Triple-negative breast cancer (TNBC) is a nasty form of the disease that does not respond to receptor-targeted therapeutics (Herceptin or Tamoxifen), as the receptors of interest (estrogen (ER), progesterone (PR), or HER-2) are not found in TNBC. The only marginally-effective treatments against TNBC are general chemotherapies, but overall response and survival rates are much lower in TNBC versus other breast cancers.
Celldex (CLDX) released P2B results from a clinical trial using their drug (CDX-011) in TNBC. Results suggest that the Celldex drug works against triple-negative cancers that overexpress a protein known as GPNMB. Celldex reports that 36% of patients with TNBC and high GPNMB expression responded to CDX-011, while zero patients in the equivalent control groups responded to standard chemotherapies. (N=11 and 3 respectively, so let's not overreact.)
(Also: NON-TNBC patients with high GPNMB expression showed a response to CDX-011. (32% response vs. 13%. N=25 and N=8, respectively.
Adding these two groups together yields a response in 15 of 36 patients (42%!) with high GPNMB expression treated with CDX-011, with 1 responder of 11 in the control group. (i.e. not treated with CDX-011.)
This data is encouraging for Phase 2B, and warrants a Phase 3 trial AND a large pharma partner, something I would expect to see Celldex close on by the end of 2012. (TNBC sometimes responds to EGFR treatment, so I'd expect Celldex's partner to be a company with an EGFR product interested in prescribing a combination of products. (Hello, AMGN, and Roche!)
(Speaking of combination, CDX-011 uses Seattle Genetics' antibody linked technology, whereby the antibody with affinity to GPNMB delivers a chemo payload to the cancerous cell. I need to take another look SGEN soon.)
CLDX Financial overview, as of 5/28/12:
Market cap: $264M (even after popping ~10% on the tnbc trial news
Cash on hand: $92M, burning ~$40M/yr.
Enterprise value: $172M
ex-CDX-011 enterprise value: $35M-$50M, as CLDX receives $9M/year in license income from successful outlicensing.
CDX-011 value (roughly): $130M ($172M less $42M in ex-CDX-011 enterprise value ($42M= midpoint of $35M-$50M valuation.)
What's the value of CDX-011?
CDX-011 Market math:
CLDX asserts that 35% of all breast cancer patients could benefit from CLDX-011, which suggests:
Annual US breast cancer cases: ~180,000
% of breast cancer that is TNBC: 15-25% via various sources. Let's say 20%.
US TNBC market: 36,000
GPNMB overexpressers as a %age of TNBC patients: 12% of TNBC, or 4,320
US GPNMB market:27,000
non-TNBC patients overexpressing GPNMB: 15% of all breast cancers
US market for GPNMB overexpressors (w/o TNBC): ~27,000
Likely US GPNMB+ market: 31,320 annually, and therefore,
Total annual world market for CDX-011: between 80,000 and 120,000 patients worldwide.
Assuming $20k revenue/patient ($50k/patient revenue, but only 40% penetration at peak), CDX-011 would then peak at ~$2B/yr in revenue, and therefore peak product value of ~$12B (equivalent to Celgene's 6X sales valuation.)
Risk-adjustment of CDX-011 value: let's assume the following:
-that FDA approval is 2 years away,
-peak revenue is 4 years post-approval
-25% discount rate
-CDX-011 has a 40% chance of successful P3 trials....
Based on peak market value of $12B for CDX-011, you could then project that CDX-011 has a present value of $1.25B, or, with a current valuation for CLDX of $172M, that the market thinks that there is only a 14% chance that my scenario above becomes true. Either way, the likelihood that Celldex is undervalued is high.
(btw: is use the value of CLDX and CDX-011 interchangeably. While CLDX does have other products in the pipeline, 99% of CLDX valuation will depend on CDX-011.)
(CLDX says that 35% of breast cancer patients could benefit from targeting GPNMB with CDX-011. It's probably a rosy-case press release figure, but even if you chop this number in half, the resulting NPV for CDX-011 3.6X today's valuation.)
Factors for Celldex:
1) Few, if any, other GPNMB programs in existence, so it is a seller's market (when it comes to partnering) for Celldex.
2) There's plenty of reason to expect CLDX to partner CDX-011 soon, and it's an ideal time to partner - P3 trials costs are significant and therefore better shared with a partner, plus partnering now allows the Big Pharma partner to influence trial design.
3) CDX-011 clinical responses exceed the 30% hurdle rate and in P2B trials have a wide advantage versus the control arm. (I'm always skeptical if the response rate and advantage versus control group outcomes is <=20% and <=10%, respectively.)
4) Good sized market, not currently served.
Factors against Celldex:
1) small-cap biotechs NEVER successfully get drugs to the market by themselves.
2) ultimate FDA approval may be conditional for GPNMB+ only, and also could depend on the development of a gene-specific test.
3) lack of partner to date could represent Big Pharma skepticism over either GPNMB's target biology or Celldex's capabilities.
4) Limited ability to raise equity financing.
5) small sample size in P2B results.
6) time to FDA approval of ~2yrs limits the ability to buy call options for CLDX.
Ultimately, the value of CLDX is driven by 1) CDX's long term outlook, and 2) the size and timing of a partnership with a big pharma to commercialize CDX-011. Outlined above is one long-term scenario representing a win for CLDX, and for the other point (partnership value), I can easily see CLDX doubling the company's valuation this year after consumating a big pharma partnership centered on CDX-011. (Guess: $50M cash @ closing, $50M in equity purchased by the pharma partner, with $1B in milestones possible; also: $50M in easily achievable milestones to land in the first 12 months. (example: $25M payment at initiation of P3 trials.)
Here's hoping that CDX-011 lives up to the P2B results, and that finally we'll have a weapon against TNBC.
Disclosure: at the time of writing, I DO hold a tiny position in Celldex.
Showing posts with label antibody. Show all posts
Showing posts with label antibody. Show all posts
Tuesday, May 29, 2012
Wednesday, May 23, 2012
Unexpected win for Amgen (& NCATS?)
Along with the acquisition of Immunex in 2001 - mostly to gain rights to Enbrel, which DID turn into a ginormous blockbuster - Amgen acquired a hodgepodge of early and mid-stage leads in the Immunex pipeline.
In most acquisitions like this, it seems like there is little value placed on the early leads of the target company - most of the attention is on the flagship, late stage product (Enbrel, in this case), and even then, the incoming programs & leads have to compete for resources with the incumbent R&D programs. Since these early stage leads have little data accumulated, and may involve new biology, little ever becomes of the "bonus" leads. (Also, after a merger, the acquiring company becomes even more of a "product" company, and also needs to cut cash costs post-merger to meet the financial expectations justifying the merger.)
Hats off to Amgen, though, for sticking with a lead sourced from Immunex, as today it was disclosed that an antibody targeting HGF (for cancer) has enough anti-MET activity that it generated strong response in certain gastric cancers.
(The Amgen antibody is referred to as either AMG 102 or rilotumumab. An excellent press release with lots of technical details is here, including the survival data. (11.1 months overall survival WITH AMG 102 versus 5.7 months without for patients with high MET expression.)
This story is really exciting for a reason beyond the notion that we might have another weapon in the war on cancer, and the notion that Amgen is a great research organization.
Searching Clinicaltrials.gov leads me to believe that this trial is the one that generated today's good news. If so, note that the trial was launched nearly four years ago, and there is NO mention of MET protein or biomarkers in the trial design.
It seems to me, then, that some astute Amgen researchers - after the trial started and likely after Amgen had already concluded that AMG 102 wasn't effective enough to continue development - decided to sift through the results on a patient by patient basis to see if there was a genomic commonality with the responders. The researcher (or team) then used either a shotgun profiling approach to identify a biomarker to stratify the patients or decided to specifically assay for MET expression. I'd guess that the first approach was used, but either way, Amgen boldly applied genomic technology to do something oft-rumored but seldom seen - a biomarker-driven compound rescue.
(And even if I'm wrong, and Amgen was onto MET stratification all along, it is still an impressive finding.)
To temper the excitement somewhat, the clinical trial found only 27 of 82 (32%) gastric cancer patients in the trial had over-expressed MET protein, so it is likely then that the FDA label for AMG 102 - like Xalkori - will be very targeted and linked to a companion diagnostic. However, as discussed here before, MET is a hot target with likely broad applicability, so AMG 102 might someday reach blockbuster status.
Also, due to its' origins back in Immunex's labs, 11 or more years of the patent life of AMG102 may have already lapsed. I would guess that someone within Amgen has just been tasked with conjugating AMG 102 with something interesting in order to boost efficacy and reset the patent clock. (Immunomedics: make sure someone is manning your phones!)
The other possible winner here: Francis Collins & his NCATS initiative. Amgen's work on '102 reinforces that there is value in rummaging through pharma programs to find new applications.
AMG 102 is another manifestation of the Molecular Future hypothesis, and more proof that targeted therapy is effective. It sure seems like targeted therapies have a higher-than-average clinical success rate once safety has been demonstrated in a Phase I trial. (And maybe those targeted therapies that haven't succeeded just need the right biomarker.)
ADDENDUM: on reflection, I do not believe that Amgen's results are predictive of success for NCATS. My understanding now is that NCATS is less about further qualifying a lead through advanced technology (genomics, etc.) than about starting de novo development in new applications for drugs that have previously made it into clinical trials. Other than the fact that the compounds under consideration are likely safe for humans (i.e. the leads had successful Phase I trials), the NCATS approach provides no running start or any reason to anticipate better than average discovery success. (In fact, I'd argue that a bureaucratic organization like the NIH is LESS likely to have discovery success.)
On a positive note, let's hope that Amgen's success can be similarly applied to the rest of the bio-pharma industry.
In most acquisitions like this, it seems like there is little value placed on the early leads of the target company - most of the attention is on the flagship, late stage product (Enbrel, in this case), and even then, the incoming programs & leads have to compete for resources with the incumbent R&D programs. Since these early stage leads have little data accumulated, and may involve new biology, little ever becomes of the "bonus" leads. (Also, after a merger, the acquiring company becomes even more of a "product" company, and also needs to cut cash costs post-merger to meet the financial expectations justifying the merger.)
Hats off to Amgen, though, for sticking with a lead sourced from Immunex, as today it was disclosed that an antibody targeting HGF (for cancer) has enough anti-MET activity that it generated strong response in certain gastric cancers.
(The Amgen antibody is referred to as either AMG 102 or rilotumumab. An excellent press release with lots of technical details is here, including the survival data. (11.1 months overall survival WITH AMG 102 versus 5.7 months without for patients with high MET expression.)
This story is really exciting for a reason beyond the notion that we might have another weapon in the war on cancer, and the notion that Amgen is a great research organization.
Searching Clinicaltrials.gov leads me to believe that this trial is the one that generated today's good news. If so, note that the trial was launched nearly four years ago, and there is NO mention of MET protein or biomarkers in the trial design.
It seems to me, then, that some astute Amgen researchers - after the trial started and likely after Amgen had already concluded that AMG 102 wasn't effective enough to continue development - decided to sift through the results on a patient by patient basis to see if there was a genomic commonality with the responders. The researcher (or team) then used either a shotgun profiling approach to identify a biomarker to stratify the patients or decided to specifically assay for MET expression. I'd guess that the first approach was used, but either way, Amgen boldly applied genomic technology to do something oft-rumored but seldom seen - a biomarker-driven compound rescue.
(And even if I'm wrong, and Amgen was onto MET stratification all along, it is still an impressive finding.)
To temper the excitement somewhat, the clinical trial found only 27 of 82 (32%) gastric cancer patients in the trial had over-expressed MET protein, so it is likely then that the FDA label for AMG 102 - like Xalkori - will be very targeted and linked to a companion diagnostic. However, as discussed here before, MET is a hot target with likely broad applicability, so AMG 102 might someday reach blockbuster status.
Also, due to its' origins back in Immunex's labs, 11 or more years of the patent life of AMG102 may have already lapsed. I would guess that someone within Amgen has just been tasked with conjugating AMG 102 with something interesting in order to boost efficacy and reset the patent clock. (Immunomedics: make sure someone is manning your phones!)
The other possible winner here: Francis Collins & his NCATS initiative. Amgen's work on '102 reinforces that there is value in rummaging through pharma programs to find new applications.
AMG 102 is another manifestation of the Molecular Future hypothesis, and more proof that targeted therapy is effective. It sure seems like targeted therapies have a higher-than-average clinical success rate once safety has been demonstrated in a Phase I trial. (And maybe those targeted therapies that haven't succeeded just need the right biomarker.)
ADDENDUM: on reflection, I do not believe that Amgen's results are predictive of success for NCATS. My understanding now is that NCATS is less about further qualifying a lead through advanced technology (genomics, etc.) than about starting de novo development in new applications for drugs that have previously made it into clinical trials. Other than the fact that the compounds under consideration are likely safe for humans (i.e. the leads had successful Phase I trials), the NCATS approach provides no running start or any reason to anticipate better than average discovery success. (In fact, I'd argue that a bureaucratic organization like the NIH is LESS likely to have discovery success.)
On a positive note, let's hope that Amgen's success can be similarly applied to the rest of the bio-pharma industry.
Subscribe to:
Posts (Atom)