Ignyta Got High Hopes on the Phase 2 Clinical Trial of Entrectinib



  • Phase 1 clinical trial of the leading product candidate of RXDX, Entrectinib, showed positive results and Phase 2 was initiated in September 2015
  • RXDX just announced that it sold $30 million worth of common stocks to Eli Lilly and Company.
  • Research and Development expenses have increased in Q3 2015 compared to the same quarter last year and it is much higher than general and administrative expenses, which indicates good management practices
  • Cantor Fitzgerald started coverage for Ignyta Inc and issued buy rating after its Q3 2015 EPS came out at -$0.49, a solid -$0.11 higher than Thomson Reuters’ consensus estimate of -$0.60

Company Overview

Ignyta Inc (NASDAQ:RXDX) is a biotechnology company involved in developing precision drugs for cancer patients. Ignyta Inc mainly targets patients with tumors and try to design drugs based on a strategy called Rx/Dx. Rx/Dx strategy is known in the biotechnology circle as the integrated therapeutic and diagnostic system that try to guess a potential solution for curing the tumors by pairing each of the solutions with biomarker-based companion diagnostics. Hence, the product candidates of Ignyta Inc is going to help a very narrow pool of patients who has the most chance of getting cured. Currently, Ignyta Inc has several product candidates in the pipeline, including RXDX-101, which is now known as Entrectinib. After Seeking Alpha contributor Steven Breazzano did a great job profiling the company with great details in February 2014, there have been several major developments over the last 20 months. We believe investors would benefit from an updated analysis of the recent key developments. Although Ignyta Inc has several internal discovery stage programs known as Spark programs and a handful of other product candidates in the pipeline, we will only discuss about the most promising product candidates, the Entrectinib ((RXDX-101)) and recent financial developments.

Updates About Entrectinib (RXDX-101)

As followers of Ignyta Inc may already know, Entrectinib is an oral small molecule inhibitor of TrkA, TrkB and TrkC, as well as ROS1 and ALK. 01_June_Price

Figure 1: Ignyta Inc Stock Spiked Over 110 Percent After Releasing Phase 1 Clinical Trial Data of Entrectinib

On June 1, Ignyta Inc announced the clinical trial data of the Phase 1 for Entrectinib and announced they have found the recommended Phase 2 dose. Within days of releasing the clinical trial data of the Phase 1, Ignyta Inc stock price spiked to $18.75 per share, representing a 110 percent increase. In September 2015, Ignyta Inc participated in the 2015 European Cancer Congress ((ECC 2015)) in Vienna, Austria, where they published interim results of its Phase 1 clinical trials of Entrectinib. During the ECC 2015, Ignyta Inc said that their ALKA-372-001 and STARTRK-1 studies had a total of 92 patients who received solid tumor doses in a varied range. During these two clinical trials, Ignyta Inc found that patients tolerated the Entrectinib doses very well. However, some of the adverse events due to the treatment included fatigue, dysgeusia, paresthesia, nausea, and myalgia. During the both studies, there were only three serious adverse events. But once the dose was modified, all these events became reversible and Ignyta Inc was able to resolve the issues. Out of the 92 participants in the Phase 1, only 18 participants met the Phase 2 eligibility criteria and later, only 9 patients remained on study treatment with durable responses of up to 21 treatment cycles. The studies concluded that Entrectinib can have an objective tumor response in the central nervous system.

Financial Situation and Burn Rate


Figure 2: Ignyta Inc’s Total Expenses Compared to Its Cash and Equivalents

Since Ignyta Inc currently does not market any products, it does not have any revenue coming in. Hence, as with all startups, investors have to keep an eye on the burn rate of the company. By the end of Q3 2015, Ignite Inc had a cash and equivalents of $57.57 million and total expenses of around $14.3 million. Earlier this month, Ignyta Inc announced that it has obtained an exclusive license for the taladegib oncology development program from Eli Lilly and Company for $2 million cash payment along with 1.2 million common stocks. Concurrently, Eli Lilly and Company entered into a stock purchase agreement with Ignyta Inc and bought an additional 1.5 million common shares of Ignyta Inc at $20 per share and effectively invested $30 million in the company. At the current burn rate, Ignyta Inc would be able to continue operation for at least two more quarters based on its current level of liquidity. However, available-for-sale securities are included, it has $163.1 million on the books against only $31 million in long-term debt. In the third quarter of 2015, out of the $14.3 million expense, $10.4 million went into its research and development. Compared to only $8.6 million in Q3 2014, this represents a 21 percent increase. It is always good to know that the bulk of the initial funding is being spent on R&D, where general and administrative expenses were only $3.9 million.


Earlier this week, Cantor Fitzgerald started coverage for Ignyta Inc and issued buy rating after its Q3 2015 EPS came out at -$0.49, a solid -$0.11 higher than Thomson Reuters’ consensus estimate of -$0.60. With the stock purchase agreement with Eli Lilly and Company, Ignyta Inc has secured its liquidity situation in the short term. Although getting FDA approval for the Entrectinib is still a matter of the distant future, the Phase 1 study showed promising results. In September 2015, the STARTRK-2 Phase 2 clinical trial of Entrectinib was initiated, which would be a global, multicenter, open label, and potentially a registration-enabling trial. In this trial, 100 leading cancer centers in the U.S., Europe, and Asia would allow their patients to participate and we can only hope the results come bearing good news. We believe the overall good financial standing of the company along with the latest developments around its lead product candidate, Entrectinib, indicates that Ignyta Inc is on course to become a leading precision oncology biotechnology company. Secondary investors should carefully follow and study this company as we believe the stock price has huge upside potential in the long-run.