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In January, Bristol-Myers Squibb (NYSE:BMY), will start a Phase 2 study in patients with glioblastoma. The trial is part of a series in which Bristol combines its experimental drug, nivolumab, with the approved Yervoy, and test it against different cancer types.

Glioblastoma (or glioblastoma multiforme) is the most aggressive type of cancer of the glial cells in the brain, affecting about 10,000 people a year in the U.S. Glioblastoma (GBM) is usually treated first with surgery, followed by chemotherapy and radiation. But GBM always comes back. And when it does, the life expectancy is generally only three to six months.

One medication, Roche's (OTCQX:RHHBY) Avastin, is approved to treat recurrent GBM but two recent studies have found that it does not prolong the lives of patients, raising questions about the role of the drug in treating that disease. Bristol's nivolumab, is a frontrunner in the new waive of cancer drugs called anti-PD-1, or Programmed Death receptors.

Nivolumab in combination with Yervoy, in an advanced melanoma study, shrank tumors significantly in about 41 percent of patients. The combination of the two drugs appears to be more effective than each drug given alone. The combination is being tested in multiple cancers. Anti-PD-1 drugs do not attack the tumor directly, instead they enable the body's natural immune system to see the cancer for what it is, the enemy, without the cloak behind which the cancer cells used to hide.

Bristol's trial

The purpose of Bristol's Phase 2 trial is to prove the safety, tolerability and efficacy of nivolumab as a single agent or in combination with Yervoy compared to Roche's Avastin in patients diagnosed with recurrent glioblastoma. The trial will start in January 2014 and completion is expected in 2018. The planned enrollment is about 260 patients.

In the monotherapy group nivolumab solution will be given to patients intravenously 3 mg per kg of body weight, once every 2 weeks until the disease progresses again or the toxicity becomes intolerable. In the combination group, nivolumab solution at 1 mg per kg will be given combined with a Yervoy solution 3 mg per kg intravenously once every 3 weeks, a total of four doses, followed by nivolumab in a 3 mg per kg dose intravenously once every 2 weeks.

In arm B of the study Avastin will be used as a comparator drug, in a solution of 10 mg per kg, given intravenously once every 2 weeks. To be accepted into the trial a patient must have a confirmed grade IV malignant glioma and previously should have been treated with radiotherapy and temozolomide.

Primary outcome measure is overall survival, measured after 176 death events, which is estimated to occur in about 44 months.

Doubts about Avastin

Avastin received a conditional approval from the FDA in 2009 for use in brain cancer, but the approval was subject to further study.

Even though two recent studies showed that Avastin should not be used as an initial therapy for glioblastoma, the drug is effective when used to treat recurrences. And considering that no other treatment is available for the disease at a late stage, Avastin's approval is probably not going to be revoked.

Avastin is one of the best-selling cancer drugs in the world, it generated sales of $6 billion last year for Roche. Glioblastoma is rare, and sales of Avastin for that use were only about $170 million in the U.S. Results of one of the studies, sponsored by the National Cancer Institute, were presented by Dr. Mark R. Gilbert of the University of Texas M.D. Anderson Cancer Center at the ASCO meeting last summer.

The trial involved 637 patients with newly diagnosed glioblastoma. Those who received Avastin lived a median of 15.7 months compared with 16.1 months for those who received a placebo. Use of Avastin delayed the time before tumors worsened by about three months (progression free survival), but the difference was not statistically significant.

A separate study, sponsored by Roche, also showed virtually identical median survival for Avastin and the control group. But the drug delayed tumor worsening by more than four months, which was in this case a statistically significant difference.

Roche's study found that Avastin improved patients' quality of life, which could be important in retaining the approval. But Dr. Gilbert's study, using a different analysis method, found that Avastin increased the burden of symptoms and led to a greater decline in patient's cognition.

Glioblastoma

Globally, the incidence of glioblastoma is approximately 1 to 2 in 100,000 people annually. Current treatment options for GBM are limited. Generally, patients' tumors get worse within the first 6 months of initial therapy and the median overall survival of patients following diagnosis is 15 months. Glioblastoma has among the highest levels of VEGF (vascular endothelial growth factor) expression of any solid tumor, which led to the rationale to use anti-angiogenic therapies on this disease, like Avastin.

Competition

Needless to say that GBM is in dire need of a breakthrough treatment.

There is not a shortage of attempts. Among the many programs, four companies especially appeared to be on the way to a breakthrough treatment: ImmunoCellular Therapeutics (NYSEMKT:IMUC), Northwest Biotherapeutics (NASDAQ:NWBO), CytRx Corporation (NASDAQ:CYTR), and Celldex Therapeutics (NASDAQ:CLDX). A recent Forbes article is optimistic about the chances of CytRx Corporation and Celldex Therapeutics, but not so much about the other two.

In November, CytRx announced that it was initiating a Phase 2 clinical trial with aldoxorubicin in patients with unresectable glioblastoma multiforme. This Phase 2 study follows positive, confirmatory results reported earlier this year from a preclinical study in which aldoxorubicin demonstrated statistically significant efficacy.

Shares of Celldex Therapeutics are up nearly 300 percent over the past year as the company's pipeline has started to gain traction.

Three Phase 2 trials of its candidate rindopepimut have been completed in newly diagnosed EGFRv3-positive glioblastoma patients with consistent results. Rindopepimut has been generally well tolerated and generated durable immune responses.

But the article is highly pessimistic about ImmunoCellular Therapeutics and Northwest Biotherapeutics, both of whom appear to be pursuing a science that hasn't quite proven itself. Like ImmunoCellular Therapeutics, Northwest Biotherapeutics is working on a dendritic cell-based vaccine. The company's pipeline includes 3 compounds in development based around the DCVax platform. The platform combines a patient's own dendritic cells with cancer related proteins, or antigens, with the aim of inducing immune responses against a patient's cancer cells. That sounds very similar to the approach that ImmunoCellular took and which ended in a failure.

Some scientists believe now that even tough cancer vaccines have many advantages, there must be a reason for the continuing poor clinical track record. Failure of the dendritic cells approach could be due to the inability of these cells to effectively overcome tumor-induced immune suppression.

Investors' summary

In December Bristol announced that it is selling its stake in a diabetes joint venture to AstraZeneca (NYSE:AZN). The companies entered into the joint venture in 2007 with a focus on developing new drugs for Type 2 diabetes and have since expanded the venture to include additional diabetes products.

As a result of the sale, the rating agency Fitch has revised downward Bristol's rating outlook to negative from stable. Fitch believes the sale of the company's diabetes business will reduce EBITDA (net income with interest, taxes, depreciation, and amortization added back to it) beginning in 2014, compared to prior estimates. Fitch does not expect Bristol-Myers to use any of the proceeds from the sale to reduce debt. These factors may result in the substantial increase of gross debt leverage during 2015-2016. Gross debt leverage is the company's total debt divided by the operating EBITDA.

According to the company's press release, in the AstraZeneca deal Bristol-Myers will receive $2.7 billion cash upon closing, $800 million in potential approval milestones and potentially $600 million sales performance milestones, payable in 2020. The company will also receive specified royalties on the diabetes' business worldwide sales through 2025.

The joint venture included development of numerous drugs that will now beef-up AstraZeneca's pipeline. Upon the expected completion of the deal in the first quarter of 2014, AstraZeneca will own global rights to Onglyza, Kombiglyze, dapagliflozin, Byetta, Bydureon, Symlin and metreleptin.

Bristol-Myers Squibb has adequate sources of liquidity. At the end of September, the company had full capacity under $3.0 billion in five-year revolving credit facilities comprising $1.5 billion expiring in September 2016 and $1.5 billion expiring in July 2017. The next significant debt maturity is 500 million euros in 4.375 percent unsecured notes due in November 2016.

On Sept. 30, 2013, Bristol-Myers Squibb had cash and short-term investments of $2.7 billion and long-dated securities of $3.6 billion. Bristol-Myers Squibb is changing directions by focusing on new products that are more promising clinically and financially. One of the new stars, cancer drug Yervoy's sales for the first 9 months were $700 million, up 41 percent from a year ago.

Guidance is confirmed for the 2013 non-GAAP earnings per share in the range from $1.70 to $1.78. Analysts estimate that earnings per share in 2014 will be $1.78, as per Bloomberg's compilation of 19 broker's opinions. Bristol's share price in the past 52 weeks ranged from $32.50 to $54.49, trending higher since last summer. The stock price is positioned above both the 50 and 200 days simple moving averages. One reason for the positive trend could be that Bristol-Myers's sales have been returning to growth after patent expirations shrank revenue in the past five quarters.

New products are emerging and the company is hoping that the newly targeted disease segments, such as rheumatoid arthritis, Hepatitis C and especially cancer immunotherapy, will boost sales even further.

Source: Bristol-Myers Squibb Vs. Roche In The Brain Cancer Race