Therapies and Medical Devices, a Personal Perspective
With most cancer incidences on the rise, the area of need in treating the devastating disease is truly unmet and affects much of the population, whether directly or indirectly. Even my own brother (his initials are BAR) has been waging a merciless battle with metastatic colorectal cancer which has now metastasized to his liver and lymph nodes. Although receiving a poor prognosis earlier in the year and having to battle the disease on a daily basis, his strength and family's love keep him pushing on and keep the disease very real and personal to me. For that reason and many others, I keep a keen eye open for hope in some form or fashion. Keeping that in mind, I rarely criticize therapies or companies that are laboring to develop therapies that can help him or others in the ongoing battle. However, as an investor I am more critical and do write on and invest my money in companies and technologies that not only offer the most hope for patients, but also the biggest potential return on invested money. My sources of information range from clinical trial data to corporate financials as well as scientific journals and associated conferences. One possible source of such information is an immediate catalyst for small and large pharmaceuticals. On November 14-17, the 6th annual World Meeting of Interdisciplinary Melanoma/Skin Cancer Centers will be held in conjunction with the 8th annual EADO Congress in Barcelona, Spain. The conference website describes the meeting as "an opportunity where clinicians and researchers, who are part of multidisciplinary melanoma centers can interact, learn from one another, establish collaborations and set an agenda for the further evolution of multidisciplinary melanoma care and research."
The Targeted Disease, Cause for Concern and Need for Hope
Before delving into the investment possibilities for the conference, let's consider the disease. For 2012, the National Cancer Institute estimates there will be 76,250 new cases of melanoma in the U.S. with 9,180 fatalities associated with the disease or its complications. The increasing rate of occurrence of the disease, whether due to better detection or simply much greater incidence, is alarming. According to the WebMD website, "The average American's risk of developing melanoma in his or her lifetime increased from one in 1,500 in 1930, to one in 250 in 1980 and one in 74 in 2000 ... By 2004, a person had a one in 65 chance of getting the deadly skin cancer and now that risk is one in 58 ... If this rate continues to rise at the same pace, the risk will be one in 50 by 2015." Whether from a healthcare or investment standpoint, the implications for this growth are alarming. At the November 14-17th conference many companies will be presenting already-known data. However, there may also be expected and unexpected presentations that may move share prices, especially among the small capitalization companies I typically focus on.
Publicly-traded Pharma Presenting Data November 14-17th
OncoSec Medical (OTC:ONCS) is scheduled to present data on Thursday, November 15th in Barcelona. The company will be presenting interim data for its electroporation-based ImmunoPulse therapy using the DNA-based immunocytokine, IL-12. The actual agent utilized is DNA IL-12, a plasmid DNA construct with instructions for the cells to produce the IL-12 cytokine. For a typical treatment regimen, the agent is injected into the targeted treatment area, the lesion/tumor. The affected tissue would then undergo electroporation which causes a significant increase in the porosity of the affected cells' membranes, dramatically increasing cellular uptake of the agent (4,000 to 10,000-fold). The current is then subsequently removed, and the cell membranes rapidly return to their former states, trapping the agent in the cells. Once inside, the plasmid DNA construct instructs the cells to produce the IL-12 cytokine. This cytokine creates an immune response against the cells expressing the IL-12, thereby making the therapy a type of immunotherapy treatment with a targeted response against the tumors. Particularly important is that the immune response is not confined to the local tumor, but can also induce a systemic response against distant lesions/tumors.
OncoSec presented interim Phase II data for the treatment of Merkel cell carcinoma with its ImmunoPulse therapy at the 27th Annual Meeting of the Society for Immunotherapy of Cancer (SITC 2012) on October 26-28. At the time of the presentation, 5 patients had been enrolled long enough to be evaluable. Of those, 20% (1 of 5) had an overall response rate. Two patients withdrew from the treatment due to disease progression, with only one of those receiving one cycle of the treatment. Of the remaining three, 100 percent of the patients treated with at least one cycle showed an increased level of IL-12 expression in tumor biopsy done three weeks post-treatment as compared to pre-treatment biopsy, demonstrating the treatment was effective at producing the immune-response generating cytokine. Of those three, at least one had increased levels of CD8+ T-cells in the tumors, demonstrating that the patient's body was indeed targeting and attacking the tumor cells. Additional date in the next few months will help to clarify the treatment's efficacy and give shareholders a better picture of where the trial could be heading.
OncoSec common shares are now trading just above support level of $0.30. Investor interest has been high for the company and its electroporation-based OncoSec Medical System (OMS) platform since an October 1st interview with the CEO and subsequent announcement of upcoming data presentations. The news of the data presentations catapulted the share price from the October 8th close of $0.26 to trade into the mid $0.30s for the following week. Share price then spiked to the mid $0.40's in anticipation of the Merkel cell data presentation. Since the actual data release, shares have settled back into the lower $0.30 range. The larger target market group of melanoma patients could indeed bring investor interest back early this week with possible upside potential in the $28 million market capitalization biotech. Downside possibilities do exist if data is unfavorable for this development-phase company. However, the company does have the favorable Merkel cell carcinoma data behind it already and a third Phase II trial already underway, this time for cutaneous T-cell lymphoma with interim data likely in 2013, although the company hasn't yet provided an update on when data for that trial may be available. Additional protection against share price downside comes in form of recent news from the company that it had received authorization to CE mark its OMS platform, giving it permission to now market the platform in the 30-nation EEA and Switzerland. The company hasn't noted yet when it could begin the commercialization process, but revenue is likely on the way whether through a licensing agreement or the company marketing the platform on its own. OncoSec common shares are currently traded on the OTCBB. Interested investors should consider the risks associated with such a security with reduced share liquidity and increased propensity of price manipulation. The company's CEO, Punit Dhillon, did note in the aforementioned interview that there are plans for uplisting in the future. Despite its recent success in achieving the CE mark for marketing its platform in Europe, the company should still be construed as a development phase entity with no current source of revenue. Therefore, the investment has more risk associated with it than most of the others presenting this week.
Vical Incorporated (VICL) is another small pharmaceutical presenting data this week. The company's success so far with its Allovectin immunotherapy agent to treat melanoma has been its largest share price mover for 2012. Deep into a Phase III trial, data for the therapy is scheduled to be presented on Friday, November 16th. Used as a first line treatment for melanoma, Allovectin is a DNA-based immunotherapy agent that induces an expression of two genes (HLA-B7 and β2 microglobulin) that together form an MHC class 1 complex. The therapy is injected into the target lesion/tumor where it triggers an immune response, locally and systemically against that tumor type.
In its Q3 results and update on November 7th, Vical gave an update on its ongoing Phase III trial which will likely be expounded upon at the upcoming presentation. In the press release, the company noted an earlier data monitory committee (DCM) evaluation in which the entity noted "no basis for any concern that there is undue risk" associated with Allovectin. It also noted that an early September sweep of all the trial sites was undertaken to confirm that there was no lag in time reporting deaths. Once the targeted number of events (deaths for this trial) has occurred, the trial can be unblinded and survival and response rate data can be evaluated and released. Vical revised its projection for the unblinding to occur sometime in mid 2013, well beyond its previous Q4 2012 estimates. Although there will likely be nothing to report on pertaining to the data since the trial is still blinded, the company could give some clarification to a more specific timeframe and further explanation for why it decided to delay the data review by extending the schedule for independent adjudication of data for the primary endpoint (response rate at 24 weeks or more after randomization).
Since the company's share price closed at highs for the year on September 25th at $4.58, the chart has turned bearish, and it is now trading at support of about $3.0 with the next support level at $2.8. Vical currently has a market capitalization of $256 million with the company's common shares having dramatic swings over the last year with a 52-week range of $2.77-$4.82. With possible news coming from the conference on November 16th, price movement over the next few days could be positive with little reason for downside per my research. Allovectin is the company's lead product candidate for its independent program. However, updates on its collaborations with other pharmaceuticals can prove to provide for additional catalysts in the coming weeks and months. Please see the company's pipeline for research into additional possible news releases in the future which will likely keep investor interest elevated for the company.
Amgen, Inc. (AMGN) is scheduled to speak about T-VEC (formerly OncoVEX) on November 14th. The company obtained the product through its March 2011 acquisition of privately-held BioVex Group. The acquisition price was about $1 billion, underscoring the interest Big Pharma has in novel and promising oncologic therapies. Perhaps Amgen became aware of the therapy at a similar venue in the past and could be on the hunt for yet another promising acquisition candidate? T-VEC is an immunotherapy agent that is comprised of a combination of an attenuated herpes simplex virus (HSV) and the GM-CSF cytokine to target melanoma tumors. The therapy is in a late Phase III trial for melanoma and has a two-fold approach for fighting the disease. The HSV acts by replicating in local cancer cells at the injection site. Once the cells are infected, they are lysed and subsequently die, giving local control at the tumor site. The GM-CSF cytokine helps to additionally add efficacy to the regimen by creating an immune response at melanoma cells located at distant locations in the body.
Amgen reported on the Phase III trial design in Chicago at ASCO 2012, but gave little information as to data except for to note "pivotal Phase III study is expected to report during 2012." With time running out in the year, the November 14th venue could be a suitable venue to report on the data and give a trial update.
Unlike OncoSec and Vical, Amgen is a revenue-generating powerhouse with a quarterly dividend payout ($0.36 per quarter this year). The company's common shares are now trading at $85.17, just shy of the 52-week high of $89.95 reached on October 18th. If the markets shake off its current jitters, and Amgen breaks back through the $90 resistance, the chart will continue to be construed as bullish and a solid investment to have in your portfolio. However, the $65 billion market capitalization company would see a more muted effect from positive results from T-VEC than what OncoSec or Vical would see with success in their therapies. Conversely, the company could also see much less downside than those two companies if results are deemed negative. With those statements in mind, please remember the near $1 billion price tag Amgen paid for BioVex (depending on milestone payments, etc). Investor response to poor data may prove to be more than moderate, even for a large pharmaceutical.
Two Companies with Associated Technologies Being Validated (or Otherwise)
With each success or failure in a small pharmaceutical clinical trial, technologies and approaches are either validated or debunked. With this thought in mind, savvy investors can make wise entries into companies whose technologies are validated by other companies' work. There are two that come to mind in which to consider a position should a counterpart technology be validated in Barcelona. Investors armed with this knowledge can make quick entries into companies with related technologies before the investor masses are privy to such correlations. These entries can make for solid trades or for solid long-term investments as their own work and success there can help to accentuate the share price increase. Conversely, investors should be wary of keeping or making entries into companies with the same type of technology or treatment approach if data presented in Barcelona are negative, questionable or in line to be a direct competitor.
Inovio Pharmaceuticals (INO) is not mentioned in the program for the Barcelona meeting and is likely not presenting there. However, its technology is closely associated with OncoSec's electroporation platform as it actually licensed the technology to the company in May of 2011. The press release noted that OncoSec purchased the rights to "certain non-DNA vaccine technology and intellectual property relating to electroporation technology useful for electrochemical and cytokine based immune therapies for treating solid tumors". While Inovio and OncoSec should not be considered competitors due to differing platforms and different targeted market groups, Inovio is still utilizing the electroporation administration technology to administer its line of synthetic vaccines for infectious diseases and cancers. If OncoSec continues to present positive data from its various trials, Inovio's administration technique could become more validated, and investor interest could likely increase for the company as nearly its entire pipeline is administered via electroporation.
Not simply riding on the heels of OncoSec's recent successes, Inovio has had its own share-price moving catalysts recently. Helping to continue the bullish stock movement in the last few months, the company had impressive news on October 10th, keeping investor interest growing. The news announced impressive results in a phase 1 clinical trial using VGX-3100 to trigger an immune response against antigens present in human papillomavirus (HPV) affected cells that had mutated into precancerous cervical dysplasias. Results of the 18-patient trial noted 100% of treated patients responded with "antigen-specific antibody responses to Inovio's vaccine, while 78% showed T-cell responses in the validated ELISpot (analytical test method) assay." The early-stage results confirmed that the company's synthetic DNA-based immune therapy can generate potent and durable T-cell responses, a key indicator of the immune response against the targeted cells. Administered by the company's electroporation platform, VGX-3100 is showing early-stage efficacy which could be more fully validated with OncoSec's continued success, especially in the short-term with data coming this week.
Inovio is currently trading with a market capitalization of $75 million. Its common shares had been trading with a bullish trend since its June 13th low of $0.39. Share price peaked on October 31st with a close at $0.72. However, shares have recently retreated largely due to a negative overall market sentiment having a particularly negative effect on Inovio with a closing price on Friday of $0.54, down 11.75% on the day. Midterm support for the company's shares is at the current $0.54, with the next support at $0.45 and then $0.40. Interested investors should watch the share price action for a solid entry with an exit plan already in place in the event the downtrend should continue. Good news from OncoSec this week may be just the catalyst to send Inovio back into a positive uptrend. Investors should perform additional research into the company's pipeline, its news for the last year or so and its Q3 2012 earnings before making entry into this promising company's shares. Like OncoSec, this is also a development-phase company with limited revenue and still subject to potential stock offerings or other sources of revenue. Therefore, potential investors should consider this risk before creating entry positions into this small capitalization entity.
Celldex Therapeutics (CLDX) has had a phenomenal year with many catalysts behind it and many ahead due to rindopepimut (CDX-110) success in front-line glioblastoma and recurrent glioblastoma as well as CDX-011 in breast cancer (trial names are ACT IV, ReACT and EMERGE, respectively). The company's CDX-1401 monoclonal antibodies (MAB) therapy targeting the NY-ESO-1 antigen for multiple solid tumors (incidentally, melanoma is a type of solid tumor) is farther back in development with a Phase I trial underway. The company released data from the Phase I trial for CDX-1401 on October 30th for solid tumors. Although not giving a great deal of information on the results, the company noted that it was the first clinical study to demonstrate that an off-the-shelf vaccine that targeted dendritic cells "in vivo" through DEC-205 (a dendritic cell receptor) can safely lead to robust humoral and cellular immunity when combined with TLR agonists in cancer patients - overcoming a significant challenge in the development of protein based vaccines." Celldex noted in the release that another trial, sponsored by the Cancer Immunotherapy Trials Network, will be initiated in 2013, providing for more hope for solid tumor patients possibly coming and more catalysts for investors to keep interest high.
The upcoming November 14-17th conference is key to CDX-011 even though the company is not listed as presenting data. Bristol-Myers Squibb's (BMY) Yervoy (ipilumumab) is listed on the program for Barcelona. Yervoy was approved by the FDA March 25th 2011 for the treatment of patients with inoperable or metastatic melanoma. The approval was significant in that it was among the first immunotherapy agents approved to treat cancer and the first of any type to demonstrate a significant improvement in overall survival for this type of cancer. Yervoy is a monoclonal antibody that acts against the cytotoxic T lymphocyte antigen 4 (CTLA-4), a negative regulator of T-cell activation. Blocking CTLA-4 augments T-cell activation and proliferation, the very mechanism by which the body's immune system can fight cancer cells with certain gene expressions. Therefore, it increases the immune response against NY-ESO-1, the same antigen CDX-1401 targets for melanoma. In patients who already have naturally-occurring and established NY-ESO-1 immunity, Yervoy may prove to help those patients fight off melanoma as well. In fact, there is already an ongoing Phase II trial evaluating Yervoy's effectiveness against NY-ESO-1 expressed melanoma. In this regard, Yervoy could be considered competition to CDX-1401. If the presented data for Yervoy is impressive, it could be a blow to Celldex's CDX-1401 program which lags behind Yervoy as it is only in a Phase I trial. However, poor results for Yervoy via this approach to melanoma could help to push CDX-1401 interest and give Celldex investors more reason to be bullish on this already impressive company. Even if positive data being reported, all would still not be lost in CDX-1401 as a synergistic relationship may prove effective via a combination of the therapies, although that could be well into the future.
Celldex's common shares are now trading in a slightly oversold condition, but still on a bullish trend. With a market capitalization of $333 million and a promising pipeline with mid-stage success, the upside here could be significant with positive data coming from its lead product candidates. The company's pipeline is also deep enough that failure in one indication, although a share price setback, would likely not be as significant as that of many of the "one trick pony" biotechs also in development stage.
The fight against cancer is and will continue to be an ongoing battle. Investors hoping to reap the rewards of wise decisions for publicly-traded companies and their promising cancer therapies should always consider the risks of being wrong. They should also consider the readership of the articles, forums and social media in which opinions and trial data may be discussed. Although the readership may be predominantly investors, depending on the venue, they should also consider the fact that the readership may be comprised of patients, family members, friends and healthcare providers trying to find hopeful upcoming cancer treatments in their often-desperate search through online media. In other words, much more is at stake here than risk management, data interpretation, regulatory pathways and company financials. Much research is advised, and much discretion is often required.