Shares of Trillium Therapeutics (TRIL) skyrocketed last year. After selling for $1.17 on the first trade in January, the shares clocked out at $14.71 on the last trade in December. This amazing run made Trillium a 13-bagger, and one of the strongest performers in the healthcare space in 2020. What caused this magnificent run?
In this clip from Motley Fool Live, healthcare and cannabis bureau chief Corinne Cardina and Fool.com contributor Taylor Carmichael discuss Trillium. The segment was recorded on Jan. 15, 2021.
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Corinne Cardina: Let's move on to number 4. This is Trillium Therapeutics. This is a small cap biotech with a novel but still unproven immuno-oncology platform. Into 2020, it was up 1,330 percent. It is at a $1.4 billion market cap. Taylor, tell us about Trillium. What kind of business does it have? This is not a COVID-19 stock, right?
Taylor Carmichael: It's not. This is a cancer stock, but similar to Co-Diagnostics, it started off the year as a tiny micro cap. This is another micro cap, it came out of nowhere. That's when you see a 1,300 percent run in a year. What they have is they're in an area that's very exciting. They're focusing in the oncology space, and this is a cancer biotech company, and they are focused on the CD47 protein. Now, the CD47 protein, the way to think about it, it's like a cloaking device. The CD47 protein hides cancer cells from your body's immune system. Because your body has a natural immune system and an adaptive immune system that kills cancer.
But CD47, when it's malfunctioning, it hides, it cloaks the cancer and keeps your body's immune system from killing the cancer. What biotech companies are doing in the CD47 space, they're turning off CD47, this protein, so that all of a sudden, your body's immune system can see the cancer and kill it. This is a very exciting space. That Gilead (GILD 2.14%) paid $4.9 billion to acquire Forty Seven, which is another biotech company focused on the CD47 protein. Well, that's what Trillium does. They're focused on the CD47 protein, they want to make cancer visible to your body's immune system so that your body will naturally kill the cancer.
One of the things that made the stock jump up is that Pfizer (PFE -0.60%) basically validated their science a bit by investing $25 million in the company. They just basically bought $25 million worth of stock. Pfizer knows more about cancer drugs than I do. If Pfizer is willing to invest $25 million in this company, then that work to me, it's valid. That's something I would like to see in a small unprofitable biotech like Trillium, if they have collaboration with big pharma, which is what they have here. They have Pfizer, they're making this investment, and they have not given up any of their intellectual property rights in their drugs. It's not like Pfizer bought their drugs or have any rights in the drugs. That's a real bonus too, so they have a lot of cash, they have $290, almost $300 million in cash, and they only burned about $22 million in cash. This is a company that is in a financially very strong position and they have very good science, but I guess the red flag, if you want to jump ahead a little bit, the red flag, (it's) very, very early. They're in the middle of phase 1. You're several years away from revenues, from profits, you're several years away from having any drugs. Even if they race it, it's not going to be like COVID-19, it's not going to be in a year. So this is several years away when you're phase 1. At a $1.4 billion market cap, that's on the high-end for a company that has drugs in phase 1. I guess my one warning here is the market loves the deal with Pfizer and loves the science. Pretty excited. It's pretty expensive for where they are, and you may be able to get a cheaper price down the road.
Corinne Cardina: Right. In 2021, they are going to give some key updates on two of their phase 1 trials. Those could be potential catalysts that are looming, or if it doesn't turn out positive, it could certainly send shares coming down in a hurry. We will keep an eye on that one.
