Biomea Fusion company background

Biomea Fusion (NASDAQ:BMEA) is a clinical-stage US biotechnology company developing unique covalent small molecule inhibitors. BMEA has three novel irreversible inhibitor candidates in clinical development, a) lead BMF-219, a menin inhibit (phase 1/2), b) BMF-500, a covalent FLT3 inhibitor, and c) unnamed covalent inhibitor (preclinical). Biomea’s lead asset, BMF-219, has a mechanism of action of binding covalently to menin in an irreversible manner. We note that targeting menin has been clinically validated in acute leukemias but has not been studied in other metabolic indications like diabetes.

Biomea is currently evaluating BMF-219 in several novel indications such as a) type 2 diabetes (T2D), b) several liquid tumors (i.e., DLBCL, MM, and CLL), and c) KRASm solid tumors. Biomea has recently reported highly compelling initial phase 2 data for BMF-219 in Type 2 diabetes; now, dose-escalation is ongoing. Biomea’s core strategy is to leverage the company’s proprietary FUSION System platform to develop covalent inhibitors to study its application in other cancer targets, such as FLT3.

Mechanism of action of BMF-219

The mechanism of action is fairly straightforward, BMF-219 covalently inhibits menin, which will, in turn, allow the beta cells to grow (pretty much releasing the brakes that restrict beta-cell growth, allowing the beta cell to proliferate).

New functional beta cells can regenerate and preserved and functionally get reactivated, leading to higher insulin production.

Diving more deeper into the mechanism of action, BMF-219 inhibits menin’s capacity to interact with transcriptional mechanisms that drive the expression of cell cycle protein regulators, including preventing beta-cell replication/expansion. Biomea is exploring the potential for BMF-219-mediated menin inhibition as a viable therapeutic approach that aims to halt or reverse the progression of type 2 diabetes potentially.

In preclinical studies, BMF-219 has been observed to restore and balance beta cell mass in multiple animal models of diabetes.

Biomea is exploring the potential of BMF-219 as a viable therapeutic approach that aims to potentially halt or reverse progression of type 2 diabetes by covalently inhibiting menin to potentially achieve:

• Proliferation of new beta cells
• Reactivation of a pool of inactive beta cells
• Preservation of existing beta cells This mechanism of action is expected to be complementary to currently approved treatments.

Source: Company IR doc

Menin inhibitors are currently being studied in AML, ALL. Solid tumors by Daiichi Sankyo and Kura Oncology (in phase 2); however, the platform and technology in type 1 diabetes are yet validated. We believe it comes with a high degree of risk (but a high return if it works out).

The protein menin is mutated in patients with multiple endocrine neoplasia type 1 (MEN1) syndrome. Although menin acts as a tumor suppressor in endocrine organs, it is required for leukemic transformation in mouse models. Menin possesses these dichotomous functions probably because it can both positively and negatively regulate gene expression, as well as interact with a multitude of proteins with diverse functions. Menin is a key scaffold protein that functionally crosstalks with various partners to regulate gene transcription and interplay with multiple signaling pathways. Source: Biomedtracker database

ADA data update: potential disease-modifying therapy

Design: the Phase 1/2 study is a randomized, double-blind, placebo-controlled single and multiple ascending dose study to evaluate the safety, tolerability, and PK/PD of BMF0219. The study is currently still ongoing (Started on Aug 17, 2022) and enrolled 188 participants.

The gathered data on phase 2a Covalent-111 is divided into three cohorts:

• Cohort 1: 16 healthy individuals.
• Cohort 2: 12 type 2 diabetes patients, each of who has had the condition for at least 15 years.
• Cohort 3: same as Cohort 2, but without food.

Of note, these patients were not effectively responding to up to three antidiabetic medications and were classified as overweight or obese, as their BMIs fell within 25-40kg/m2.

In terms of dosing, the second group was administered 100mg of BMF-219 or a placebo daily for four weeks during meals, whereas the third group was given the same dosage but without meals. Significant reductions in blood sugar were observed in these groups after four weeks, albeit with a high placebo effect.

Data: clinical (HbA1c, C-peptide, HOMA-B, CGM) and remarkably positive C-peptide biomarker data

Placebo	Treatment	Placebo	Treatment
Treatment Description	Placebo (Cohort 2)	BMF-219	Placebo (Cohort 3)	BMF-219
Number of Patients	2	10	2	10
Number of Evaluable Patients	N/A	N/A	N/A	N/A
Exposure: Cmax(Endpoint=Secondary)	N/A	34.8 ng/mL	N/A	94.2 ng/mL
Exposure: AUC(Endpoint=Secondary)	N/A	84.3 (ng/mL)hr	N/A	224 (ng/mL)hr
Median HbA1c at Baseline(Endpoint=Secondary)	8.4 %	7.9 %	7.8 %	7.8 %
Median Change in HbA1c at Week 4(Endpoint=Secondary)	-0.1 %	-0.3 %	-0.15 %	-1.0 %

Click to enlarge

Blood sugar data maintained up until 12 weeks

The initial data published that the drug showed an impressive reduction in blood sugar in a 4-week timeframe; the new data published in ADA in June 2023 was from the previous 12 weeks, with patients having received no further BMF-219 treatment since the four-week point. Impressively, that blood sugar was maintained in most patients, and the total number of patients with blood pressure in the normal range seems to be increasing, possibly due to the company’s potential “healthy beta cell regeneration” claim. Furthermore, the data indicated that the response was maintained 8 months after the cessation of the treatment (After 8 weeks of stopping the drug). Also, the healthy volunteer cohort did not show meaningful change in HbA1C after two weeks may indicate that the placebo response (potentially BMF-219 driving RBC production artificially lowering % HbA1C due to an increase in non-glycated hemoglobin without actually impacting the beta-cell function) may not be the key driver, although it is too early to tell.

The biomarker data may be too good to be true. The C-peptide level was maintained after the treatment was discontinued after week 4; we believe biomarker data published were highly encouraging at the point where some investors may think it is too good to be true because this was achieved in such a short period. C-peptide is a marker of insulin production in our beta-cell; if this data is true, this would indicate somehow, this drug has allowed the beta-cell to regenerate at a degree where it starts producing a significant amount of insulin (material enough to be detected), which is questionable in our view.

Safety data: some signs of toxicity, but overall safety data were good. Some toxicity signals were present, leading to the manager indicating they were rethinking the dosing. Interesting food interactions were shown; patients who were dosed with food (200mg arm) had mild-moderate nausea compared to the group that did not receive it; as such, the company is moving the 200mg cohort to 100mg twice daily. Besides this, the safety profile seems fairly clean, and no red flags were shown (although we would need to see the full data to build conviction).

The earlier you get treated, the greater the benefit.

The company’s early prognostic factor exploratory work (i.e., time since diagnosis, baseline HbA1c, and BMI) indicated that patient population who were more recently diagnosed with type 2 diabetes (within 5 years), patients with higher baseline HbA1c, and population with lower BMI had preferentially benefit from the BMF-219 therapy, which makes logical sense as more beta cells are alive at that point.

However, at this point, we are cautiously optimistic. As an example of exaggerated early-stage results, the SGLT-1/2 inhibitor Zynquista initially had a 1.25% A1C reduction at four weeks in 12 patients in a Phase IIa study as monotherapy (albeit with a placebo reduction of 0.49%), but in a larger monotherapy study only had a 1.03% reduction at 26 weeks (versus 0.34% for placebo). Still, even if BMF-219 had more conventional improvements over a longer period, it could be an important product if its mechanism conferred other advantages, such as longer-lasting beta-cell function.

Longer term study expected further.

The management indicated that the company would further evaluate the potential next steps around dose escalation, and a longer treatment duration (beyond 12 weeks) would be explored with two additional cohorts. Interestingly, the company noted that they have plans on studying the candidate in type 1 diabetes patients as well, where Vertex and Sernova are currently conducting trials to reach a functional cure; we don’t ascribe too much value to this market expansion at this point.

Catalysts

The company plans to publish more updates around the next cohort (100mg 2x daily/QD) in 2H 2023 (breaking down the 200mg QD dosing to two 100mg dosing due to nausea and GI upset side-effects shown). The company plans to explore longer treatment duration and dose expansion studies during 1H 2024.

Risks

1. Clinical and Regulatory Risk: Biomea Fusion’s pipeline is largely in early to mid-stage clinical development, which inherently carries significant risk. Clinical trials are highly uncertain endeavors, and there’s a high likelihood that the company’s experimental therapies may fail to demonstrate the desired safety and efficacy profile. Further, it’s important to consider that regulatory agencies like the FDA have stringent standards for drug approval. Consequently, any setbacks in clinical trials or regulatory hurdles could significantly impact the company’s future prospects and investor confidence.

2. Competition Risk: The biotech landscape, particularly in cancer and diabetes, is highly competitive, with numerous companies, both large pharmaceuticals and other biotech firms, vying for market share. The success of BMF-219 and other assets in development will depend on their ability to differentiate from existing and future competitors. Given the progress made by competitors such as Daiichi Sankyo and Kura Oncology, there is a significant risk that Biomea Fusion may be outpaced.

3. Commercialization and Market Risk: Even if the company’s drug candidates successfully navigate clinical trials and gain regulatory approval, there’s no guarantee of commercial success. The company would need to build out a sales and marketing infrastructure, or find suitable partners, to effectively market and distribute their products. Moreover, pricing pressures, reimbursement challenges, and market acceptance can all pose significant risks to the company’s commercialization efforts.

4. Financial Risk: Biomea Fusion is currently not generating any revenues from product sales and is likely to continue incurring significant expenses related to its research and development activities. As a result, the company’s operations could be financed by dilutive equity offerings, incurring debt, or through partnerships that may require it to relinquish some rights to its technologies or products. This could potentially lead to shareholder dilution or increased financial burden, posing a significant risk to investors.

Conclusion

We initiate Biomea with a speculative buy rating. We believe claiming disease modification in diabetes based on such a small, short-term study may not be appropriate. Biomea would have to conduct additional trials to validate its platform and also finalize the agent’s dose escalation, and further safety evaluation would need to be made as the margin of error around the safety of diabetes and metabolic medication remains low. However, we believe the phase 2a data was strong enough to warrant an optioned-sized position, just considering the attractiveness of the multi-billion dollar diabetes market with only one disease-modifying treatment (Tzield). Furthermore, we believe the company may decide to put its oncology development on the back burner and potentially focus more on diabetes development, considering that they are behind Kuda, and SNDX in the AML/ALL segment, which should clear the overhang around the company’s oncology pipeline. The company currently holds ~$86m in cash and burns around $30m per quarter; we see imminent dilution on the horizon as a potential risk moving forward in the short/mid-term.