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Options Traders Position Ahead of Key Catalyst for Chemocentryx (CCXI)

by | Sep 23, 2021

Chemocentryx (CCXI) with a key, binary event coming up on 10/7 with their PDUFA for avacopan in ANCA vasculitis. The event was pushed back in July after the company filed an amendment to their application resulting in the date being pushed back. The company didn’t disclose what change was made or why the FDA pursued it. In May, the AdCom voted 9-9 on whether or not the Phase 3 data supported approval and 10-8 in favor of their drug’s safety profile. The AdCom generated a lot of debate about the trial after the FDA raised concerns over statistical analyses used.

ANCA vasculitis is an autoimmune disease where neutrophils become overactive and attack small blood vessels in the body. This results in inflammation and damage. Neutrophils are a normal part of the body’s reaction to an injury or infection but with ANCA vasculitis, this process can be triggered by mistake leading to massive accumulation that can lead to long-term damage. The part of the body that signals this response is a protein in the complement system called C5a receptors.

Avacopan is an oral therapy that binds to C5a preventing it from attaching to receptors and triggering a wrong immune response.  The drug has been shown to increase remission rates and improve kidney function in people with ANCA vasculitis while limiting the toxicity that typically comes with steroids (the current SoC). The AdCom in May raised a lot of questions about the benefits of avacopan versus predisone and wether the response was robust enough. They also had concerns over the use of glucocorticoids and its impact on efficacy.

Analysts are still fairly bullish on the odds of approval while the market setting up for a big move (the market is currently pricing in about $30 or $6). Canaccord with a $64 PT in August noted they remain optimistic around avacopan approval as the PDUFA extension implies the FDA has committed significant resources to its review with the goal of a first-pass approval. However, they now expect a slower launch due to his expectation of a more limited initial label. Stifel upgraded to Buy in July noting that the company’s amendment to NDA represents a positive surprise. While the amendment does not equate to guaranteed approval, the firm thinks the FDA’s receptivity towards additional data/analyses in light of the unmet need and a standard of care in need of innovation resurfaces the question on FDA’s ‘flexibility’ when reviewing drug applications.

The $1.21B company has about $5/share in cash on hand. Short interest is around 6.4%. In May, the COO bought $120K in stock at $11. RA Capital, Ikrain, and Tang Capital all top holders. Options flow has been bullish. On 9/23, there was a buyer of 2500 October $22.50 calls for $3.90 and follows 3800 of the $25 calls bought recently. On 9/21 the January $10 puts were sold to open 1000X. The November $30/$40 call spread was bought 3000X in early August.