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Advaxis Inc (NASDAQ:ADXS) Just Announced A Low Risk, High Reward Program

Advaxis Inc (NASDAQ:ADXS) Just Announced A Low Risk, High Reward Program
Written by
Chris Sandburg
Published on
March 1, 2017
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Advaxis, Inc. (NASDAQ:ADXS) picked up a volume spike and a 7% gain at the start of this week, on the company's announcement that it has secured a collaboration agreement with a company called SELLAS Life Sciences Group. The agreement relates to a combination therapy that incorporates Advaxis' drug development platform with SELLAS' lead development asset, and while we don't know the specific indication the collab will go after, we know it's an oncology treatment and we can say with reasonable certainty (based on the two inputs' MOAs, something we'll look at shortly) that it's going after a solid cancer.If the program works out, however, and even if just the initial element of it produces something positive, there are gains to be had that far exceed the single digit run seen on the announcement. As such, this apparent under reaction could be a nice opportunity to pick up an exposure at a discount.Here's what you need to know about the deal, and what it means for Advaxis and its shareholders.So, it relates to a technology that Advaxis has developed and that it refers to as it Lm-based antigen delivery technology. The Lm element of the name abbreviates what are called listeria monocytogenes. It's a pretty neat approach. The company takes antigen DNA, and fuses it to listeria DNA. This fusion creates a plasmid, which the technology then packages into Listeria monocytogenes, which creates a cancer immunotherapy drug that targets the antigen with which the listeria DNA was fused. When introduced to the body, the drug rushes to the site of any cells that express the antigen in question (and the idea here is that the fused DNA is that of an antigen that is expressed by cancer cells) and the listeria comes into play. Basically, it tricks the immune system into thinking any cells that express the target antigen are infected with listeria. The immune system attacks the cells that it believes are infected (in this case, of course, they are cancer cells), and removes them – thus treating the cancer.SELLAS wants to investigate this approach when the technology is combined with its own lead asset, a drug called galinpepimut-S. This one uses antigens called WT1 antigens, and so the theory is that by combining it with Advaxis' technology, the resulting asset can trick the immune system into thinking that any cancer cells that express WT1 are infected with listeria.We told you it was neat.A wide variety of tumor cells express WT1, meaning there's a large potential base of indications the two companies can target, if the preclinical program points towards a validation of the concept.Which brings us to the key element of the agreement. Advaxis is taking control of the preclinical side of things, with a remit to create proof of concept that can support an IND. After IND, SELLAS will take over control and – in turn – financial obligations, and Advaxis will receive future payments of up to $358 million from SELLAS if certain development, regulatory, and commercial milestones are met. $358 million is pretty much exactly what Advaxis is valued at currently, and that comparison alone serves to underline how much this deal could mean for the company if it bears fruit.So what's next?It's now in Advaxis' hands to come up with proof of concept, and so our key milestone is some news from the company relating to how it plans to do this. It won't involve any human studies or anything like that (not least because it's not allowed to by law) and we expect all Advaxis will have to do is prove that it can adapt its tech to incorporate the WT1 antigen, as opposed to its proprietary antigen targets, which right now are spearheaded by one called HPV.It's not a massive ask by any stretch of imagination.There are risks, as always, and these are rooted in capital necessity. That said, this program won't cost much, and is playing second fiddle to an ongoing phase III, so it doesn’t add too much risk, while it does add plenty of reward.We will be updating our subscribers as soon as we know more. For the latest updates on ADXS, sign up below!Disclosure: We have no position in ADXS and have not been compensated for this article.

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