Karyopharm: 6 Months Later, No Change In My Stance (NASDAQ:KPTI)

I covered Karyopharm Therapeutics (NASDAQ:KPTI) in May. At that time, I noted that the stock was destroyed by the SIENDO trial failure, and that a catalyst desert with no major readout in two years will keep the stock stagnant. The stock is down 60% since then, so I wasn’t exactly right. The stock didn’t just stagnate, it drastically fell.

I covered KPTI many times before, and was also invested in the stock once. My coverage was generally bullish; in 2018, right before selinexor’s first approval, I made positive comments about the stock. I kept on being bullish for a long time, but declining/stagnant selinexor sales, and finally the failure of SIENDO, changed my mind.

If you look at the chart, there’s no major drop since February (SIENDO), just a general drag. In that time, KPTI achieved a few things, and failed a few others. In terms of achievements, in May, the European Union extended Nexpovio’s (selinexor) Multiple Myeloma label to include Nexpovio and Takeda’s (TAK) Velcade combo with dexamethasone for the treatment of adults with multiple myeloma who have got one to three prior lines of therapy. Earlier, it was only approved for multiple myeloma. That sounds a bit confusing, so to clear all confusion, here’s the actual label, right from the EMA website:

Nexpovio is a cancer medicine used to treat multiple myeloma (a cancer of the bone marrow). It is used together with two other medicines, bortezomib and dexamethasone, in adults who have received at least one previous treatment. It is also used together with dexamethasone in adults who have received at least four previous treatments and whose disease has worsened since the last treatment.

In May, also, the company announced that they have dosed the first patient in a phase 3 trial evaluating oral selinexor in combination with Bristol-Myers Squibb’s (BMY) chemo drug Pomalyst (pomalidomide) and low-dose dexamethasone versus BMY’s Empliciti (elotuzumab), pomalidomide, and dexamethasone in patients with relapsed or refractory multiple myeloma. These are heavily pretreated patients with up to four lines of prior therapy. Earlier, the same combo saw good data from a phase 1b/2 trial, dubbed STOMP, and a phase 2 study called XPORT-MM-028.

What else? On the flipside, a director sold $3.4mn of KPTI shares; never a good thing, whatever the reason. Biogen terminated an asset purchase agreement with Karyopharma for the latter’s KPT-350 inhibitor, which Biogen was developing for use in treating amyotrophic lateral sclerosis. No reasons were given. KPTI received a $10mn payment in 2018, and was supposed to receive up to $207mn more. Those funds won’t be coming. In another news, which is good or bad depending on your perspective, KPTI made a $165mn private placement, accompanied by warrants, which will go towards replenishing some of its dwindling cash balance.

Speaking of cash, the company has about $150mn of it if you ignore the private placement. Total revenue for the third quarter of 2022 was $36.1 million, of which $32mn was product revenue. It spent $31.4 million on R&D, $1mn on COGS, and $34.6mn on G&A. At that rate, the company has cash for barely two quarters, again ignoring the $165mn. Taking it into account, and revenue, they have cash for 4-5 quarters.

KPTI just initiated the phase 3 trial of selinexor in women with Advanced or Recurrent TP53 Wild-Type Endometrial Cancer. This follows from the SIENDO trial in endometrial cancer in a broader population, which didn’t do too well. The PFS was hardly differentiated from placebo in the general population (5.7 months versus 3.8 months), however:

Data also showed that a subgroup of patients with wild-type p53 endometrial cancer had PFS of 13.7 months compared to 3.7 months for placebo, a 62% reduction in the risk of disease progression or death.

Thus there was strong differentiation in this subgroup, which is the target of the phase 3 trial. Data will be read out in 2025, however, so that’s a long wait.

Also, the company read out phase 1 data at ASH 2022 from its selinexor/ruxolitinib combo in treatment naive myelofibrosis patients. This was an open label study, and I have learned not to put much stock in phase 1 open label studies especially if they talk about efficacy. You can really figure out nothing much from such studies except through meaningless cross trial comparison. Why do you need a cross trial comparison? Because a study without a control arm does not help you compare the target molecule with anything unless you go cross trial. Anyway, they say the data is good. I will believe them – after a randomized trial.

I have left out a few things here because I don’t want to repeat myself. XPOVIO sales have disappointed again. Major catalysts are far away from now. Stock is selling at 52-week low, but that doesn’t always equate with “undervalued.” I will continue to stay on the sidelines.

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