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Two weeks ago, Micromet (MITI) hosted its annual R&D day, where it discussed plans for 2009 and beyond. The meeting provided plenty of information regarding the company's technology and drug candidates, but more importantly, it served as an appetizer for next month's EHA meeting.

As a reminder, Micromet is expected to present data from 2 trials evaluating its lead agent, blinatumumab (MT103), in two forms of blood cancer: Non-Hodgkin Lymphoma (NHL) and Acute Lymphoblastic Leukemia (ALL).

During the R&D day, the company (intentionally and unintentionally) shared some previously undisclosed results from the trials. The new information, which includes impressive efficacy signals from both studies, further solidifies blinatumumab's position as one of the most promising investigational agents in oncology.

Based on its spectacular performance, blinatumumab has a high chance of getting approved as soon as 2012.

Fast route to market

Although the NHL study represents a much larger commercial opportunity, the ALL trial will garner most of the attention. As I explained in my previous article, the ALL study evaluates blinatumumab's effect on patients who have undergone chemotherapy but still have disease remnants in their bone marrow (minimal residual disease or MRD). These patients usually have very poor prognosis since they are destined to relapse within less than a year.

The only available treatment option for some of these patients is stem cell transplant, a highly aggressive and toxic procedure which is associated with a 20-30% mortality rate. Micromet decided to enroll only patients who cannot tolerate or are unwilling to undergo stem cell transplant, as these patients have no approved treatment options.

The high medical need combined with the low prevalence of ALL make this clinical program a fast route to market, with a possible approval already in 2012. More importantly, the study could serve as the ultimate proof of concept for blinatumumab's ability to deal with one of the central challenges in cancer, post-treatment residual disease that eventually leads to disease relapse.

Micromet’s strategy is similar to that of other biotech companies, such as Exelixis (NASDAQ:EXEL) and Arqule (NASDAQ:ARQL). All three have a promising compound with a very large potential market, but they decided to pursue approval for niche indications that represent the fastest and safest route to approval.

Micromet’s blinatumumab targets CD19, a protein highly expressed on the majority of blood cancers, but decided to initially go after a distinct subgroup of ALL. Exelixis’ XL184 hits several targets that are relevant in most solid tumors, yet it decided to seek approval for a rare subset of thyroid cancer. Arqule’s lead compound targets c-Met, a protein believed to have a role in a plethora of solid tumors, but it decided to start with a family of rare tumors called MiT. Based on clinical data the companies have presented, their chances of obtaining an FDA approval are high.

Reasons for optimism

Data from the ALL trial could shed light on two basic questions:

  1. Can blinatumumab effectively convert MRD positive patients into an MRD negative status?
  2. Can the MRD conversion be translated into real clinical benefit in the form of longer remission and survival?

For the first question, the answer is a resounding “yes”. Last year, Micromet presented preliminary data on just four patients, three of which turned from MRD positive to MRD negative. A conversion rate of 75% using such a stringent parameter is impressive, but it is very hard to conclude anything from such a small sample size. Next month at EHA, the company will present results for ~17 patients, still a small number but a much more reliable one. The exact conversion rate for these patients will be announced next month, but it will probably be very high, according to a statement by one of the speakers who revealed that "almost all" of the patients responded to blinatumumab.

But response is not the ultimate parameter for these patients, who typically experience a relapse within 6 months following initial therapy. Therefore, the real issue is whether blinatumumab can keep patients in remission for a longer period of time. The majority of patients were recruited to the study only in the past six months, following the previous data at ASH, so the duration of responses will probably be available for a limited amount of patients. The company provided anecdotal evidence for blinatumumab's effect in two patients, who were still in remission for 9 and 10 months, respectively.

It is important to understand that in most cases, there is an average lag of several months between a molecular relapse (turning from MRD negative to MRD positive) and a clinical relapse, where a large amount of cancer cells is found in the bone marrow. Therefore, the two patients are looking at a time to relapse of over a year at minimum. This is highly encouraging, considering the fact that most patients in this setting experience disease relapse within 6 months.

On top of the anecdotal data, there is a good reason to believe that MRD conversion will be translated into longer remission and overall survival, perhaps even a cure. Many studies have shown that patients who are MRD positive following initial treatment have a very high risk of relapse as opposed to MRD negative patients who have a high likelihood of long term remission. MRD is not just another surrogate that can predict patient prognosis, it is the presence of the disease itself. As a bone marrow disease, ALL originates in the bone marrow and spreads to the blood and other organs as the disease progresses.

Therefore, if blinatumumab manages to purge the bone marrow to the point where even the most sensitive method cannot identify cancer cells, then curing these otherwise terminal patients is not out of the question.

MT110- Micromet’s wild card

The next big event for Micromet is the ESMO meeting in September, where the company will present phase I data for MT110, the first BiTE antibody for the treatment of solid tumors. At the R&D meeting, the company did not provide any data about the ongoing trial which commenced one year ago. Assuming a relatively slow accrual rate of 1 patient per month, the study has only recently reached doses that could show some sort of clinical activity.

During the summer, the trial might reach dose levels at which multiple objective responses were observed in blinatumumab's dose escalation phase I trial. Since MT110 targets solid tumors, as opposed to blinatumumab which targets blood borne malignancies, the company will probably have to push MT110's dose higher compared to blinatumumab's dose.

Therefore, it is impossible to predict whether MT110 will prove to be clinically active, but if it will, investors might have to wait to next year to see real clinical responses.

Until data becomes available, investors might be encouraged by the recent European approval of another bispecific antibody which is very similar, at least conceptually, to MT110. Last month, TRION pharma (another Munich based company) announced that its lead antibody, Removab has been approved by the EMEA (the European equivalent of the FDA) for the treatment of ovarian cancer. Similarly to MT110, Removab is a bispecific antibody that targets CD3 with one arm and EpCAM with the other. The recent approval of Removab is important because it serves not only as a validation of targeting EpCAM with a bispecific antibody, but also because it utilizes a similar mechanism of action to that of MT110.

TRION's technology could be viewed as a threat to Micromet's position as the leader of bispecific antibodies, but at the moment, TRION's platform suffers from multiple drawbacks. These drawbacks, especially the drug's safety profile and immunogenicity, substantially limit the potential use of TRION's products. In the meantime, there is no evidence TRION was able to work around these issues, which leaves Micromet as the undisputed leader.

Portfolio update and performance

We decided to increase our position in Micromet ahead of the blinatumumab data next month. 2009 has the potential to be a transformative year for Micromet, with multiple value creation events, including at least one licensing deal and a data set that could serve as a basis for a registration trial next year. On a cautionary note, notwithstanding Micromet's huge upside potential, it is still a high risk play due to the novelty of its technology and the early stage of its programs.

Since its inception 7 months ago, the biotech portfolio, co managed by Ran Nussbaum and myself, generated a return of 22.9%, versus 5.7% and 2.1% for the NASDAQ and S&P, respectively. In addition, the portfolio outperformed all the leading Life Sciences indices and ETFs, including the AMEX Biotechnology (^BTK) Index and the NASDAQ Biotechnology Index (^NBI), represented in the table below by the iShares NASDAQ Biotechnology (NASDAQ:IBB) ETF.

Portfolio holdings as of May 8th, 2009

Portfoluio holdings as of May 9th 2009