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Fire Up the Immuno-Oncology Powerhouses: John McCamant

Source: Editors, The Life Sciences Report

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June 19, 2014 (Investorideas.com Newswire) Forecasting when we'll have a cure for cancer remains beyond the predictive powers of researchers and investors. But forecasting the focus of the latest American Society of Clinical Oncology meeting was in the cards: Immuno-oncology took center stage. In this interview with The Life Sciences Report, Medical Technology Stock Newslettereditor John McCamant describes the excitement surrounding this rapidly evolving sector, and names big pharma and small biotech players conjuring potential game-changers.

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John McCamant: As many expected, immuno-oncology was all the rage at the recently concluded ASCO meeting. It was widely acknowledged that before ASCO, Bristol-Myers Squibb Co. (BMY:NYSE) was the leader in the space, followed by Merck & Co. Inc. (MRK:NYSE) and Roche Holding AG (RHHBY:OTCQX). At the conference, however, AstraZeneca Plc (AZN:NYSE) showcased its emerging immuno-oncology pipeline. The competitive landscape changes rapidly as this exciting sector evolves.

Bristol's lead drug exhibited further toxicity in both non-small cell lung cancer (NSCLC) and renal cell carcinoma trials, with some very real adverse events in lung cancer. Yervoy (ipilimumab) has been the primary culprit, but Bristol also reported some notable adverse events with its PD-1 blocker, nivolumab.

Just before ASCO, on May 6, Merck was granted priority review for its top PD-1 prospect, MK-3475, with a U.S. Food and Drug Administration (FDA) approval deadline of Oct. 28. Merck is expected to get first-mover position in the new wave of immuno-oncology therapies, which is expected to be a game changer in the oncology market. The initial indication is melanoma.

Despite the speed bumps, Bristol is still a leader. But it is becoming clear that Bristol may not have the best-in-class immuno-oncology drug candidates, leaving the company vulnerable to the next wave of competitive compounds.

The emergence of AstraZeneca's strong immuno-oncology pipeline is, in our view, the primary driver for the recent Pfizer Inc. (PFE:NYSE) bid. Pfizer has little presence in the immuno-oncology sector, and AstraZeneca's emerging pipeline would have transformed Pfizer into an immuno-oncology player overnight.

While many investors were expecting a post-ASCO selloff, the exact opposite has occurred, as investors have begun to get in a back-to-bios mode. ASCO was a big pharma and biotech conference after all. Incyte Corp. (INCY:NASDAQ) and Pharmacyclics Inc. (PCYC:NASDAQ) stars shone brightly, while Bristol's immuno-oncology disappointed.

The immuno-oncology sector is primed to become a super blockbuster market. Most current Wall Street estimates for the immuno-oncology treatment space, of ~$10–15 billion (~$10–15B), are based on only a few cancer types (melanoma, NSCLC and renal), and that is changing. The signal at ASCO is that immuno-oncology, with all the new tools emerging, will impact the vast majority, if not virtually all, cancer types in some shape or form. A great example is the bladder cancer data reported by Roche, which showed a 50% response rate (including one complete response) with RG7446 in PD-L1+ patients with pretreated metastatic bladder cancer, a setting that typically has very limited treatment options. Adding immunotherapy in combination with radiation and chemotherapy is another reason the immuno-oncology market opportunity is poised to grow significantly over the next few years.

TLSR: Incyte Corp. presented results from RECAP, a Phase 2 trial of Jakafi (ruxolitinib) in metastatic pancreatic cancer, as well as preliminary results from an ongoing Phase 1/2 trial of its immuno-oncology compound for metastatic melanoma and results from RESPONSE, a pivotal Phase 2 trial of ruxolitinib in uncontrolled polycythemia vera (PV). Did the data validate the faith you have in the company's potential to become "an oncology powerhouse?"

JM: Immuno-oncology is clearly of high interest to investors, and the standing-room-only crowd that greeted the presenter for Incyte's INCB24360 ('360) indoleamine 2, 3-dioxygenase (IDO) poster is further illustration. In fact, the presenter was barely able to put the poster up for display due to crowding in the presentation area.

For immunotherapy-naïve patients in the 25mg twice-daily and 50mg twice-daily cohorts, the objective response rate was 42% and the disease control rate was an impressive 75%. In immunotherapy-experienced patients, there were two patients with stable disease. Data from a 300mg twice-daily cohort had some intriguing follow-up data, despite the study being stopped due to toxicity. Although treatment of the subgroup was discontinued before responses could be fully evaluated, six of the seven patients were alive after one year, including three who have not received subsequent checkpoint inhibitor immunotherapy. In our view, this shows that Incyte's '360 may have a sustained treatment effect even after therapy has stopped. We remain impressed with the data for '360, albeit that the results are from a small data sample. For those who doubted IDO after the ASCO abstracts were made available, major votes of validation have occurred this year, as Incyte has formed three IDO combination joint ventures with the leaders: Merck, AstraZeneca, and Bristol-Myers Squibb.

Incyte had a very productive ASCO, as the company also presented positive data for Jakafi in both PV and pancreatic cancer. The primary endpoint for the PV trial was a spleen volume reduction of 35%+ and hematocrit control at week 32. While only 21% of Jakafi-treated patients met the primary endpoint (versus 1% in control), 77% met at least one part of the primary endpoint. Also important was symptomatic control, with 64% of patients reporting a greater than 50% improvement in symptoms such as itching, muscle aches and night sweats. We expect Incyte to file a new drug application with the FDA for PV approval shortly.

The RECAP data in pancreatic cancer and the biomarker, C-reactive protein (CRP), were finally revealed at ASCO. The data was very strong from a small sample size and adds to our confidence that Jakafi will be effective in treating solid tumors.

TLSR: Pharmacyclics' supplemental new drug application (sNDA) for Imbruvica (ibrutinib) was recently granted priority review by the FDA for treatment of chronic lymphocytic leukemia (CLL). Is that the catalyst you were looking for, or is there more news to come?

JM: At ASCO, partners Johnson & Johnson and Pharmacyclics sponsored several symposia on CLL, and the Phase 3 RESONATE trial data was presented—and simultaneously published in the New England Journal of Medicine with major fanfare. The common term used among researchers at the conference and analysts after the presentations was "SOC," meaning Imbruvica is on its way to becoming the new "standard of care" for the treatment of CLL, the most common form of B-cell blood cancer.

In our view, ASCO data, including duration of response results now exceeding an astonishing 3 years, further solidifies the drug in the eyes of hematologists/oncologists. As Dr. Susan O'Brien from MD Anderson Cancer Center put it, "Imbruvica is the easiest drug I've ever prescribed." Prescription data recently spiked, and that was before the conference.

A post-ASCO pop is likely over the next few weeks. In addition, the FDA just accepted the company's sNDA application for a full CLL/small lymphocytic lymphoma (SLL) label, giving Imbruvica a priority review and setting a PDUFA date for Oct. 7. While some believe AbbVie Inc.'s (ABBV:NYSE) ABT-199 has a chance to dethrone Imbruvica someday, most ASCO watchers note that its tumor lysis syndrome profile has hardly been fixed, and that its use in the community will be very difficult, especially compared with Imbruvica.

The train doesn't stop there, as Pharmacyclics' autoimmune compound, which has even greater commercial opportunity and financial leverage, will emerge later this year. In our view, investors will begin to appreciate the next leg up in the Pharmacyclics value proposition being created in autoimmune.

TLSR: Can you update us on the rest of your picks for the 2014 Life Sciences Report Biotech Watchlist?

JM: Earlier in June, Novavax Inc. (NVAX:NASDAQ) announced a $100 million secondary offering of common stock. The underwriters are JPMorgan and Citibank, two global investment banks that currently do not cover the stock from a research standpoint. After speaking with management, the proceeds will be used to fund a standalone trial in the elderly that will accelerate the path to approval for the company's disruptive/novel combination influenza/respiratory syncytial virus (RSV) vaccine. As a result, Novavax now has a potential "seasonal" vaccine strategy for the elderly.

Prior to this, there was no standalone path to approval for the elderly. The new path provides the earliest license/commercialization potential for the "respiratory vaccine"—this combination flu/RSV vaccine that, in our view, will be highly differentiated and lead the company into the combined >$5 billion market for flu and RSV vaccines.

As a reminder, the Novavax F Protein RSV vaccine completed its fourth clinical trial since last year, and the company is about to meet with the FDA to begin the first RSV trial in pregnant women.

In an update call with senior management, Anthera Pharmaceuticals Inc. (ANTH:NASDAQ) is expected to have a busy H2/14 with blisibimod (b-mod). Over the next month or so, the company is expected to take an interim look at the CHABLIS-SC1 trial in patients with lupus. The clinical/surrogate endpoint is a trend in the level of proteinuria and, while the interim look will not be confirmatory of the final results, it is an important catalyst and will give both the company and investors a first look at b-mod's post-PEARL-SC clinical trials.

The interim look may influence a potential partner's decision to form a collaboration, and the company is hopeful one may finally be struck by the end of the year. Such a partner will help fund and coordinate the second lupus trial, which is ready to go and is expected to begin by H2/14. In addition, a look at Anthera's IgA nephropathy trial is due by end of Q3/14 or in early Q4/14. There is a lot of sound science behind BAFF (B cell activating factor) inhibitors including b-mod, and we are cautiously optimistic of the outcome.

TLSR: John, thanks for your time.

John McCamant is the editor of the Medical Technology Stock Letter, a leading investment newsletter. McCamant has spent more than 25 years on the frontlines of biotechnology investing. He has established an extensive network that includes contacts throughout the investment banking and venture capital communities. His expertise in biotechnology investments is a subject of media interest. He is frequently consulted and quoted by The Washington Post, Reuters, Bloomberg, CBS and MarketWatch.

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1) The editors of Streetwise Reports LLC, publisher of The Gold Report, The Energy Report, The Life Sciences Report and The Mining Report, conducted this interview, and provide services to Streetwise Reports as employees. They own, or their families own, shares of the following companies mentioned in this interview: None.
2) The following companies mentioned in the interview are sponsors of Streetwise Reports: None. Streetwise Reports does not accept stock in exchange for its services.
3) John McCamant: I own, or my family owns, shares of the following companies mentioned in this interview: Incyte Corp., Novavax Inc. I personally am, or my family is, paid by the following companies mentioned in this interview: None. My company has a financial relationship with the following companies mentioned in this interview: None. I was not paid by Streetwise Reports for participating in this interview. Comments and opinions expressed are my own comments and opinions. I had the opportunity to review the interview for accuracy as of the date of the interview and am responsible for the content of the interview.
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