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When analyzing the results of a phase 2 trial in oncology, it is important not to get caught up in popular statistics but rather to look at the whole picture before drawing an investment conclusion. Specifically, I am referring to survival statistics. At first glance, survival, both overall and progression free, seems to be the intuitive primary endpoint of any oncological trial. After all, the basic point of any cancer medication should logically be to extend life. While this is usually the case, it is not always, and investors must keep this in mind, especially when considering high risk high reward stocks like trial stage biotechs.

Let me paint an example from just last year in oncology. In 2013, 12 new molecule drugs were approved by the FDA. Seven of these trials rested on statistics involving either progression free survival, or overall survival, barely a majority. That means that five FDA approvals in oncology last year, or a full 42%, did not have survival extension as a primary endpoint.

Those five were

  1. Imbruvica by Pharmacyclics (NASDAQ:PCYC), approved November 2013. The trial was open label, 111 patients. Primary endpoint was overall response rate, which came in at 69%.
  2. Pomalyst by Celgene (NASDAQ:CELG), approved February 2013. Also open label, 221 patients. Primary endpoint was overall response rate which came in at 29.2% in Pomalyst plus dexamethasone versus 7.4% Pomalyst alone. Pomalyst here was approved based on its synergistic reaction with dexamethasone in this case.
  3. Revlimid by Celgene, approved June 2013. Also open label, single arm, 134 patients. Primary endpoint overall response rate which came in at 26%.
  4. Valchlor by Ceptaris Therapeutics, approved in August 2013. Observer blind, two-armed 260 patient trial looking for non-inferiority to the comparator arm. 60% of subjects in the Valchlor arm achieved responses, which was deemed non-inferior to control. Approval was gained on that basis alone.
  5. Xgeva by Amgen (NASDAQ:AMGN), approved June 2013. Primary endpoint was objective response rate, which came it at 25%, all partial. Nevertheless, approval was granted.

The reason this is important is that preliminary results of a phase 2 trial in India were recently announced for cervical cancer by Advaxis (NASDAQ:ADXS), comparing ADXS-HPV plus cisplatin to cisplatin alone. ADXS-HPV uses attenuated Listeria bacteria to deliver vaccine into cancer cells. Preliminary results of this phase 2, whose endpoint is 12-month survival, show an improvement over control of 36% to 33%, with patients still alive and data continuing to be collected.

While overall survival was not significantly different (so far) from chemotherapy alone, this is precisely why understanding the implications of those 5 trials last year is so important. None of them had overall survival as a primary endpoint, and neither did Advaxis in its phase 2. It is entirely likely that Advaxis will tweak its phase 3 endpoint for ADXS-HPV upon completion of the phase 2 in order to emphasize the strengths of ADXS-HPV and gain approval. That, and disease control was reported at 41% with 6 complete responses and 6 partial responses, for an overall response rate of 11%. Side effects were mild to moderate, with only 2% of patients experiencing serious adverse events in comparison with 100% of chemotherapy patients. With these data, Advaxis has a lot of options regarding how to structure its phase 3, and comparing the data with those that got approval for Valchlor and especially Xgeva, prospects look good for ADXS-HPV.

More on the Advaxis Pipeline

Advaxis has 5 clinical trials on file. The flagship is ADXS-HPV, a clinical program for Human Papillomavirus ("HPV")-associated cancers, and the others are ADXS-PSA, a clinical program for prostate cancer, and ADXS-cHER2, for the treatment of HER2 over-expressing human cancers including breast cancer, among others. Both ADXS-PSA and ADXS-cHER2 are in the pre-clinical development stage, while ADXS-HPV is the furthest along and deserves the most attention. The company is also evaluating the program in three other clinical trials for HPV-associated cancers, including recurrent advanced cervical cancer, head and neck cancer, and anal cancer.

Advaxis is also currently recruiting participants for phase II ADXS-HPV clinical trials for the treatment of cervical cancer in the U.S. It is being tested for the treatment of persistent or recurrent, squamous or non-squamous cell Carcinoma of the Cervix on female patients aged 18 years and older. In this program, patients receive live-attenuated Listeria monocytogenes cancer vaccine ADXS11-001 IV over 15 minutes on day 1. This process is repeated every 28 days on three occasions in the absence of disease progression, or unacceptable toxicity. After treatment, patient progress is followed up every three months for two years, and every six months for the next three years, making a total of 5 years of close monitoring of patient recovery. This widens the company's addressable market for the program in the developed world.

The program is also being tested for the treatment of anal cancer in the U.S and is currently in Phase I/II. The main purpose of the study is to assess the safety and effectiveness of ADXS11-001 when combined with standard chemotherapy and radiation treatment for anal cancer. In addition to this ADXS-HPV is undergoing clinical trials for the treatment of head and neck cancer in the U.K, sponsored by the University of Liverpool. It is currently in phase one in this study. As mentioned earlier, the company also has other programs currently in the pre-clinical development stage, which could follow in the footsteps of ADXS-HPV in the clinical trial process.

The Market Will Be Ready

Upon a successful clinical trials process, and approval by the FDA, if it is to happen, it is paramount that a company puts in place a vibrant mechanism to steer the marketing and distribution campaign for the product. Advaxis seems to be well prepared with a very strong network of partners to help get the product to market upon approval. The company landed two lucrative deals in a period of two months that could form the basis of ADXS-HPV sales once out in the market.

First, the company signed an exclusive licensing agreement with Global BioPharma [GBP] for the development and commercialization of ADXS-HPV in Asia. Global BioPharma is a Taiwan-based biotech company funded by a group of investors led by Taiwan Biotech Company [TBC]. TBC is one of the top five pharmaceutical companies in Taiwan, and formed Global BioPharma to solely develop and commercialize ADXS-HPV for the treatment of HPV-related diseases. GBP has an addressable market of 4 billion people, with approximately 200,000 annual diagnoses of cervical cancer. Based on the World Health Organization stats, this represents approximately 40% of the global cases.

Now, based on this agreement, Advaxis will receive event-based financial milestones, an annual development fee, and annual net sales royalty payments in the high single to double digits. GBP will also purchase Advaxis shares as a form of investment in the company.

Secondly, Advaxis announced on January 22 that it had signed an agreement with India-based biotechnology company, Biocon for the co-development and commercialization of ADXS-HPV for the treatment of cervical cancer in women in the emerging markets, including India. According to W.H.O, over 134,000 women are diagnosed with cervical cancer in India every year, with approximately 73,000 succumbing to the disease annually. W.H.O statistics indicate that nearly 8% of all women in the world suffer from cervical cancer at some stage in their lifetime, which translates to about three in every forty.

Developing countries report a majority of the cervical cancer cases filed by W.H.O, a relationship that extends to the number of deaths reported annually. Therefore, Advaxis is presented with the opportunity to address the challenge of cervical cancer in women in the developing countries.

Under the agreement, Advaxis gives Biocon exclusive commercialization rights for ADXS-HPV in India and key emerging markets for all HPV cancers. Advaxis will supply the product to Biocon.

Now, based on these developments, it is quite clear that Advaxis has established a strong network to commercialize ADXS-HPV upon approval. Many small cap biotech companies tend to fail at this stage, even after launching a promising product, while others are drained up by competition. The company has formed key strategic partnerships that will drive sales associated with ADXS-HPV, which based on ongoing clinical trials, has shown good signs of being approved. This is based on the lack of side effects over chemotherapy with comparable survival, an improved 12-month survival profile, and a 6% complete response rate. Compared with Valchlor and Xgeva approved last year, these data look pretty good.

The opportunity presented by the company's partnership with GBP targeted at the Asian market speaks volumes, while Biocon creates a perfect avenue to address the growing cases of cervical cancer in the developing world. The main issue here is, these two present a realistic market, which has already revealed gaps for biotech players like Advaxis to fill. Additionally, the question of whether the product will get approval from the relevant regulators seems to lean towards yes, especially considering that no major adverse effects have been reported so far in the trial process.

Cash, Risks, and Conclusion

As with all trial stage biotechs, risk is high as is potential reward. It all depends on ADXS-HPV. Results look good so far, but it is impossible to know what phase 3 results will bring. For potential gains, all one needs to do is check the quotes of the companies quoted at the beginning of this article to see the potential, especially Pharmacyclics. But what really matters now is the cash clock. Right now, Advaxis is sitting on $21M, which is enough to last 4 quarters, assuming current burn rate, and coupled with its recent partnerings in Asia and possible milestones, should get ADXS-HPV through an FDA decision, at which point it all depends on what the bureaucrats have to say. The marketing infrastructure is all lined up. Now it is all a question of getting through the pipeline.

Dilution is of course another concern if regulatory timing is less than optimal, as it is with all trial stage biotechs. In the case of Advaxis, the waters are muddied because sometimes drugs get approved at phase 2, though more often at phase 3. It depends on precedent, location and jurisdiction, and historical data. In terms of location, as noted earlier, GBP, a major Advaxis partner, has an addressable market of 40% of HPV-associated cervical cancer cases, all out of FDA jurisdiction. It is impossible to predict what Asian regulatory authorities may do, and for all we know approval may be granted based on phase 2 results alone. To provide a tether to this sort of speculation, the average trial size of approved oncologics in 2013 was 361 patients, with the smallest being 111, Pharamcyclic's Imbruvica for mantle cell lymphoma. Advaxis's phase 2 for cervical cancer in India included 110 patients. This is at the bottom of the bell curve for approvals, but nevertheless approval at phase 2 is a possibility.

Barring that, it is likely that ADXS-HPV has some time yet before approval is considered, and investors should be cognizant of the possibility of dilution, to what degree is uncertain. Though Advaxis is sitting on a comfortable amount of cash for now with some strong backers, there is the distinct possibility that dilution will be necessary to bring ADXS-HPV through phase 3 if indeed a phase 3 is called for. Advaxis's partners may pick up some of the costs considering their financial interests in the matter, but not all. That said, keep in mind that the main market for cervical cancer is outside the US, as HPV-associated cancers are rare within the US given the vaccine options available for HPV. The main market is in Asia where vaccines are less available. Asian regulatory agencies are the main ones to watch in this case.

Human health is one of the most lucrative markets in the world, if you make the right picks. Advaxis's new generation immunotherapy seeks to address the often overlooked cervical cancer, and as noted earlier, the fight does not end with the ADXS-HPV program. Advaxis could benefit massively on a successful launch of the ADXS-HPV program, as it could potentially be the launch pad of several other immunotherapies by the company. Additionally, its strong array of partnerships could create a winning framework for brand development and sustainable growth.

Disclosure: I am long ADXS. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Source: Advaxis's ADXS-HPV Phase 2 Results In Context