Oncternal Therapeutics, Inc. is a clinical-stage biopharmaceutical company focused on the development of novel oncology therapies for the treatment of patients with cancers that have critical unmet medical needs. The company's pipeline includes several promising drug candidates, including ONCT-534, a dual-action androgen receptor inhibitor, and ONCT-808, a ROR1-targeting autologous CAR T cell therapy.
Company History and Business Overview
Oncternal Therapeutics was founded in 2013 and is headquartered in San Diego, California. The company was originally known as GTx, Inc. and was incorporated in Tennessee in 1997 before reincorporating in Delaware in 2003. In June 2019, GTx, Inc. merged with Oncternal Oncology, Inc. and changed its name to Oncternal Therapeutics, Inc.
Since its inception, Oncternal has devoted most of its resources to organizing and staffing, business planning, raising capital, acquiring product candidates and securing related intellectual property rights, and advancing its clinical and preclinical development programs. The company has funded its operations primarily through gross proceeds of $136.3 million from the issuance of common stock, $49 million from the issuance of convertible preferred stock, $14.5 million in subaward grant payments, and $18.3 million in cash proceeds received in connection with the closing of the merger with GTx, Inc. in June 2019.
Oncternal has incurred net losses in each year since inception, and its ability to generate product revenue sufficient to achieve profitability will depend heavily on the successful development and eventual commercialization of one or more of its current or future product candidates. Substantially all of Oncternal's net losses have resulted from costs incurred in connection with advancing its research and development programs, general and administrative costs associated with its operations, and in-process research and development costs associated with the GTx merger.
The company's clinical pipeline has included ONCT-534, a dual-action androgen receptor inhibitor product candidate for the treatment of castration-resistant prostate and other androgen receptor-driven cancers, ONCT-808, a CAR T chimeric antigen receptor T-cells product candidate that targets Receptor Tyrosine Kinase-Like Orphan Receptor 1 (ROR1), and zilovertamab, a humanized monoclonal antibody that binds to ROR1. The company's program activities previously included ONCT-216, an investigational small molecule designed to inhibit the E26 Transformation Specific (ETS) family of oncoproteins.
Financials and Key Metrics
Oncternal has funded its operations primarily through the issuance of common stock, convertible preferred stock, and grant payments. As of September 30, 2024, the company had $14.6 million in cash, cash equivalents, and short-term investments, and no debt.
For the nine months ended September 30, 2024, Oncternal reported the following financial results: - Grant revenue: $1.86 million - Total operating expenses: $28.19 million - Net loss: $25.41 million - Net cash used in operating activities: $20.21 million
The company's financial performance has been significantly impacted by its ongoing research and development activities, with the majority of its expenses related to advancing its clinical-stage programs. Oncternal has not generated any product revenue to date, as its drug candidates are still in development.
For the most recent fiscal year (2023), Oncternal reported a net loss of $39,479,000. In the most recent quarter (Q3 2024), the company reported no revenue and a net loss of $8,464,000. Operating cash flow for Q3 2024 was negative $6,953,000, which was also equal to the free cash flow for the same period.
Liquidity
Oncternal's liquidity position remains a critical concern for the company. With $14.6 million in cash, cash equivalents, and short-term investments as of September 30, 2024, the company believes it has sufficient funding to support its operations into the first quarter of 2025. However, there is substantial doubt about its ability to continue as a going concern for the next twelve months without securing additional funding or entering into a strategic transaction.
The company's liquidity ratios as of the most recent quarter are as follows: - Debt/Equity Ratio: 0 - Cash and Cash Equivalents: $13.08 million - Current Ratio: 2.39 - Quick Ratio: 2.39
These ratios indicate that Oncternal has no debt and maintains a relatively strong short-term liquidity position. However, given the company's ongoing losses and cash burn, additional funding will likely be required to sustain operations beyond the first quarter of 2025.
Strategic Pivot and Exploration of Alternatives
On September 12, 2024, Oncternal announced that its Board of Directors had decided to discontinue the company's clinical trials evaluating ONCT-534 and ONCT-808, as well as all other product development activities. The Board also initiated a review of strategic alternatives to maximize the value of Oncternal's assets for its shareholders.
This decision was made after the interim Phase 1 results of ONCT-534 did not show clinically meaningful improvements in disease, including prostate-specific antigen (PSA) levels, in the 20 patients treated across eight dosing cohorts. While ONCT-534 was generally well-tolerated, the lack of a clear clinical benefit prompted the Board to discontinue further development of the program.
Similarly, the early data from the Phase 1/2 study of ONCT-808 in patients with relapsed or refractory aggressive B-cell lymphoma, including those who had failed prior CD19 CAR T treatment, did not meet the company's expectations. As a result, the Board determined that it was in the best interest of shareholders to explore strategic alternatives, which may include asset sales, licensing opportunities, or a merger, reverse merger, or other business combination.
Oncternal has commenced a reduction-in-force and is assessing further cost-cutting measures as it navigates this new strategic direction. The company expects its research and development expenses to decrease significantly as it discontinues its clinical research and development activities, but will continue to incur expenses related to clinical trial closing costs and the completion of certain ongoing manufacturing and nonclinical activities.
Product Pipeline
Prior to the strategic pivot, Oncternal's product pipeline included:
ONCT-534: An investigational dual-action androgen receptor inhibitor (DAARI) product candidate with a novel mechanism of action that includes inhibition of androgen receptor (AR) function and degradation of the AR protein. ONCT-534 demonstrated preclinical activity in prostate cancer models against both unmutated AR and multiple forms of AR alteration. It was evaluated in a Phase 1/2 clinical study (ONCT-534-101) for patients with metastatic castration-resistant prostate cancer (mCRPC) who have relapsed or are refractory to approved androgen receptor pathway inhibitors (ARPIs).
ONCT-808: Oncternal's lead cell therapy product candidate, an investigational autologous chimeric antigen receptor T (CAR T) cell therapy targeting Receptor Tyrosine Kinase-Like Orphan Receptor 1 (ROR1). ONCT-808 demonstrated activity in preclinical models against multiple hematological malignancies and solid tumors. It was evaluated in a Phase 1/2 study (ONCT-808-101) in patients with relapsed or refractory aggressive B-cell lymphoma, including patients who have failed previous CD19 CAR T treatment.
Zilovertamab: An investigational, humanized, potentially first-in-class, monoclonal antibody designed to bind to ROR1 and inhibit its function. Zilovertamab was evaluated in a Phase 1/2 study (CIRM-0001) in combination with ibrutinib for the treatment of patients with chronic lymphocytic leukemia (CLL), mantle cell lymphoma (MCL), and marginal zone lymphoma (MZL).
Risks and Challenges
Oncternal faces several risks and challenges as it explores strategic alternatives, including: - Uncertainty around the successful identification and execution of a strategic transaction - Potential disruption to its operations and the potential loss of key personnel during the strategic review process - The need to secure additional funding to support its operations and any potential strategic initiatives - The inherent risks associated with the development of novel oncology therapies, including the potential for clinical failures, regulatory hurdles, and competition from other treatment modalities
Short Reports and Potential Impacts
In September 2024, Oncternal announced that it was exploring strategic alternatives, including potentially selling assets or engaging in a merger or acquisition. This news was met with significant volatility in the company's stock price, as investors grappled with the uncertainty surrounding the company's future.
Shortly after the announcement, a short report was published by an anonymous group, alleging various issues with Oncternal's clinical programs and questioning the viability of the company's assets. The short report claimed that the discontinuation of the ONCT-534 and ONCT-808 studies was due to a lack of efficacy and safety concerns, and that the company's exploration of strategic alternatives was a desperate attempt to salvage value for shareholders.
While Oncternal has not publicly responded to the specific allegations made in the short report, the company's stock price has continued to be volatile and has traded at a significant discount to its historical levels. The short report's claims, if validated, could further undermine investor confidence in Oncternal's ability to execute a successful strategic transaction and maximize value for shareholders.
Conclusion
Oncternal Therapeutics is facing a critical juncture in its history, as the company navigates the discontinuation of its lead clinical programs and explores strategic alternatives to secure its long-term future. The company's decision to halt the development of ONCT-534 and ONCT-808 due to underwhelming clinical results represents a significant setback, and the uncertainty surrounding its strategic review process has added to the challenges facing the company.
As Oncternal works to identify and execute on a strategic path forward, it will need to address a number of risks and challenges, including the need to secure additional funding, the potential for disruption to its operations, and the ongoing scrutiny from short sellers and other market participants. The company's success in navigating these obstacles will be crucial in determining its ability to create value for shareholders and potentially find a path to long-term sustainability.
Investors in Oncternal Therapeutics should closely monitor the company's progress in the coming months, as the outcome of the strategic review process could have significant implications for the future of the business. While the road ahead may be uncertain, Oncternal's deep expertise in oncology drug development and its diverse pipeline of clinical-stage assets could potentially make it an attractive target for larger biopharmaceutical companies or investors seeking to capitalize on the continued growth of the cancer therapeutics market.