osimertinib) for the treatment of NSCLC patients with EGFR mutations whose disease progressed after treatment with osimertinib alone. Tagrisso® is AstraZeneca's highest grossing product, with more than $3 billion in worldwide sales in 2019. Given the FTD designation and Tagrisso's status as the current standard of care in EGFR-mutated NSCLC, the company has focused its efforts on the clinical development of GEN-001 in combination with Tagrisso®, and the company plan to initiate a Phase I/II combination trial in late 2020 or early 2021. The company believes this regulatory pathway positions it well to potentially capture market share in the large NSCLC market, particularly given the advantages of the FTD status. The company also is preparing for an additional combination therapy clinical trial in NSCLC evaluating GEN-001 with Keytruda (pembrolizumab), which generated $11.1 billion in worldwide sales in 2019. The company's proprietary non-viral biodegradable positively charged nanovesicle functions to deliver drugs to tumors, exhibiting a 10 to 25-fold uptake in cancer cells versus healthy cells and has been well-tolerated in humans in previous trials2. GEN-002 utilizes a novel infusion process, and a phase one clinical trial for diabetes would represent the first ever gene therapy tested in humans and holds potential even to be a cure for diabetic patients.
2-Genprex Investor Presentation 2020
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Investment Thesis
Genprex is a clinical-stage gene therapy company developing a novel approach to treating cancer and diabetes by utilizing its cutting-edge proprietary technology platform Oncoprex™. The company's later stage product candidate is targeting the treatment of non-small cell lung cancer (NSCLC). Based on a prediction from Grand View Research, the NSCLC therapeutics market is rapidly expanding. The market size for NSCLC was valued at over $6.2 billion in 2016 and is expected to exceed a value of $12.2 billion by the end of 2025, with the industry achieving a 7.5% growth rate during the forecasted period. With the new financing, Genprex has guided it has sufficient capital over the next twelve months to reach key inflection points. We view Genprex as a unique high-risk, high reward opportunity to invest in this large and growing market, with lung cancer being the leading cause of cancer deaths. Genprex's lead product candidate, GPX-001 (non-proprietary name quaratusugene ozeplasmid) for non-small cell lung cancer (NSCLC), is an immunogene therapy utilizing the TUSC2 gene. GPX-001 is specifically designed to target cancer cells by interrupting cell signaling pathways that cause replication and proliferation of cancer cells, re-establishing pathways for apoptosis (or programmed cell death) and modulating the immune response against cancer cells. Osimertinib is considered a new standard of care in the U.S. for NSCLC patients with an EGFR mutation and with FDA Fast Track Designation for the use of GPX-001 combined with osimertinib, Genprex is prioritizing this program in lieu of the combination trial of GEN-001 and erlotinib given the fast track designation. The company is also planning a combination trial with pembrolizumab (Merck's leading drug Keytruda®). Previously GEN-001 had interim trial data indicating a disease control rate of 78% in NSCLC in phase 1/2 trial. The company is also working on GEN-002, which although early stage, could potentially be the first gene therapy tested in humans for diabetes utilizing a novel infusion process. We view Genprex as a unique high-risk high reward investment opportunity within the gene therapy sector, benefitting from a strong balance sheet.
Genprex is initially targeting the multi-billion-dollar lung-
cancer market, which is projected to grow at a CAGR of 7.5% per year
Two upcoming planned clinical combination trials with Keytruda® and Tagrisso® where positive data could
function as key inflection point
Source :Genprex Investor Presentation 2020
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GPX-001: Lung Cancer Potential Treatment
GPX-001, is encapsulated in a positively charged nanovesicle that binds and enters cancer cells through selective endocytosis to inhibit cell signaling pathway and cause cell death. Moreover, GPX-001 could work synergistically with other cancer drugs to provide more effective treatment. GPX-001, in combination with AstraZeneca's Tagrisso or Merck's Keytruda, will be evaluated in Phase I/II clinical trials for the treatment of non-small cell lung cancer (NSCLC). In January 2020, the FDA granted Fast Track Designation for GPX-001 in combination with AstraZeneca's Tagrisso® for the treatment of NSCLC. GPX-001 is a unique product which utilizes a combination of pan-kinase inhibition, direct induction of apoptosis (programmed cell death), anti-cancer immune modulation and complementary action with targeted drugs and immunotherapies to fight NSCLC. Previous clinical results showed a disease control rate (DCR) of 78% with GPX-001 plus Roche's Tarceva in NSCLC. Genprex is also researching other potential cancer indications.
Diabetes is a chronic, metabolic disease that impairs the body's ability to process blood glucose. Type 2 diabetes, the more common type, interferes with the way the body uses insulin, as the body's cells do not respond to them effectively. Type 1 diabetes occurs when the body fails to produce insulin and is also known as juvenile diabetes. Approximately 34 million people are currently affected by diabetes in the U.S. According to the WHO, about 422 million people worldwide have diabetes, and 1.6 million deaths are attributed directly to diabetes each year.
GPX-002 is currently in the preclinical stage and has been tested in vivo in mice and nonhuman primates. A unique infusion process with AAV vector delivers Pdx1 and MafA genes to the pancreas. It works by reprogramming alpha cells to functional beta cells, and preclinical studies have shown restored normal blood glucose levels.
Source: Genprex Company Presentation
The gene therapy asset was acquired via a worldwide license from the Rangos Research Center at UPMC Children's Hospital of Pittsburgh. On February 11th, 2020, the company signed an exclusive agreement with the University of Pittsburgh for potentially curative gene therapy for diabetes. Researchers discovered that GPX-002 restored normal blood glucose levels for a prolonged period in diabetic mouse models. There is potential for GPX-002 to provide long-term effectiveness and even become a cure for diabetes.
GPX-002 could potentially be used in the first in human trial for a diabetes gene therapy
treatment
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Potential Catalysts
• Additional research on new oncology platform technologies and research into other potential cancer indications
• Future collaboration with other prestigious research centers focused on cancer treatments and new publications and presentations
• Further preclinical development of GPX-002, diabetes gene therapy candidate • Establishing GPX-001 combination clinical trials with Keytruda® and Tagrisso®
including enrolling patients • Prepare lipid nanoparticle delivery system and TUSC2 DNA plasmid for clinical trials and
eventual commercial scaling • Collaborations with larger biotechnology and pharmaceutical companies, including
potential milestone payments • Contacts with other institutions to facilitate Oncoprex's clinical trial program • Increased awareness of the company via investor presentations and additional sell-side
coverage • Creating a new brand for Oncoprex as proprietary delivery system platform technology
and acquiring non-proprietary drug name
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Large Market Opportunity
Lung cancer is the uncontrolled, abnormal growth of cell tissues in the lungs. According to the World Health Organization, lung cancer is the second most diagnosed disease and has the highest death rate among all cancers for both men and women. Based on data from the World Health Organization, lung cancer causes more cases of death than the liver, colorectal, stomach, and breast cancer [4]. Each year, there are over 1.8 million new lung cancer patients and 1.6 million deaths from lung cancer all over the world. American Lung Association estimated lung cancer accounts for approximately 13% of all cancer diagnosed. With an increasing incidence of lung cancer, the demand for effective therapeutics is also expected to rise.
Based on cancer cell types, lung cancer can be broadly categorized into two segments: small cell lung cancer (SCLC) and non-small cell lung cancer (NSCLC). The NSCLC category accounts for approximately 80% of all lung cancers. Based on the shape and size of the cell, NSCLC can be further divided into three subtypes: adenocarcinoma, large-cell carcinoma, and squamous cell carcinoma. According to the American Cancer Society, it was estimated that in the United States approximately 195,000 people are suffering from NSCLC every year and the number of deaths from NSCLC are approximately 135,000. Typical treatments for NSCLC are surgery, radiation therapy, and chemotherapy. However, these traditional approaches bring undesirable side effects for patients, thus, companies are looking for other medicines that could treat NSCLC with minimal side effects.
Source: World Health Organization,
Each year, there are over 1.8 million new lung cancer patients
and 1.6 million deaths from lung cancer all
over the world
Genprex is focusing on the NSCLC segment, which accounts for
80% of the lung cancer market
The biggest cause of lung cancer is smoking,
with the number of smokers in the United States continuing to
rise
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Lung cancer arises from the transformation of healthy cells in the lung into tumor cells in a multistage process, which generally progresses from pre-cancerous lesions to a malignant tumor. The changes are the result of the interaction between internal genetic factors and external factors. Analysis from the World Health Organization states that the top four external risk factors for cancers are tobacco, alcohol, unhealthy diet, and physical inactivity. The statistics show that the number of lung cancer patients is likely to rise as smoking continues around the world, indicating the market size will continue to expand.
Typical treatments for NSCLC are surgery, radiation therapy, and pharmacological therapy. Some patients receive all three procedures to combat lung cancer, while others receive one or two types. The NSCLC therapeutics market is rapidly expanding due to the increasing demand for chronic disease treatment options and innovative medical technology. A study from Grand View Research shows that the market size for NSCLC was valued at over $6.2 billion in 2016 and is expected to exceed a value of $12.2 billion going forward to 2025, with the industry achieving 7.5% annual growth rate during the forecast year. According to Global Market's sight, the NSCLC therapeutics market is rapidly expanding with increasing demand for the treatment of chronic diseases with innovative solutions.
Source: Diagnosis, staging, and Testing for Nonsquamous NSCLC
Genprex’s leading product candidate –
GPX-001 – is designed to capture the NSCLC market with a unique gene therapy solution
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Source: Market Research Future, NSCLC Therapeutics Market Report
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Valuation
Source: Yahoo Finance As of market close July 8th, 2020
We performed a technology value analysis to arrive at a valuation per share of $5.00 per share, which is also relatively in line with the discounted cash flow model. Technology value considers the value the market assigns to the technology a company has developed minus cash. We focused our search on small capitalization oncology companies with lung cancer-focused assets, but there is no direct peer to Genprex. We note this technology value valuation model does not account for the early stage, potentially curative diabetes gene therapy treatment the company is developing.
Ticker Company Name Market Cap (MM) Cash (MM) Technology Value
GRTX Galera Therapeutics, Inc. $178.2 $120.5 $57.7NXTC NextCure Inc. $492.0 $322.1 $169.9MGTX MeiraGTx Holdings plc $456.9 $210.4 $246.5CLLS Cellectis S.A. $695.1 $325.7 $369.4TPTX Turning Point Therapeutics Inc. $2,496.0 $380.8 $2,115.2UMRX Unum Therapeutics $102.2 $29.6 $72.6
Technology Value 169,911,000$ Add: Cash and Equivalents 23,080,000$ Less: Total Debt -$ Equity Value 192,991,000$ Outstanding Shares 38,630,000 Valuation Per Share $5.0
Technology Value Analysis
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Risk Factors • Genprex faces intensive competition from other biotechnology and pharmaceutical companies. Their competitors include multinational pharmaceutical companies, biotechnology companies, generic drug companies, and research institutions. Many of their competitors have more significant financial resources and operating experience.
• Genprex will require additional funding, and there is no assurance it can be secured or secured at attractive terms.
• Genprex has a history of losses and may never be profitable with an accumulated deficit of $46 million as of March 31st, 2020.
• The public's opinion on gene therapy may cause the government to strengthen the regulatory scrutiny of gene therapy and genetic research, which could harm Genprex's business. Additionally, patients need to undergo genetic screening to detect EGFR mutations, which has inherent confidentiality concerns.
• Microcap equities are subject to additional risks including limited liquidity and investor awareness, investments in this asset class are best suited for high risk tolerant investors and institutions.
• Even if Genprex obtains regulatory approval of their current and potential product candidates, the drugs may not gain market acceptance among physicians, patients, hospitals, cancer treatment centers, third-party payors and others in the medical Community. Additionally, the drugs will be subject to various government regulations once approved.
• Genprex's current valuation depends greatly on the success of their development of GEN-001 for the treatment of non-small cell lung cancer, and their pipeline of product candidates beyond this lead indication is extremely early stage and limited.
• Genprex may not be able to successfully defend its intellectual property.
These Risk Factors Are Not Comprehensive. For Full List of Risk Factors Please Read Genprex's Latest Prospectus and/or Annual Filing
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