Executive Summary / Key Takeaways

• Candel Therapeutics is advancing a differentiated approach in immuno-oncology using off-the-shelf viral immunotherapies designed to induce systemic anti-tumor immunity.
• Positive Phase 3 data for lead candidate CAN-2409 in localized prostate cancer, showing a statistically significant 30% reduction in recurrence risk, supports a planned BLA submission in Q4 2026.
• Promising survival data from Phase 2 trials of CAN-2409 in NSCLC and pancreatic cancer highlight pipeline potential beyond prostate, with plans for potentially registrational trials in these indications.
• Recent financing activities, including a December 2024 offering and subsequent ATM sales, have significantly strengthened the balance sheet, extending the cash runway into Q1 2027 to support ongoing development and pre-commercial activities.
• While facing competition from established players and other biotech firms, Candel's multimodal viral platform and recent clinical successes position it as a notable innovator in the evolving cancer immunotherapy landscape.

The Promise of Viral Immunotherapy: Setting the Scene for Candel Therapeutics

Candel Therapeutics, Inc. is carving out a niche in the competitive landscape of cancer treatment, focusing on the development of off-the-shelf viral immunotherapies. The company's core strategy revolves around engineering viruses designed for intratumoral administration. This local delivery aims to induce immunogenic cell death within the tumor microenvironment, releasing tumor-specific neo-antigens and fostering a pro-inflammatory state. The ultimate goal is to trigger an individualized, systemic anti-tumor immune response, potentially targeting both injected tumors and distant metastases through an abscopal effect.

The company's journey began in 2003 as Advantagene, Inc., evolving through strategic licenses and acquisitions, notably incorporating herpes simplex virus (HSV) technology from Periphagen and Mass General Brigham (MGB). Becoming a public entity in 2021 provided access to capital markets, a crucial step for funding lengthy and expensive clinical development. This history underscores a long-term commitment to harnessing viral vectors for therapeutic benefit, positioning Candel within the broader immuno-oncology field alongside large pharmaceutical companies like Bristol-Myers Squibb , Merck , and AstraZeneca , as well as specialized biotech firms such as Replimune . While larger players dominate with established checkpoint inhibitors, Candel differentiates itself through its unique viral platforms and targeted delivery approach.

Candel operates primarily through two core platforms: an adenovirus-based platform featuring its lead candidate, CAN-2409, and an HSV-based platform centered around CAN-3110. The enLIGHTEN Discovery Platform, an iterative HSV-based system, further supports pipeline expansion by leveraging advanced analytics to design novel viral immunotherapy candidates with optimized gene payloads. This technological foundation is intended to provide a competitive edge by potentially overcoming resistance mechanisms common in solid tumors and offering a multimodal therapeutic effect. The strategic intent behind these platforms is to develop therapies that are not only effective but also have a manageable safety profile through local administration, contrasting with the systemic toxicities sometimes associated with other immunotherapies.

Pipeline Momentum and Financial Performance

Candel's investment story is currently anchored by the progress of its lead candidate, CAN-2409 (aglatimagene besadenovec), particularly in prostate cancer. The company recently announced positive topline data from its pivotal Phase 3 trial in newly diagnosed localized prostate cancer (intermediate-to-high risk). This trial met its primary endpoint, demonstrating a statistically significant improvement in disease-free survival (DFS) when CAN-2409 was combined with radiation therapy. Treatment with CAN-2409 reduced the risk of prostate cancer recurrence or death by 30% (HR 0.70, p=0.0155), with median DFS not reached in the active arm compared to 86.1 months in the placebo arm. This compelling data, along with the FDA's Special Protocol Assessment (SPA) and recent Regenerative Medicine Advanced Therapy (RMAT) designation for this indication, supports the company's plan to submit a Biologics License Application (BLA) in the fourth quarter of 2026.

Beyond prostate cancer, CAN-2409 has shown promise in other challenging solid tumors. Final survival data from a Phase 2a trial in advanced non-small cell lung cancer (NSCLC) patients who had inadequate response to immune checkpoint inhibitors demonstrated prolonged median overall survival (mOS) of 24.5 months in evaluable patients, significantly exceeding historical controls (9.8-11.8 months). Similarly, final analysis of a Phase 2a trial in borderline resectable pancreatic ductal adenocarcinoma (PDAC) showed an estimated mOS of 31.4 months in the CAN-2409 group versus 12.5 months in the control arm, with a median post-progression survival of 21.2 months versus 6.4 months. These results, coupled with Fast Track and Orphan Drug designations for CAN-2409 in PDAC, are driving enabling work for potential registrational trials in these indications, suggesting a broader potential for the therapy.

The HSV-based candidate, CAN-3110, is also progressing in an investigator-sponsored Phase 1b trial for recurrent high-grade glioma (HGG), an area of high unmet need. Early data has indicated extended overall survival associated with immune activation, particularly in patients with pre-existing anti-HSV1 antibodies. Repeat dosing is being explored in an extension cohort, with initial mOS data expected in the fourth quarter of 2025. This program has also received Fast Track and Orphan Drug designations, underscoring its potential in a difficult-to-treat cancer.

Financially, Candel is in a typical stage for a clinical-stage biotech, characterized by significant R&D investment and no product revenue. For the three months ended March 31, 2025, the company reported total operating expenses of $8.13 million, a slight increase from $7.90 million in the same period of 2024. Research and development expenses were $4.02 million, a minor decrease from $4.10 million in Q1 2024, primarily reflecting lower stock compensation partially offset by increased manufacturing costs for CAN-2409. General and administrative expenses rose to $4.11 million from $3.80 million, mainly due to higher professional and consulting fees. The company reported net income of $7.38 million in Q1 2025, a significant shift from the $8.22 million net loss in Q1 2024. This was largely driven by a substantial non-cash gain of $14.88 million from the change in the fair value of the warrant liability, reflecting fluctuations in the company's stock price, alongside increased interest income ($0.93 million vs $0.32 million) from a larger cash balance and decreased interest expense ($0.31 million vs $0.65 million) on its term loan.

Strengthening Liquidity and Future Outlook

Maintaining sufficient capital is paramount for Candel as it advances its late-stage pipeline. As of March 31, 2025, the company held $92.17 million in cash and cash equivalents. This position was significantly bolstered by the December 2024 public offering, which generated approximately $85.9 million in net proceeds. Subsequent to the quarter, the company raised an additional $4.0 million in net proceeds through its At-the-Market (ATM) program by May 5, 2025, and announced a $15 million registered direct offering in June 2025. These capital raises are intended to support ongoing clinical development, pre-commercialization activities for CAN-2409 in prostate cancer, and BLA preparation.

Based on its current financial resources, Candel anticipates having sufficient capital to fund its operating expenses and capital expenditure requirements into the first quarter of 2027. This runway provides critical support for advancing the lead programs towards key data readouts and regulatory submissions. The outlook is focused on executing the clinical development plans for CAN-2409 across prostate, NSCLC, and PDAC, and obtaining initial mOS data for CAN-3110 in HGG in Q4 2025. The planned BLA submission for CAN-2409 in prostate cancer in Q4 2026 represents a major potential value inflection point.

However, the company acknowledges that substantial additional funding will be required to complete the clinical development of its pipeline candidates, build commercial capabilities if approvals are obtained, and support potential commercialization efforts. The ability to raise this capital will depend on market conditions, clinical trial success, and the overall progress of its programs. The company's debt obligations, including a term loan with approximately $10.91 million outstanding as of March 31, 2025, also represent a fixed financial commitment.

Competitive Dynamics and Risk Considerations

Candel operates in a highly competitive environment. The immuno-oncology market is dominated by large pharmaceutical companies with extensive resources, broad pipelines, and established commercial infrastructures, such as Bristol-Myers Squibb (BMY), Merck (MRK), and AstraZeneca (AZN), whose checkpoint inhibitors generate billions in revenue and boast high gross and operating margins (e.g., MRK with 82% gross margin and 38% operating margin in 2024). While Candel's financial metrics reflect its clinical stage (0% revenue, negative margins), its competitive edge lies in its differentiated viral immunotherapy approach, particularly the potential for localized delivery to induce a systemic response and target cold tumors. The positive Phase 3 prostate data, showing a quantifiable benefit (30% risk reduction), provides a specific point of differentiation against standard-of-care alone.

Smaller biotech companies, like Replimune (REPL), also compete in the oncolytic virus space. While Replimune faces similar financial challenges (minimal revenue, negative margins), Candel's recent clinical successes, particularly the Phase 3 prostate data and promising Phase 2 survival data in NSCLC and PDAC, suggest a potentially stronger near-term trajectory compared to some niche competitors. Candel's strategic partnerships, such as the recent collaboration with IDEA Pharma for commercialization readiness, aim to build capabilities necessary to compete effectively if approvals are secured.

Despite the promising clinical data and strengthened financial position, Candel faces significant risks inherent in biopharmaceutical development. The success of its pipeline is not guaranteed; clinical trials can fail, regulatory approvals are uncertain and lengthy, and manufacturing complex viral therapies presents challenges. The reliance on third parties for manufacturing and clinical trial execution introduces dependencies. Market acceptance of novel viral immunotherapies, even if approved, is not assured and depends on factors like efficacy, safety, pricing, and reimbursement. The company's intellectual property, while actively managed, is subject to challenges and requires ongoing defense. Furthermore, broader industry trends like healthcare reform, evolving data privacy regulations, and geopolitical factors could impact operations and market potential.

Conclusion

Candel Therapeutics is at a pivotal juncture, transitioning from a preclinical/early clinical-stage company to one with late-stage clinical assets demonstrating compelling data. The positive Phase 3 results for CAN-2409 in prostate cancer, coupled with promising survival data in NSCLC and pancreatic cancer, provide a strong foundation for the investment thesis centered on the potential of its multimodal viral immunotherapy platform. The recent capital raises have significantly improved the company's financial flexibility, providing runway to advance these programs and prepare for potential regulatory submissions and commercialization.

While the path forward in oncology remains challenging and competitive, Candel's differentiated technology and recent clinical successes offer a clear value proposition. Key milestones, such as the upcoming CAN-3110 data readout and the planned CAN-2409 BLA submission, represent critical events for investors to monitor. The ability to successfully navigate regulatory processes, secure necessary funding, and potentially bring novel therapies to market will ultimately determine Candel's long-term success and its ability to translate clinical momentum into sustainable value.