Mural Oncology (NASDAQ: MURA, $3.05, Market Capitalization $52.0 million), a clinical-stage oncology company focused on discovering and developing immunotherapies, held its first virtual Investor Day on September 26. During the Investor call, the company highlighted latestage clinical progress in its lead candidate, Nemvaleukin, and provided updates on future pipeline developments. Nemvaleukin, an engineered IL-2 cytokine, is designed to enhance anti-tumor effects while mitigating toxicity, with promising efficacy shown in combination with pembrolizumab. The company’s phase 3 ARTISTRY-7 trial for platinum-resistant ovarian cancer and phase 2 ARTISTRY-6 trial for mucosal melanoma are fully enrolled, with key data readouts expected in early to mid-2025. Also, the company stated that if the hazard ratio meets the bar for success for ARTISTRY-7, the study will be declared positive, and the company will plan to file a Biologics License Application (BLA) in 2025, or the company may decide to terminate the study. Mural also discussed its IL-18 program, with an Investigational New Drug (IND) submission planned for Q4 2025. Management emphasized that these therapies aim to address significant unmet needs in cancer treatment, with potential registration pathways under discussion with regulatory authorities.
Valuation and Recommendation
Our fair value estimate for Mural Oncology is $12.00 per share (Previously: $15.00 per share), based on a terminal growth rate of 2% and WACC of 13.72%. The bulk of the value ($8.90 per share) is accounted for by the cash, which is likely to reduce as the company funds its operations. During its conference call, the company stated that its current cash and cash equivalents of $200 million as of 2Q24 is expected to fund its operations till 4Q25. We have assumed a cash burn of ~$50 million to arrive at our projected cash and cash equivalent of $151 million as of the end of FY24. Mural’s CMP indicates that the company trades significantly below its cash per share, which means the market assigns a negative value to its operating business and continuing cash burn in its ongoing development programs. Mural’s pipeline drug Nemvaleukin has generated compelling clinical data with durable responses 1 in monotherapy and PD 1 combination across various tumor types. Mural Oncology has spent ~$552 million from FY21 to 1H24, which implies the company is heavily investing in its pipeline drug Nemvaleukin. It expects top-line readouts for ARTISTRY 6 in 2Q25 and interim analysis data readouts for ARTISTRY-7 variants in late Q1 or early 2Q25. Moreover, the company also shared data for its preclinical IL-18 and IL-12 programs – candidate nominations for each are expected later this year. Mural plans to nominate a development candidate for its IL-18 program by the end of 2024 and intends to submit an Investigational New Drug (IND) Application to the FDA in Q4 2025. Currently, MURA’s major candidates (ARTISTRY-7 and ARTISTRY-6) are in the pipeline for cytokine cancer therapies at different stages in clinical trials that may offer material value if things go well. The further reduction in our target price is a factor in the uncertainty of the outcomes of these trials. During the conference call, MURA did not provide any details on securing further funding for its operations post-2025 or when it expects to launch one of its products. However, we expect the company to provide more details post top-line data readouts (ARTISTRY-7 & ARTISTRY-6 in 1H25). We believe the stock offers an attractive entry point for long-term investors as it is trading below its cash per share. However, in view of its high-risk business model, the stock offers an asymmetric binary payout depending on the success of ongoing trials on Nemvaleukin. We maintain our ‘Long-Term Buy’ rating on Mural Oncology Plc and an implied upside of 293.4% from the current market price of $3.05 as of 9/27.
Key Highlights From Investor Day
1. Nemvaleukin (IL-2 Program)
Mural Oncology’s lead candidate, nemvaleukin, is a key focus of its clinical-stage pipeline. This engineered IL-2 cytokine is designed to harness the anti-tumor potential of high-dose IL-2 while reducing the associated toxicities that typically limit its use. The company is advancing two significant trials for nemvaleukin. The ARTISTRY-7 trial, a phase 3 study targeting platinum-resistant ovarian cancer (PROC), compares nemvaleukin combined with pembrolizumab against standard chemotherapy. PROC is an area of high unmet need, with few effective treatment options and poor survival. Nemvaleukin, for the treatment of PROC, has received a Food & Drug Administration (FDA) Fast Track Designation. The Nemvaleukin (arm 3) has shown positive (OS) results, with a 25% reduction in risk of death. This trial has completed enrollment with 456 patients. Its primary endpoint is overall survival (OS), and the OS events required for interim analysis are estimated to occur by late Q4 2024 or early Q1 2025. Data from this trial are expected in late Q1 or early Q2 2025, which could lead to a Biologics License Application (BLA) filing later in 2025.
The protocol-specific interim analysis for overall survival (OS) in the ARTISTRY-7 trial will occur when 75% of the total OS events have been reached, which is approximately 215 out of 286 total OS events. The cumulative alpha spend for the interim analysis is 1-sided at 0.0096. The maximum hazard ratio for success at this interim analysis is 0.727, indicating a 27.3% reduction in the risk of death, assuming exactly 215 OS events. The company stated that if the hazard ratio meets the bar for success for ARTISTRY-7, the study will be declared positive, and the company will file a Biologics License Application (BLA) in 2025. Further, in case the hazard ratio is not met, the company may decide to continue to the final analysis at approximately 286 OS events, or it may decide to terminate the study.
Concurrently, the ARTISTRY-6 trial, a phase 2 study, is focused on mucosal melanoma, a rare and aggressive form of cancer with no currently approved treatments. Enrollment has been completed, with 92 patients enrolled, and the top-line results are expected by Q2 2025. The target response rate is 25%, and at this target, the lower bound of the 95% confidence interval will exceed a 15% response rate. Nemvaleukin has demonstrated promising results in earlier trials and received Fast Track and Orphan Drug designations from the FDA.
2. IL-18 Program
In addition to its IL-2 program, Mural is advancing its IL-18 program, which aims to develop therapies that enhance immune responses against tumors. IL-18 is a potent immune-stimulating cytokine, but its efficacy is often blunted in its native form. Mural’s innovative approach to engineering IL-18 addresses these limitations, offering the potential for a new class of immune-based cancer therapies. The company plans to submit an Investigational New Drug (IND) application to the FDA for its IL-18 candidate in Q4 2025, with the nomination of the specific development candidate expected by the end of 2024.
Next Steps & Milestones:
Mural Oncology has set several key milestones that will shape its development trajectory over the next two years. In early 2025, the company expects to report interim data from the ARTISTRY-7 trial, which will determine the potential for nemvaleukin’s success in PROC. By Q2 2025, top-line data from the ARTISTRY-6 trial in mucosal melanoma will be available, potentially supporting a BLA filing for this indication. Further along in the pipeline, the submission of an IND for the IL-18 program in Q4 2025 will represent an important step in expanding Mural’s therapeutic portfolio. These milestones reflect Mural’s commitment to addressing unmet medical needs in oncology and advancing innovative immuno-oncology therapies.
Financial & Market Outlook:
• Mural Oncology is positioned to address large unmet medical needs in PROC and mucosal melanoma, two indications with limited therapeutic options. The company expects nemvaleukin to be a key asset for driving growth.
• With a strong cash runway into Q4 2025, the company is well-positioned to continue its clinical development programs. During the investor call, the company stated that its current cash balance is $200 million.
Other Updates
On September 23, the company announced the appointment of Sachiyo Minegishi to its board of directors, effective September 20. Ms. Minegishi will serve as Chair of the Audit Committee and join the company’s Nominating and Corporate Governance Committee. Sachiyo brings over two decades of biopharma experience, focusing on corporate strategy, finance, development, and commercialization. She is currently the Chief Operating Officer at Rectify Pharmaceuticals, driving corporate and financing strategy to advance its lead program from discovery to clinical stage. Prior to Rectify, Sachiyo was Chief Financial Officer at Akouos, Inc., where she led corporate finance and business development strategy and played a key role in the acquisition of the company by Eli Lilly.
Financial Position
Total Research and Development (R&D) expenses were $54.4 million in 1H24 compared to $82.9 million in the prior-year period. The decrease in R&D expenses in 1H24 was primarily due to a different team composition compared to the personnel previously allocated to Mural by Alkermes prior to the separation. The decline in R&D expenses was also due to decreased spend on the ARTISTRY-1 and ARTISTRY-2 trials as activities related to these trials wound down in 2023 and lower manufacturing spend on other programs. The General and Administrative (G&A) expenses were $13.9 million compared to $8.5 million in the prior-year period. The increase in G&A expense in 1H24 was primarily due to costs associated with operating as a standalone company after the Separation. This includes employee-related expenses and professional fees. The cash balance at the end of 1H24 was ~$200 million.
Valuation
Our revenue model for Mural is driven by its first wholly owned drug, Nemvaleukin, which is currently in potential registration, enabling studies in two difficult-to-treat tumor types: platinum-resistant ovarian cancer and mucosal melanoma. By selectively targeting the IL-2 pathway, nemvaleukin has broad potential clinical utility in various tumor types and offers the potential for significant value creation as the development program advances. Mural expects top-line readouts for ARTISTRY-6 in 2Q25 and interim analysis data readouts for ARTISTRY-7 variants in late Q1 or early 2Q25. Moreover, the company plans to submit an Investigational New Drug (IND) application to the FDA for its IL-18 candidate in Q4 2025, with the nomination of the specific development candidate expected by the end of 2024. The immunoboncology industry is expected to have revenues of ~$88 billion by 2027. We estimate Nemvaleukin to achieve ~$120 million in net revenue by 2030 with ~0.06% penetration after its launch.
DCF Valuation – Using a discounted cash flow methodology, our fair value estimate for Mural Oncology stands at $12.00 (Previously: $15.00) per share. Our DCF thesis assumes a terminal growth rate of 2%, WACC of 13.72% and a post-spin-off share count 17.04 million. Our implied equity value for Mural Oncology stands at $209 million.
Risk to Target Price/Valuation – For Mural Oncology, clinical outcomes from clinical trials, especially for products such as nemvaleukin, could impact how investors view its outlook as the current core products mature.
Company Description
Mural Oncology
Mural Oncology is leveraging its novel protein engineering platform to develop cytokine-based immunotherapies for cancer treatment. By combining its expertise in cytokine biology, immune cell modulation, and protein engineering platforms, MURA is developing medicines to deliver meaningful and clinical benefits to people with cancer. The company’s mission is to broaden the potential and reach of cytokine-based immunotherapies to improve the lives of patients. MURA’s lead candidate, nemvaleukin, is currently in potentially registrational trials in mucosal melanoma and platinum-resistant ovarian cancer. Mural Oncology has its registered office in Dublin, Ireland, and its primary facilities in Waltham, Mass.