Modified T-Cells: Quietly Becoming Very Relevant

Includes: CELG, LBIO, NVS
by: Brian Nichols

On February 20, biotech specialist Barbara Ryan, managing director at FTI Consulting, went on CNBC to discuss the best biotech investments following a breakthrough in cancer immunotherapy. Of course, she referenced clinical leaders such as Bristol-Myers, Merck, and Amgen, but her key message was that combination therapies are going to become the norm and that we are moving cancer towards a disease that can be cured. This optimism on behalf of Ryan, along with CNBC's coverage, came after a private biotech company called Juno Therapeutics presented unprecedented data in treating a very deadly disease. And while Juno and big pharma deserve all the credit that's been received, the underlying investment value is that Juno, along with two peers, have very quietly presented the best data that we've seen in treating cancer(s) using modified T-cells.

Juno Therapeutics, a Seattle-based startup, is developing a technology where it retrieves a patient's own T-cells, genetically modifies them to target a protein called CD19, and then infuses them back into the patient. Back in March of 2013, Juno had reported five complete remissions in a small clinical study on patients with acute lymphoblastic leukemia, an aggressive disease where all patients had already relapsed following standard therapy.

This is impressive, but the small sample size of data was enough to earn Juno $145 million in series A funding late last year - Amazon CEO Jeff Bezos and Venture capitalist Venrock were among those to invest. However, given the company's latest round of data on February 19 - sparked interest by CNBC - it's likely that Juno will be attracting a lot more investors, and perhaps prepping for a high-profile IPO, perhaps worth billions.

In a 16 patient trial, those with acute lymphoblastic leukemia, 14 had a complete response. In other words, 88% of patients in this trial had no molecular evidence of disease - and keep in mind, this is a very sick patient population. Hence, this is incredible data, and the process of modifying a patient's own T-cell might, in fact, be the key to such success.

With that said, the process being used by Juno to produce such great data and attract such big-name investors is a very similar approach used by Novartis (NYSE:NVS), Lion Biotechnologies (NASDAQ:LBIO), and to a lesser degree, Celgene (NASDAQ:CELG).

Novartis has a product in development that removes chimeric antigen receptors (CARs), modifies and then infuses them back into the patient. Like Juno, Novartis is testing this product to treat forms of leukemia, and has also presented data on a trial of acute lymphoblastic leukemia patients. The only difference is that in Novartis's 22-patient trial all were children, which is clearly a different population.

Nonetheless, in this study 19 of the children achieved complete remission, which translates into 86%, a near identical outcome to Juno's study. And if this weren't enough, in treating chronic lymphocytic leukemia - even more deadly - 15 and 7 of 32 total patients experienced a significant reduction in their cancer and achieved remission, respectively. Once more, this is unprecedented data and supports Juno's plan to target lung, pancreatic, and other blood cancers with this therapeutic approach.

If data from Juno and Novartis isn't good enough, Lion Biotechnologies has reported very similar results in a different disease using a near identical approach. Lion's T-cell of choice is Tumor Infiltrating Lymphocytes (TILs), which are also found in all tumors. Lion removes TILs, modifies them via expansion, and then infuses them back into the body (sounds familiar). Like Juno and Novartis, Lion has plans to test its modified TILs on a variety of cancers; but currently, its data has been in treating metastatic melanoma.

In a multicenter (four sites) 136-patient trial, TILs produced a complete response rate of 12%. And while you might notice that this response is far less than what Juno or Novartis presented, it's important to understand that these are two different diseases. As a comparative, a 12% complete response is a far better result than either Bristol-Myers or Merck's anti-PD1.

Moreover, it's the consistency of Lion's data that further supports the thesis behind this therapeutic approach, as TILs demonstrated a durable clinical response rate around 50% at all four of its sites. Lastly, in a 93-patient trial where patients were treated with TILs in conjunction with interleukin-2 following a chemotherapy or radiation regimen, 20% of patients remain disease-free today.

Final Thoughts

To conclude, we have three companies using a very similar approach that have all produced robust data. Combined, this data serves as a great indication that these therapeutics could become the backbone in treating cancer for many years to come. With that said, there are more and more companies exploring the use of modified T-cells: Last year Celgene announced a collaboration with bluebird bio (NASDAQ:BLUE) that will focus on applying gene therapy technology to genetically modify a patient's own T-cells. Essentially, this is the same approach being studied by Juno, Novartis, and Lion, with the only difference being Celgene is hoping to capitalize on the combination of gene therapy, hoping to find an edge. Perhaps, this opens the door to combination or multi-therapeutic approaches.

In a previous article, I wrote about combination therapies and how TILs could be combined with one or more agents, such as anti-PD1/PDL1s. But it's worth noting that Juno and Novartis's products share the same benefit, meaning the potential exists for all three of these technologies. Essentially, these modified T-cells could play a huge role in curing cancer. Moreover, these are under-the-radar technologies, producing data that's not widely discussed, meaning that if data holds in larger trials, we could be talking about massive gains for Lion and Juno once it becomes public.

Specifically, if Goldman Sachs estimates that Bristol-Myers, Merck, and Roche's anti-PD1/PDL1 programs have peak sales potential of $7 billion each, then if data holds, what is the sales potential for an approach that strengthens natural cancer-killing cells that are found throughout the body and that have proven effective at treating a number of different cancers? In my opinion, the potential for modified T-cells is quite high. In the next year, this technology will be in the spotlight and considered highly relevant in the future of curing this disease.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. 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.