Follow Us GraphicFacebook IconTwitter IconLinkedIn Icon
Search Graphic

Expert Financial Analysis and Reporting

Chimerix: A Review of Recent Analyst Day Presentations with a Focus on Adenovirus and Ebola (CMRX, $31.31, Neutral)

  • The fundamental outlook for Chimerix is very attractive in my opinion. My model suggests that sales of its lead drug brincidofovir could reach $800 million in 2021 based only on use in allogeneic  hematopoietic stem cell and other severely immunocompromised patients. It could have significant uses beyond this.
  • Topline data on the phase 3 SUPPRESS trial of brincidofovir could be reported in 2H, 2015 with approval in 2016 if the results are positive as I expect.
  • I think that brincidofovir may be the most important of several drugs being tested and tried on a compassionate use basis in Ebola. However, I don't see a significant commercial opportunity in Ebola at this time.
  • The stock has some fluff in it due to the Ebola scare which has moved it ahead of where I would like to buy it. However, I would be reluctant to try to trade in and out of the stock at the current price level.

Company Overview

Chimerix's lead product candidate is brincidofovir, an oral nucleotide analog that has shown to have broad spectrum in vitro antiviral activity against all five families of double stranded DNA viruses that affect humans. These include viruses in the herpes family (such as cytomegalovirus) and adenoviruses. Brincidofovir is an improvement on an older drug called cidofovir which is an effective agent but is limited because it is associated with kidney or bone marrow toxicity. Using lipid technology Chimerix was able to significantly increase the amount of cidofovir released within the cell (where it attacks the virus). In doing so it was able to significantly reduce toxicities as has been demonstrated in studies in over 1000 patients.

Based on positive phase 2 results in cytomegalovirus (CMV) prevention in hematopoietic stem cell and immunosuppressed patients, Chimerix initiated the Phase 3 SUPPRESS trial in 2013. If positive, data from SUPPRESS will support Chimerix's initial regulatory submission for brincidofovir for the prevention of CMV infection in adult hematopoietic cell transplant (HCT) recipients and certain other immunosuppressed patients. Topline data from the SUPPRESS trial is expected in 2H, 2015 and if positive could support an NDA filing and approval in 2016.

Chimerix recently initiated AdVise, a Phase 3 trial in adenovirus, which is an often-fatal viral infection in immunosuppressed patents with no approved treatment; enrollment is ongoing for the pilot portion of the trial. Chimerix is also working with the Biomedical Advanced Research and Development Authority (BARDA) to develop brincidofovir as a medical countermeasure against smallpox. Brincidofovir has received Fast Track designation from the FDA for cytomegalovirus, adenovirus, and smallpox.

The Company has just surged more brightly into the investment spotlight with the release of in vitro data that shows that it could potentially be used against Ebola. The FDA has just approved the protocol for a phase 2 trial in the US and Europe. The Company is working with international organizations to determine how and if the drug should be made widely available in West Africa (the epicenter of the Ebola outbreak).


Investment Perspective

I initially wrote an in depth report on Chimerix on March 13, 2014 in which I started coverage with a neutral rating. I started writing this report when the stock was in the $16 to $18 range and it was my intention to recommend the stock. However, positive news on the use of brincidofovir in compassionate treatment of severe adenovirus infections drove the stock to $25.48 by the time my report was finished. As a result, I started my recommendation at neutral even though i very much liked the fundamental story. Subsequently the market swoon for small biotechnology stocks caused a significant decline in the stock that was punctuated by a sharp downdraft in an over-reaction to an equity offering. This gave me the opportunity to recommend the stock at $14.22 on May 21.

I think that the Company’s lead drug brincidofovir is an extremely promising, broad spectrum anti-viral drug for the treatment of severe infections caused by double stranded DNA viruses. The first important application will be in allogeneic stem cell transplant setting to prevent infections in the immunocompromised stem cell transplant recipients and also in other immunocompromised patients such as chemotherapy patients. I project that the drug will be approved in 2017 and my model projects $800 million of sales in 2021.

I believe that this could result in a market capitalization in 2020 of five to eight times projected one year forward revenues in 2021 which is $4 billion; this is $133 to $213 per share. I arrive at this multiple of sales by noting the current market capitalization to sales ratio of several successful biotech companies: Alexion (ALXN) sells at 12 times 2015 estimated revenues, BioMarin (BMRN) at 12, Gilead (GILD) at 6, Regeneron at 12 and United Therapeutics at 5.This $800 million sales estimate does not include projections for use in smallpox, Ebola or potentially other viruses and does not include any sales from new products internally developed or acquired.

The stock has done quite well following my recommendation on May 21 at $14.22 as it rebounded to the low $20s. However, the news of the potential use against Ebola triggered a sharp run-up in the stock. The stock close on the day before the announcement on September 8 was $23.25. In the subsequent month or so with the great uproar over Ebola, the stock has soared to a high of $35.40 and the most recent close was $33.63. The Ebola scare has added $300 million to Chimerix’s market value. In considering the potential importance of Ebola, the investor has to consider the following issues and questions.

  1. There is no human or animal data for brincidofovir that shows efficacy. The evidence for efficacy against Ebola is based on cell cultures. Will it work in humans? I think so. The drug concentrations needed to control the virus are only somewhat higher than those in other viruses in which it has been effective, but they are obtainable.
  2. In what percentage of Ebola patients will it work and at what stages of the disease will it be effective. I don’t have a good idea.
  3. Will it be safe in Ebola patients? Probably. It has now been used in 1000 patients and has shown an acceptable side effect profile.
  4. When will it be widely available? I don’t know. Chimerix has just received FDA approval to begin a phase 2 in the US and Europe. How many patients will be required to get a sense of efficacy? Perhaps 25 or 50 as was the case with adenovirus. It will also be available for compassionate use.
  5. When might the drug be available in the West African epicenter of the Ebola epidemic? The Company said that it will give guidance on this soon. My guess is that it is available to some degree by late this year.
  6. Could the drug be made widely available in West Africa with no evidence of human efficacy? Perhaps. The situation is desperate and brincidofovir has a lot going for it. It is a pill that can be taken twice a week, it has an established safety profile and the formulation is stable in the hot humid West African climate. These are very appealing attributes for an underdeveloped and overstressed health care systems.

While I think that brincidofovir may have an important role to play in Africa, there is a question as to how much can be charged and who will pay for the drug. I would expect the Gates foundation and other non-profits to jump in with funding and this could be meaningful for revenues. However, because there is no proof of efficacy nor will there be for some time, I don’t know how a reasonable price can be determined. There will be a lot of pressure on Chimerix to provide the drug at cost or a slight markup over cost for obvious humanitarian region. If Chimerix tries to render a meaningful profit, they could leave themselves open to significant criticism for profiteering. Even if the drug is shown to be dramatically effective, it may be difficult to make meaningful profits.

As for the US and Europe, my best judgment is that Ebola will not cause a pandemic and the number of cases in the US and Europe will be small. The head of the CDC testified before Congress that the Ebola outbreak can be controlled. It is more a matter of focusing resources and attention on the problem than coming up with a new cure. Importantly, Ebola is not an airborne virus like SARS or pandemic flu and is much less likely to cause a pandemic. Like these viruses, I think that it will likely run its course without causing the problems imagined by the doom sayers.

I think that Ebola will be a limited factor in the stock price one year from now as has been the case in the past for stocks that were seen to be potential beneficiaries of pandemic flu or SARS. However, I readily acknowledge that the fluidity of the situation could lead to numerous potential outcomes. The stock in the near-term will probably trade sharply up and down in accordance with unpredictable data coming out on the Ebola epidemic. I think that without any consideration of Ebola that I would be a buyer in the low $20s. So does that mean that I am recommending selling the stock? No it does not. I don’t believe in trading stocks in which I have such conviction in the long term fundamentals. I would hold the stock.


Brincidofovir’s Potential Use against Ebola


The Ebola virus was first discovered in 1976. The current outbreak is the most severe outbreak since then and has killed more people than all previous epidemics combined. It is beleived to have started in Guinea in December 2013 and then spread to neighboring Liberia and Sierre Leone. These countries have large impoverished populations with poor water, sanitation and health care infrastructure which readily lends itself to an epidemic. In countries which bracket these three nations, there has been one case reported in Senegal and none in the Ivory Coast. The wealthier nation of Nigeria has been more successful in handling and containing the virus where 20 cases have been treated. There have been secondary cases in the US and Spain occurring in medical workers.

As of October 14, 2014 the World Health Organization (WHO), the United States Centers for Disease Control and other organizations have identified 9,216 suspected cases and 4,555 deaths of which 4,995 cases and 2,729 deaths have been confirmed by laboratories. WHO has said that the actual number may be 2.5 times greater. An executive of the WHO made the statement that there could be 10,000 new Ebola cases per week by December 2014. The mortality rate per the above figures is 50%.

This interest in brincidofovir was sparked by NIH in vitro testing of all experimental drugs that might be of use against Ebola; the data was described in a press release issued on September 8. Various types of human cells were grown in culture dishes and then were infected with Ebola virus. Brincidofovir was added to culture dishes at increasing concentrations and as the concentration was increased, greater eradication of the virus was seen. The EC50 (amount of drug needed to kill 50% of the virus) was within concentrations achievable in humans.

In multiple different human cell types, the EC50 was comparable to the EC50 seen with adenovirus and other double stranded DNA viruses. In these other viruses, the EC50 readings translated well to vivo animal models and then in human studies in cytomegalovirus and adenovirus. This translation form culture dish data to human data for these viruses raises hopes that it will be effective for Ebola as well. If you can kill viruses in a culture dish, it is highly predictive of being able to do the same in human beings. The key is getting the drug into right places in adequate levels to kill the virus.

Clinical Trial Plans in Ebola

Chimerix has just received approval for a phase 2 protocol to treat Ebola patients in the US and Europe who have confirmed Ebola disease. There is an ongoing collaboration with the CDC and the NIH and they are progressing into animal efficacy studies in guinea pig models. This will determine the efficacy and safety of brincidofovir in a sophisticated medical environment that is not really available in Africa.

Chimerix is also working with international agencies to potentially make it available to African patients through emergency INDs or other compassionate use programs as appropriate. They are in active discussion with global organizations to determine the best way forward for evaluating whether Brincidofovir is effective in the West African theatre. The Company promises announcements for ways forward in the coming weeks.

Advantages and Uncertainties of Brincidofovir in Ebola

Brincidofovir has advantages relative to other agents that are under consideration for the treatment of Ebola virus at present. As opposed to some of the other agents, it can be given orally and requires only twice weekly dosing; this is extremely important for the overstressed health care systems in West Africa. Another very important advantage is that there is a large safety base stemming from the clinical trials in other viruses involving 1000 patients. This safety database should allow the Company to move faster in human studies than other agents.

It is also very important that manufacturing has been established and can be ramped up quickly. There is no difficult issue to overcome to build large supplies. It also is stable at room temperature and in conditions of high heat and humidity so that it is well suited for West Africa.

There are uncertainties as brincidofovir is absorbed in the proximal small intestine. Ebola is associated with gastrointestinal toxicity and severe diarrhea. This raises the question as to whether this could interfere with the absorption of brincidofovir into the blood in Ebola patients. The dose limiting side effect of brincidofovir is diarrhea and this raises the concern that it could exacerbate the gastrointestinal damage and diarrhea seen with Ebola. However, management notes that experience in adenovirus may be a good correlate because diarrhea and GI toxicity are a prominent component of adenovirus disease. And what has been seen in patients that present with severe diarrhea from adenovirus diseases is that brincidofovir does not make things worse and often ends up improving the diarrhea associated with adenovirus.

There is little known about the Ebola virus and what the mutation rate might be and whether these mutations could result in resistance to brincidofovir. This just can’t be known at present. Cidofovir has never been used in these patients so it’s hard to say what the differential activity between brincidofovir and cidofovir might be. However, as in other double stranded viruses, brincidofovir has orders of magnitude more activity and should be more active. And certainly from toxicity perspective significantly less toxic than cidofovir will be in these individuals.

Other Companies Involved In Ebola Drugs and Vaccines

MAPP Biopharmaceutical has developed a product called ZMapp which is based on three recently identified monoclonal antibodies. ZMapp was show to have efficacy in a monkey model of Ebola. The product was made available on request to researchers, but I have heard no anecdotal results from its use. ZMapp is produced recombinantly in tobacco leaves, which is a new approach to monoclonal production and certainly has a lot of development work before large scale production is possible. The available supply of ZMapp was very limited and the Company announced in August that the supply had been exhausted. It seems unlikely that ZMapp could be supplied in meaningful quantities at the current time.

Tekmira signed an agreement with the Department of Defense in 2010 to development for freeze dried versions that can be administered intravenously. The current version of the drug is called TKM-Ebola and was given a Fast Track designation by the FDA in March 2014. It is being developed under the animal rule that is used for drugs whose efficacy cannot be tested in humans.  In non-human primates it was shown to provide 100 percent protection from an otherwise lethal dose of Zaire Ebola virus when given beforehand and also provided significant benefit when given 48 to 72 hours after infections; the results were published in the May 29, 2010 issue of Lancet. The drug was given intravenously in seven daily doses. TKM-Ebola is being made available to people who have returned from the African epidemic to North America and is working with international health organizations to perform clinical trials in West Africa.

BioCryst is starting a dose ranging study in animal models for BCX-4330. This is an RNA polymerase inhibitor, a different mode of action from brincidofovir. It is initially administered as an intramuscular administration.

NewLink Genetics Corporation (NLNK) has started a phase 1 trial of an Ebola vaccine that developed by the Public Health Agency of Canada. The vaccine is directed at the protein which forms the outer coat of Ebola virus. This vaccine has shown promise in both pre- and post-exposure vaccination of non-human primates exposed to lethal doses of the Ebola virus. The phase 1 study in 40 healthy adults will evaluate how they respond to increasing doses of vaccine. The highest dose levels correspond to levels that created antibody responses were seen to protect monkeys in Ebola challenge studies. GlaxoSmithKline (GSK), Bavarian Nordic (BVNRY), the Netherlands company Crucell and Profectus BioSciences also have vaccines in phase 1 development.

Brincidofovir in Adenovirus Infections

Pilot Study Results in Adenovirus

Chimerix initiated an open label pilot study called AdVise in March 2014 and as of September 19th, 48 patients had been enrolled. The trial enrolled pediatric and adult patients with adenovirus infections; they received brincidofovir twice weekly for twelve weeks. This is more of a pediatric problem with 60% to 70% of patients under the age of 18. There is currently no approved treatment for adenovirus which can progress rapidly in patients with a weakened immune system due to disease or medications that depress the immune system.

In these very sick patients treated with brincidofovir, nearly two-thirds of the patients survived the first few weeks when the highest mortality rates occur. The mortality rate in the 48 patients was 35% based on median duration of observation of 57. This was meaningful decline from an earlier interim look in the first 26 patients in which the mortality rate was 48%. Historical studies before the availability of brincidofovir have shown mortality rates of 51% to 80% resulting from various therapies. However, because of differences in study design, we can only take this pilot study data as being suggestive of a mortality benefit.

Data from the first interim look at 26 patients showed that over half of the subjects were hematopoietic cell transplant recipients with disseminated disease. There were also solid organ transplant recipients and patients undergoing chemotherapy. Over one-third of the subjects (10 of 26) had a second active infection with another double stranded DNA virus in addition to adenovirus, including BK virus (20 %), cytomegalovirus (19 %) and Epstein Barr virus (8 %). Similar data has not been presented for the 48 patients.

One of the investigators on the AdVise trial is Dr. Michael Grimley, Associate Professor, Division of Bone Marrow Transplant and Immune Deficiency, Cincinnati Children's Hospital. He spoke at the R&D presentation and said that two thirds of these 48 patients were transplant recipients with disseminated disease; these were very sick patients. About 60% to 70% were pediatric patients. Many patients were symptomatic with pneumonia, hepatitis, entrocolitis and kidney infections. Almost half of the patients had previously received intravenous cidofovir and did not adequately respond. About 65% of patients had a greater than three log reduction or undetectable virus at some point during their treatment indicating a significant effect of brincidofovir in killing the virus.

While mortality is a key focus of AdVise, there are other endpoints of interest. Prior to the availability of brincidofovir, IV cidofovir often has been used off label for this indication. It is associated with nephrotoxicity and immunosuppression. The latter may force the physician to reduce the amount of immunosuppressive drugs being used to prevent graft versus host disease and this increases the risk of graft rejection.

Dr. Grimley said that patients most likely to benefit from brincidofovir are those who are T-cell depleted; receive grafts from unrelated donors and or recipients of cord blood stem cells. He said that about 50% of such high risk patients suffer a reactivation of a doubles stranded DNA virus or combinations of viruses post-transplant. When asked how he would use brincidofovir, he said that he would use it all patients as prophylaxis. He would start it during the preparative therapy for transplant and keep it going through day 100. He feels this would provide pre-emptive coverage of adenovirus, cytomegalovirus and Epstein Barr virus.

Of the patients treated in the pilot study only three patients were discontinued due to side effects. Two of those were diarrhea which is an outside effect that requires treatment to the patient and one patient had an elevation of bilirubin that was positively unrelated to brincidofovir. This is an encouraging safety profile.

Dr. Grimley concluded that brincidofovir has very potent biologic activity in patients with adenovirus disease with about two thirds of the patients having a clinically significant improvement. There appears to be improved survival compared to historical controls with up-to-date mortality of approximately 38% in all cohorts versus 58% historical control (his estimate). There were no new safety concerns. It is also important that, particularly in patients who are struggling with adenovirus infection, more than one-third of patients have more than one DNA virus, which underscores the need for a safe and broad-spectrum antiviral. The data definitely supports moving into a pivotal Phase 3 study in his opinion.

Phase 3 Trial Design for Adenovirus

The phase 3 trial will be comprised of three active arms: Cohort A will enroll allogeneic stem cell transplant patients who have localized disease, Cohort B will enroll allogeneic stem cell transplant recipients who have disseminated disease that causes very high mortality and Cohort C will enroll immunocompromised with documented adenovirus infections resulting from other types of stem cell transplants or causes such as chemotherapy.

Given the efficacy has already been demonstrated in the pilot program in adenovirus, Chimerix feels it would be unethical to include a placebo arm in this study; this presents a problem in interpreting final results. Chimerix is addressing this issue in two ways. In Cohorts A and B, patients will be randomized to determine outcomes at six weeks and twelve weeks. This could show increasing efficacy with duration of therapy so that the six weeks group could kind of be looked at as a control arm. However, in the event that the outcomes at six and twelve weeks are comparable, the Company will also use historical matched controls as a control group. Patients in all cohorts will be matched by factors such as age, transplant type etc. against historical controls.

What is the Incidence of Adenoviral Infections in Allogeneic Stem Cell Transplants?

There are no solid estimates on the incidence of adenoviral infections in allogeneic stem cell transplant patients and the resultant mortality. Past studies have suggested that the incidence can be anywhere from 5% to 47%. This wide disparity reflects different study designs. Chimerix suggests that the mortality rate is 58% in patients treated with other therapies. I have seen other estimates of 50% to 80%. Again this reflects different study designs.

The truth is that we don’t have a good grasp on the epidemiology at this time. Because of this, Chimerix is undertaking another study that will look the serum banks in stem cell transplant sites involved in their studies and other transplant sites. These sites collect serum and store it in the freezer. This provides the data base to look at the incidence of double stranded viruses such as cytomegalovirus, adenovirus and BK virus. It will show the combination of infections which viruses are activated early and late and the scope of infections in the absence of brincidofovir prophylaxis.

Brincidofovir and Small Pox

Ebola is not transmitted through the air. Imagine the panic if there were a smallpox outbreak. It can be transmitted through the air and is rapidly fatal. It can also be easily weapon zed.  The Biomedical Advanced Research and Development Authority (BARDA), is a branch of Health and Human Services, that supports development and procurement of drugs, vaccines and other products to address among other things the health and medical consequences of infectious diseases that could through terrorism or accident become a public health hazard. Chimerix has a contract with BARDA to develop brincidofovir for smallpox as a medical counter measure for smallpox in the event of a bio terror event. Work has been going on for some time and Chimerix was recently awarded a $17 million extension.

For obvious reasons, clinical development of a drug for smallpox cannot be done in humans. They are developed in the context of the animal rule. This is based on doing phase 1, 2 and 3 studies in two species of animals against a virus that affects those animals that is a surrogate for smallpox. Hence, Chimerix is doing studies in rabbits and mice. The program in rabbits is about to enter phase 3. The Company says that a short course of therapy using just three doses has been 80% to 100% effective in preventing death in its phase 2 studies and the Company is confident of success. Chimerix says that it also works well in the mouse model but is not quite as far along.  The Company is looking to file an NDA in late 2016 that could set the stage for stockpiling by BARDA in 2018

There has actually been one case in which a human was exposed to virus related to smallpox. A marine who was immunosuppressed was vaccinated for smallpox with the related vaccinia virus and developed a disseminated infection. He responded very well to treatment with brincidofovir. While this was just one case, it was encouraging.

R&D Pipeline

A core strength of Chimerix is a unique compound library targeted at viral diseases. This library is being screened against many viruses. The lipid technology that was used to improve the drug properties of cidofovir and create brincidofovir is also strength of the company. The company’s two most advanced pipeline products are CMX16669 and CMX157.

CMX669 is a rationally designed molecule intended to do a very specific thing. It has shown potent in activity against cytomegalovirus and BK virus in animal models. This is a follow-on compound to brincidofovir with some unique characteristics. It is not active against other double stranded viruses. It can be given orally and seems to have a very good safety profile. Chimerix plans to initiate clinical trials in 2015.

CMX157 is a compound that was licensed to Merck for potential use against HIV as a possible component of a triple combination. Merck returned the compound but Chimerix has not given up on the drug.  CMX157 is potent against HIV strains that are highly resistant to other nucleosides. The Company believes it is two to three times more potent than Viread (tenofovir). The mechanism of action may make this a very effective topical microbicide. Hence, Chimerix is exploring ways to develop and or license the drug.


Tagged as , , + Categorized as Company Reports


  1. Larry thanks for providing a very informative update on the company and about the topic on everybody’s minds; ebola virus.

    On your thoughts that Brincindofovir for ebola sales would likely be small due to humanitarian pricing pressures, I might be cynical here but I didn’t realize drug companies drop the price of life saving drugs much in order to save lives, outside of compassionate use. I always hear the argument that they need to recoup the R&D costs of past and future years, so they go on to charge a price that gives them a 75% gross profit. Of course for poor 3rd world countries, I see the practical sense of that but would have guessed US/EU government aid would come in the form of the government purchasing the pills where they pay a profit.

    Even if Ebola becomes contained in the next year (I hope) and not an outbreak into other countries, I would imagine that since Brincindofovir has efficacy as a preventative treatment to Ebola, that there would be significant revenue from the purchase and stockpiling of the pills by hospitals in countries in USA, EU, Asia, and Africa for prevention. The volume could be high. It would seem anyone that has direct contact with an Ebola patient showing early symptoms might want to undergo a preventative pill treatment, and as we know from TV, that could easily turn into 50, 100, or 200 people within a couple of days.

  2. I think that finding a way to make money on usage in West Africa is a difficult challenge. Also, recall that there is no data showing efficacy in humans.

    Your point on stockpiling in developed countries is possible, but we would have to see evidence of efficacy in humans and wider spread incidence of infections. The situation is very fluid and there are a wide number of possible outcomes.

  3. Thanks Larry!

  4. Lawrence Braverman says:

    Strike while the iron’s hot, I guess… look out below. Sold half my position early this afternoon; thinking of buying back if we go much lower. -l.

    4:57 pm Chimerix announces commencement of public offering of ~$105 mln of its common stock (CMRX) : Morgan Stanley & Co. LLC and J.P. Morgan Securities LLC are acting as joint book-running managers for the offering. Chimerix anticipates using the net proceeds from the offering to fund its research and development efforts and for general corporate purposes, including working capital.


You must be logged in, or you must subscribe to post a comment.