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Biotech Takes a 'Disruptive Drug Development Approach' to Destroy Dysregulated Transcription in Cancer
Research Report

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Kronos Bio's key assets are reviewed in an H.C. Wainwright & Co. report.

In a June 24 research note, analyst Robert Burns reported that H.C. Wainwright & Co. initiated coverage on Kronos Bio, Inc. (KRON:NASDAQ) with a Buy rating and a $35 per share price target. The biopharma's current share price, in comparison, is about $24.34.

Burns noted that Kronos is developing drugs that address dysregulated transcription in cancer. The company is doing so with a "disruptive drug development approach" that combines precision medicine based on computational biology and a small molecule microarray screening platform.

Kronos has three clinical stage assets in its pipeline: entospletinib and lanraplenib, in-licensed from Gilead in July 2020, and KB-0742. Burns discussed the status of each.

The next step for Kronos' lead drug candidate entospletinib is a Phase 3 study evaluating the SYK inhibitor plus 7+3 in firstline NPM1-mutated acute myelogenous leukemia (AML), Burns relayed. The trial is slated to start in mid-2021. Entospletinib targets a critical node in the HOXA9/MEIS1 transcriptional regulatory network, expressed at high levels in AML patients with certain genomic mutations. A Phase 1/2 trial in which entospletinib was combined with 7+3 showed an 87% complete response rate in NPM1- mutated AML patients versus 54% in wild-type AML patients.

Regarding lanraplenib, Burns indicated, Kronos plans to commence two Phase 1/2 trials of this SYK inhibitor in the near term. One, scheduled to start by year-end 2021, will evaluate lanraplenib plus gilteritinib in patients with refractory and recurrent FLT3-positive AML. The second, to commence in H1/22, will test lanraplenib plus Venclexta in patients with firstline unfit NPM1-positive or FLT3-positive AML. A Phase 2 study in a non-oncological indication showed Lanraplenib to have "a favorable dosing schedule, pharmacokinetics and safety profile versus entospletinib," wrote Burns.

As for Kronos' third asset in development, KB-0742, Burns noted it has "broad applicability for a selective CDK9 inhibitor." KB-0742 solely targets CDK9 in solid tumors altered by the MYC oncogene and others affected by transcription. The drug is now being evaluated in a Phase 1/2 trial, initial results from which are expected in Q4/21.

"This agent may sidestep the safety and tolerability problems of older generation, nonselective CDK inhibitors while achieving best-in-class efficacy," Burns wrote.

He addressed the commercial potential of all three drugs. KB-0742 has the greatest, he noted, given how often MYC amplification occurs in solid tumors, including lung and other common cancers. H.C. Wainwright estimates global peak non-risk-adjusted sales of KB-0742 could be $4.6 billion per year.

The commercial opportunities with entospletinib and lanraplenib are smaller, Burns wrote, allowing Kronos flexibility in how it approaches marketing and selling the drugs. For example, the biopharma could begin by commercializing them in niche indications and then engage one or more partners to penetrate the larger markets. Together, entospletinib and lanraplenib could generate about $1 billion annually in firstline NPM1-mutated AML and refractory and recurrent FLT3-positive AML, H.C. Wainwright forecast.

Burns pointed out that "all three of Kronos' lead candidates could be deployed using a precision medicine format, which would allow the company to screen for and select the likeliest responders based on expression of specific biomarkers or mutations in particular genes that are known to constitute powerful drivers of cancer cell proliferation and metastasis."

The analyst also highlighted another Kronos asset, CEO Norbert Bischofberger, describing him as "one of the foremost small molecule drug developers in the biopharma industry." Bischofberger worked as the chief scientific officer for Gilead Sciences for about 30 years, during which time he oversaw the launches of numerous "highly innovative medicines," including Sustiva, Viread and Sovaldi.


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Disclosures from H.C. Wainwright & Co., Kronos Bio, Inc., Initiating Coverage, June 24, 2021

Investment Banking Services include, but are not limited to, acting as a manager/co-manager in the underwriting or placement of securities, acting as financial advisor, and/or providing corporate finance or capital markets-related services to a company or one of its affiliates or subsidiaries within the past 12 months.

I, Robert Burns and Raghuram Selvaraju, Ph.D., certify that 1) all of the views expressed in this report accurately reflect my personal views about any and all subject securities or issuers discussed; and 2) no part of my compensation was, is, or will be directly or indirectly related to the specific recommendation or views expressed in this research report; and 3) neither myself nor any members of my household is an officer, director or advisory board member of these companies.

None of the research analysts or the research analyst's household has a financial interest in the securities of Kronos Bio, Inc., MEI Pharma, Inc. and Prelude Therapeutics Incorporated (including, without limitation, any option, right, warrant, future, long or short position).

As of May 31, 2021 neither the Firm nor its affiliates beneficially own 1% or more of any class of common equity securities of Kronos Bio, Inc., MEI Pharma, Inc. and Prelude Therapeutics Incorporated.

Neither the research analyst nor the Firm knows or has reason to know of any other material conflict of interest at the time of publication of this research report.

The research analyst principally responsible for preparation of the report does not receive compensation that is based upon any specific investment banking services or transaction but is compensated based on factors including total revenue and profitability of the Firm, a substantial portion of which is derived from investment banking services.

The firm or its affiliates received compensation from Oncternal Therapeutics, Inc. for non-investment banking services in the previous 12 months.

TThe Firm or its affiliates did not receive compensation from Kronos Bio, Inc., MEI Pharma, Inc. and Prelude Therapeutics Incorporated for investment banking services within twelve months before, but will seek compensation from the companies mentioned in this report for investment banking services within three months following publication of the research report.

The Firm does not make a market in Kronos Bio, Inc., MEI Pharma, Inc. and Prelude Therapeutics Incorporated as of the date of this research report.

H.C. Wainwright & Co., LLC and its affiliates, officers, directors, and employees, excluding its analysts, will from time to time have long or short positions in, act as principal in, and buy or sell, the securities or derivatives (including options and warrants) thereof of covered companies referred to in this research report.

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