On January 21, 2014, Neuro-Oncology, the leading journal of the Society of Neuro-Oncology published an editorial describing the Phase 2 results of Agenus' (NASDAQ:AGEN) Prophage G-200 vaccine in recurrent patients with glioblastoma multiforme (GBM) as 'exciting' and a 'very promising therapy'. Further to this, in an independent editorial, John Sampson, professor of neurosurgery at Duke University called the results 'impressive' and also said they represent a 'very promising therapy' in patients seeking GBM treatment. It is one thing when a hedge fund or other trading entity publishes positive reviews of a biotech company. It is another thing when that review comes from within the biotech trade itself.
The nature of this type of academic editorial is such that its content is often much more reliably indicative of success or failure than other types of published content from within the investment world. Theses are inquisitive in nature and rely on biological/scientific data instead of technical or financial analyses, data classes are highly scrutinized and conclusions are objectively drawn and mostly disconnected from profit-driven hype.
The terminology used in this particular editorial reminds me of a number of other instances over the past few years, in which respected academic journals used similar terminology to describe the trial results of an ongoing FDA approval process.
First, An Introduction
Many reading this will likely have an idea of what Agenus is as a company, in addition to the details of its GBM candidate Prophage G-200. For those that do not however, here is a quick introduction. GBM, or glioblastoma multiforme is a cancer whose tumors form on brain cells called astrocytes, which are the cells that make the connective, glue-like tissue in the brain. For a number of reasons, including the high reproductive rate of the cells and their proximity to a blood cell network, GBM cancer is very malignant, arguably the deadliest cancer there is.
Treatment is difficult not just because of the proximity of the tumors to the brain but because of their composition and form. GBM comprises many different types of brain cells, making them difficult to target, and they grow into what are commonly referred to as "tentacles" that spread across the brain, making them very difficult, almost impossible in fact, to remove in entirety.
Current standard of care treatment involves chemotherapy with Temozolomide combined with surgery to remove as much of the tumors as possible. The aim of the chemotherapy is long-term tumor control rather than remission; however, this long term control results in only around 20% of treated patients.
Prophage G-200 is one of two major Agenus Prophage Series vaccines. In simple terms, Agenus manufactures a vaccine using cells taken directly from the GBM tumors. Because the vaccine is created using the patient's tumor, its "antigenic fingerprint", which is the element of a vaccine that stimulates an immune system response, allows the vaccine to target only the GBM tumors.
Phase II Trial
On December 16, Agenus announced results published from a Phase 2 study, the primary endpoint of which was to assess the survival rate of patients at six months. The trial enrolled 41 patients that underwent surgery to remove a large proportion (over 90%) of the tumor, and were then treated with the vaccine once weekly for four weeks, followed by biweekly injections until vaccine depletion. The results reported that more than 90% of the patients treated were alive at six months. Half a year may seem paltry, but data wise, it is huge. Presently, the 6-month survival rate under placebo is only 36% according to key studies. Under treatment with Carmustine, a type of chemotherapy administered in wafer form, it has been reported to be 56%.
Perhaps just as importantly, there were no serious adverse events associated with administration of the vaccine. Treatments like Carmustine have plenty of negative side effects associated with chemotherapy involved. This gives Prophage-200 a serious advantage over currently available treatments, because even if it does not significantly extend survival over standard of care, if it can increase quality of life by lowering side effects over the same period of time, it will speak volumes at the FDA.
As a direct result of the positive phase II trial, the National Cancer Institute ("NCI") is now funding a large-scale study of Prophage G-200, named ALLIANCE after the cooperative group of the NCI that is sponsoring it. Agenus, in other words, is getting a free ride on this trial. The study will compare the efficacy of Prophage G-200 in combination with bevacizumab ("Avastin") with that of bevacizumab on its own. This is huge for Agenus, as it insulates the company from the financial risk normally associated with a large-scale clinical trial.
Academic Support and its Effect on Stock Gains
As mentioned previously, a number of reliable academic sources have recently cited Prophage as 'exciting', 'impressive', and 'very promising'. There have been a number of other cancer treatments during the past few years that have garnered similar attention prior to their approval.
The first of note is Medivation's (NASDAQ:MDVN) enzalutamide, marketed as Xtandi, for late-stage prostate cancer. Since Medivation announced that Xtandi had met both primary endpoints of its phase 3 trial in October 2011, the stock is up 780%. The FDA approved enzalutamide for the treatment of castration-resistant prostate cancer in August 2012. The key is, in May 2009 two and a half years before the big move in the stock began, the world's largest scientific society, the American Association for the Advancement of Science [AAAS], published a piece concerning enzalutamide titled "Development of a Second-Generation Antiandrogen for Treatment of Advanced Prostate Cancer".
The piece covered a phase I/II clinical trial of MDV3100, the then name for enzalutamide. The results of the study showed sustained declines in serum concentrations of prostate specific antigen, a biomarker of prostate cancer, in 43% of patients. The report concludes with the sentence, "Although preliminary, these clinical data appear promising and validate the persistent role of AR in driving castration-resistant disease."
The second of note is pertuzumab, developed by Genentech and now marketed by Roche (OTCQX:RHHBY) as a result of the 2009 acquisition under brand name Perjeta. Pertuzumab is an agent-inhibitory treatment for late-stage breast cancer. The FDA approved pertuzumab in June 2012 based on data from a Phase III study. The study showed that people with previously untreated HER2-positive metastatic breast cancer (a type of breast cancer that expresses the antigen HER2) who received a combination of Perjeta, Herceptin and docetaxel chemotherapy experienced a progression free survival of 18.5 months compared to a progression free survival of 12.5 months with Herceptin plus docetaxel chemotherapy.
Five months earlier, on January 12, 2012, The New England Journal of Medicine [NEJM] published a piece concerning pertuzumab and its potential when combined with Docetaxel for the treatment of breast cancer. The piece referred to the combination as "promising", "impressive", and "significant". It was eventually approved. Since that NEJM article was published, RHHBY is up 62%.
Finally, ibrutinib, now marketed as Imbruvica by Pharmacyclics (NASDAQ:PCYC), is an anti-cancer drug targeting B-cell malignancies. In November 2013, the FDA approved ibrutinib for the treatment of mantle cell lymphoma. Four months earlier, in a journal piece published by the NEJM on July 4th, contributor Kristie Blum described the treatment as "paradigm changing", and "impressive". Since that publication, PCYC is up 51%.
The crucial point here is that while positive reviews of biotech prospects from the financial world are common, positive reviews from within the biotech academic world should be taken very seriously. Academic endorsements of treatments undergoing clinical trials can indicate potential future success. The reason being that academic content solely focuses on the quantitative side of trials, and is not subject to the bias that so often filters into other media.
Cash, Risks, and Conclusion
As with all trial stage biotechs, the risk/reward ratio is high. If no approval is given, investors could lose a large percentage of their capital. If there is an approval, a stock like AGEN could triple, quadruple or more in a very short time span. We've seen what's happened with Medivation and Xtandi, and these large moves on the approval of blockbusters should be no surprise. A stock like AGEN in particular, however, is comparatively de-risked because of the very wide pipeline that Agenus has. Prophage for GBM is by no means its only candidate, and important phase 2 results are in the wait for HerpV, the company's therapeutic genital herpes vaccine, and just recently the company has embarked on a new phase 2 trial of Prophage with Yervoy on melanoma. Not to mention the vaccine adjuvant QS-21 Stimulon and its partnerships with GlaxoSmithKline (NYSE:GSK).
What is key in the meantime is the cash clock, and on that front Agenus is in fairly good shape. Having just raised $56M in a registered public offering without noticeably affecting its stock price, the company now has close to $87M in cash counting current assets on its latest balance sheet, giving it nearly 3 years of cash at current burn rate. This is a comfortable position to be in as a trial stage biotech, though investors should be aware that AGEN can swing wildly on minor news, and has in the past. That, and Agenus has been around for 20 years. 3 years is a long time, and though prospects look good for now, nothing assures approval and investors should be mentally and financially prepared for all possibilities.
Also, regardless of the examples given here regarding academic journals, obviously, this is a relatively small sample of the numerous cancer drugs that have been approved over the last few years, and there are likely some for which well-regarded journals showed approval and excitement but did not meet approval. While Neuro-Oncology suggests Prophage G-200 is a promising candidate for GBM treatment, this does not necessarily increase its chances of approval. Potential investors in Agenus should view its candidate, and the rest of its pipeline, just as they would any other investment in a development stage biotech that is seeking FDA approval: risky and long-term, but with potentially very high upside.
Having said this, taken alongside the positive trial results, the initiation of the large-scale ALLIANCE trial and the financial burden of this trial falling squarely on the NCI, the closer Prophage G-200 gets to FDA approval/decline, the better an investment Agenus looks to be.