For companies targeting hematologic conditions, the American Society of Hematology (ASH) meeting is the pivotal event of the year, and a great place to gain exposure. ASH takes place this year in New Orleans from December 7th-10th. In this article, I will discuss three companies with successful IPOs presenting at ASH and reasons why they may have much more room to grow.
Stemline (STML) raised $38 million in a January IPO followed by a $69 million raise in May, leaving the Company very well capitalized. Investor interest has been high and the stock rose to the mid-$40 range from the $10 IPO price. Now in the low-mid $20 range, with no change in fundamentals since its highs, this still represents a more than doubling since the IPO and, importantly, a tremendous growth potential here forward. Stemline is focused on developing targeted oncology drugs that treat bulk tumors and cancer stem cells (CSCs) within the tumor. The CSCs are responsible for tumor regrowth, and their removal could potentially reduce cancer recurrence. The lead program is SL-401, a targeted therapy directed to the IL-3 receptor. The agent, a recombinant IL-3 protein fused to a truncated diphtheria toxin payload, homes to cells expressing the IL-3 receptor, internalizes, and induces cell death. SL-401 is being tested in a Phase I/II clinical trial in patients with blastic plasmacytoid dentritic cell neoplasm (BPDCN) and 3rd-line AML, both orphan indications. Additional Phase II open-label trials are expected next year in other cancers that also express the IL-3 receptor. The orphan and additional indications represent a multi-billion dollar market opportunity.
Stemline will have a significant presence at ASH with 5 presentations total. All but one presentation is focused on lead program SL-401. An update on the Phase I/II clinical trial will be presented on SL-401, as well as preclinical data with SL-401 and SL-101, a next generation IL-3 receptor-targeted agent, in several additional indications. BPDCN is a rare disease and Stemline has received orphan drug designation for the indication. In the Phase I/II trial, 100% of the 5 evaluable patients have achieved either a complete response (n=4) or a partial response (n=1) after just one cycle of therapy. If Stemline continues this efficacy trend in its next trials, slated to begin in 2014, it may only need to conduct a single arm trial, possibly of 50 patients or less, to support approval. Investors will get an answer on this program relatively soon as opposed to waiting for larger, more time-consuming and costly randomized studies. An approval in BPDCN could serve as a gateway for SL-401 in additional, larger indications, while also helping treat a population of BPDCN patients with few other options.
Stemline's additional presentations will highlight preclinical data supporting SL-401 in multiple myeloma and chronic eosinophilic leukemia, a rare IL-3 receptor-positive cancer, plus evidence that SL-101 is active in hematological cancers as well. Stemline has everything to gain at ASH after the huge deal between Celgene (CELG) and OncoMed (OMED), another 2013 IPO targeting CSCs. The deal gave OncoMed ($1b market cap) $155 million upfront, a $22.5 million equity stake, and more than $3 billion in potential milestones. That's the type of validation companies targeting CSCs have been waiting for.
Given the current stock price and clear efficacy signal we are seeing with SL-401, coupled with the promise of its other pipeline candidates, STML is a company with compelling upside potential.
Portola (PTLA) completed a super-sized IPO in May raising nearly $160 million in gross proceeds. In October, the company raised an additional $100 million, pushing the cash on hand at the end of 3Q 2013 to $218 million. An impressive war chest no doubt, but also keep in mind that Portola is in the anti-coagulant market, a space that can require clinical trial data from more than 20,000 patients before approval. The market cap is near $1 billion at the time of this article. Portola has three clinical programs, a Factor Xa (FXA) inhibitor (betrixaban) in a Phase III trial, an anticoagulant antidote (PRT4445*), and a Syk/JAK (PRT2070) inhibitor for cancer indications. PRT4445* is getting a lot of attention recently, and may provide some early upside as investors wait for potential blockbuster betrixaban to bear fruit. Portola won breakthrough status for PRT4445* in November and will seek accelerated approval following guidance from End-of-Phase II meeting with the FDA.
Portola has two presentations at ASH, one related to a Phase II trial with PRT4445* and the second highlighting some preclinical data for the PRT2070 program. The Phase II trial is funded by Bayer and Janssen Pharmaceuticals and is testing PRT4445* in combination with the blood thinner Xarelto. Portola is no stranger to big Pharma deals, and in 2012, the company forged an alliance with Bristol-Myers Squibb (BMY) and Pfizer (PFE) to test PRT4445* with Eliquis. The trial data are encouraging and so far a dose-dependent decrease in anti-FXa activity has been reported in the initial dose cohorts. A 420 mg dose of PRT4445* can reduce Xarelto activity by 53%. The target market for a drug such as PRT4445* are patients on anti-FXa therapies who experience major bleeding or who visit the hospital requiring emergency surgery. PRT4445* may be the first anti-FXa antidote to hit the market, and is the only one in development that works with all anticoagulants.
Portola's second presentation is also interesting, and will discuss the company's preclinical compound PRT2070 that inhibits for JAK and SYK signaling pathways. PRT2070 is the subject of a Phase I/II clinical trial in patients with hematologic cancers. I still think the highlight of Portola is the potential near-term entry into the anti-coagulant market with PRT4445*. With the support of big Pharma, over $200 million in cash, breakthrough designation, and the potential for accelerated approval, it's one to watch.
Acceleron (XLRN) is a fresh IPO that closed on $87 million in net proceeds at the end of September 2013, and added another $10 million via a concurrent private placement from partner and collaborator Celgene. The stock price has fluctuated between the $15 opening price and nearly $27/share, and the stock is up 20% since September. Acceleron's focus is on the TGF-beta superfamily of proteins, which are intimately associated with cancer, but also play a role in other diseases. Two of the company's three programs (sotatercept and ACE-536) are partnered with Celgene and are in Phase II trials to increase red blood cells in rare blood diseases. The last program, dalantercept, is also a TGF-beta inhibitor, but with the goal of inhibiting angiogenesis to treat cancer.
Acceleron has 5 presentations at ASH. Four presentations focus on preclinical data and provide support for Acceleron's clinical programs. The key presentation discusses interim Phase II trial data with sotatercept in patients with beta-thalassemia. This inherited disease leads to red blood cell loss, requiring transfusions in severe cases. The data show some early signs of hemoglobin increase in patients that are not transfusion dependent. In fact, all 6 (100%) of patients receiving 0.3 mg/kg of drug had at least a 1 g/dL increase in hemoglobin from baseline. Dose escalation is continuing and is expected to ramp up to 1.5 mg/kg. Acceleron's programs are the subject of 11 Phase II clinical trials being conducted internally, by Celgene, or as investigator led studies.