CytoDyn Inc (OTCMKTS: CYDY) Gives Investor Update at the Annual Shareholder Meeting


CytoDyn Inc. (OTCMKTS: CYDY) had its annual meeting at 9:30AM on November 8, 2018 at the Portland Hilton.  The company reported that all the proposals passed.  The company made the following proposals.  The slate for the board of directors, the ratification of their public accountant, increasing the authorized to 600 million shares, and the executive compensation proposals were all adopted.  After the formal shareholder meeting was over both Dr. Pourhassan and Dr. Pestell shared the stage in a shareholder update.  There were new updates to the corporate presentation.

Financing History

Dr. Pourhassan gave an overview of the achievements of CytoDyn starting in 2012 and shared his vision of what he thought the company would look like in 2019.  He thought that PRO 140 has the potential to be the first ever monotherapy treatment for HIV and eventually replace the Highly Active Antiretroviral Therapy (HAART) standard of care that is dominated by Gilead (GILD).  He also made a bold statement about being the first ever in the world to bring a safe therapy to market to stop the metastasis of cancer.  He indicated that if the company just focused on the combination therapy they would need $30 million in order to reach regulatory approval that would lead to a projected $500 million in sales the following year and an end to the dilution.  He made historical comparisons to GILD and their stock price because many forgot that it traded sideways for almost 5 years and then started moving once their drugs got approved.

Coming Revenue Streams

Using numbers from their consultant Biovid the company indicated that market potential of the combination therapy was $1.2 billion and if they were successful in getting monotherapy approval the market potential of just the monotherapy was $4.0 billion annually.  Dr. Pourhasan updated the milestones for regulatory approval of the combination therapy.  The clinical and non-clinical parts of the BLA should be finished by the end of 2018 and the CMC which is the final part will be completed by the end of Q1 in 2019.   CytoDyn Inc. (OTCMKTS: CYDY) is expecting regulatory approval in 2019 and expects significant revenue in 2020.  He used a couple of slides from Biovid’s market research that showed extremely fast penetration of the market led by the patients not through any marketing initiatives.  Adoption was expected to be at 60% within 3 months and at 90% within the first year.

Monotherapy Update

PRO 140 continues to perform as expected.  The company announced that 23 patients were in the 700 mg arm of the trial and they came from the 525mg arm.  Of those patient that were in the higher arm only 5 had viral failure and an additional 12 patients achieved viral suppression levels below 50 copies/ml.  This bumped up the responder’s rate from 78% in the last update to 92%.  The last investor update in July the company announced that the FDA was looking for an 80% responder’s rate to consider approval as a monotherapy.  The recent data puts them well over the mark and the company is looking for the FDA to label this CD-002 as a pivotal trial.

Graft versus Host Disease Update

The company indicated that they modified the protocol to reflect the positive preclinical finding and plan to dose 10 patients in the next cohort.  They also reflected on the far reaching implication regarding other types of transplants.  The animal studies below are very conclusive that this should work.  If clinical trials validate the animal studies this could usher in a paradigm shift in the area of organ transplantation.  If human cells can thrive in a mouse what else is possible?

Cancer Development Update

Dr. Pestell handled most of the cancer presentation.  He gave an overview and started out with Herceptin and HER2+ patients and mentioned that only 25% are HER2+ compared to 50% of breast cancer patients overexpress CCR5 making it a better target.  He also explained that Merck (MRK) and Pfizer (PFE) are doing clinical trials using the CCR5 target which equated to big pharma validation of the target.  He also mentioned that should either MRK or PFE want to commercialize their work they would need to get a license from CYDY to “practice the art” of CCR5.  This would include indications in cancer and GvHD.  Dr. Pestell commented that PFE had a very strong program with respect to GvHD.

The evolutionary path that led to the discovery of the CCR5 target was after Dr. Pestell’s team realized that the HIV signaling pathway was causing cancer metastasis.  He challenged his team to think about a different approach to cancer treatment.  Many therapies focused on treating the primary tumor even though 90% of cancer deaths are the result of metastasis.  Once they discovered that CCR5 was responsible for the metastasis various drugs were tried and worked but toxicity was the issue.  Once Dr. Pestell realized the safety profile of PRO 140 he formed a company with his eyes on licensing PRO 140.  In the interim he developed a solid foundation to launch a CCR5 inhibitor in Breast Cancer, Prostate Cancer, and Colon Cancer.

The immediate focus is on Triple Negative Breast Cancer (TNBC) which is ER negative (estrogen), PR negative (progesterone), and HER2 negative.  The disease doesn’t respond to targeted therapies like Herceptin which is made by Roche (RHHBY) or endocrine therapies like Tamoxifen which is made by AstraZeneca (AZN).  The median survival is 6 -13 months and progression free survival (PFS) is usually 3-4 months.  Immunomedics (IMMU) has a breakthrough therapy designation for their investigational drug IMMU-132 which targets the TROP-2 receptor which is expressed on over 90% of TNBC cancers. What CYDY plans is do something similar with the CCR5 receptor in conjunction with Carboplatin.  The endpoint is a reduction in circulating tumor cells, and increase overall survival and progression free survival.


Immunomedics Pipeline

Prostate Cancer Prognostic Test

Included in the acquisition of ProstaGene is the IP for a prognostic test for prostate cancer.  According to Dr. Pestell it was highly developed and at the stage of licensing when they decided to focus on the completion of the ProstaGene merger.  Although Dr. Pestell said that they stopped work on the licensing deal he did announce that there was a 3rd interested party in the licensing the prognostic test.  He went on to add that these type of licensing deals have a large upfront payment with a royalty stream based on the number of tests.

The test is superior to 6 other tests currently in use.  The higher the hazard ratio the typically the better the test.  The most common test that is also approved by Medicare is the Onctotype Dx test and its hazard ratio is 2.3 versus the CytoDyn’s prognostic test which has a hazard ratio of 9.2 which is many times more useful in guiding the decision making process.  Since prostate cancer is such a slow growing disease the surgical treatment which typically results in a cure has side effects like erectile dysfunction, dribbling and incontinence.  Putting off the surgery results in a much better quality of life for the patient but the patient has to weight the quality of life versus the risk of death and until the prognostic test nothing really gave a definitive answer.  The simplicity of this test is that is it a urine test versus a very invasive biopsy procedure known as the transrectal ultrasound (TRUS) guided biopsy.

The prognostic test is expected to be ready in a year and generate as much as $700 million annually.  The price of the test is expected to match the price of the existing test of $3500 but the actual cost of the consumables for the test is only $150.

Upcoming Catalysts

  • Closing of ProstaGene Acquisition by December 7, 2018
  • BLA Combination Therapy – publication at CROI
  • Commercialization of PRO 140
    • Combination Therapy – $1.2 billion market
    • Monotherapy – $4.0 billion market
  • Triple Negative Breast Cancer – publication
  • Prostate Cancer Prognostic Test – publication



The company appears to be focused on closing the bridge loan or landing licensing deals that will fund the company going forward.  Paulson Investments has been a big factor in past fund raising efforts and could act as a backstop should they not succeed in closing a licensing deal for the prognostic test or find a partner for GvHD or cancer.  They are open to a buyout but felt that investors would reject any offers near the current market cap given the enormous potential of the company.  The company is starting with TNBC but will expand its cancer indications as funds permit.  Given the number of times that they mentioned licensing opportunities in their presentation it seems like that is a credible direction that they are moving toward.  Investors who understand the cancer space should pay very close attention to the breast cancer slide and its goal of a BTD in TNBC and what that is worth.  Immunomedics (IMMU) has a market cap of $3.8 billion and a BTC in TNBC and as CYDY plays catch up on the pipeline so should the market cap.  With a proven safety profile CYDY can fly through the regulatory process.  Many catalysts are possible once the merger is completed by December 7, 2018.  The stock seems poised to benefit from near term and medium term catalysts.

While this is the first time CYDY has appeared in our reports it most certainly won’t be the last. We’ll be sure to continue looking out for key events. We’ll stay up on any further developments with CYDY and pass them along to you! Stay locked to and be sure you’re signed up for our 100% free small cap newsletter if your interested on staying up to date with CYDY. Simply submit your primary active email address in the box below. Subscribe now!