5 Oncology Drugs Available for Partnering

by: Ohad Hammer

One of the questions I am frequently asked is whether there are any good oncology drugs out there which are still available for partnering. The past years saw a surge in licensing and M&A deals; however, there are still several high-quality assets out there being developed independently by small- or mid-cap biotechs. Below are 5 companies with promising wholly-owned development stage programs, in alphabetical order.

Ariad (NASDAQ:ARIA) is trading close to its five-year high thanks to positive phase III data from for ridaforolimus, which is partnered with Merck (MRK). In addition, it is developing a wholly-owned drug, Ponatinib, which recently achieved impressive clinical proof of concept in CML (Chronic Myeloid Leukemia). As the CML space is packed with effective agents, simply showing activity is not enough to be considered promising. It is Ponatinib’s efficacy in a subset of patients who are resistant to all available drugs that makes it so unique.

The leading drug for CML is Novartis’ (NVS) Gleevec, a Bcr-Abl inhibitor that revolutionized the treatment of the disease 10 years ago. Hailed as one of the most effective cancer drugs in history, Gleevec keeps the majority of patients in remission for years. Patients who progress on the drug or stop taking it due to side effects can be treated with next-generation Bcr-Abl inhibitors, Novartis’ Tasigna and BMS’ (BMY) Sprycel. As both Tasigna and Sprycel have demonstrated superiority over Gleevec in Gleevec-naïve patients, they are expected to migrate to first line. One barrier for this will probably be cost, as Gleevec will go off patent in the coming years.

In a market well served by three effective drugs and dominated by large pharmas, where the market leader is about to become generic, there is no place for a “me too” drug. Based on data reported last year, Ariad will be able to differentiate its product, at least in a subset of patients who have a specific resistance mutation, the T315I mutation. These patients are resistant to all other inhibitors on the market, representing a real unmet need as well as a fast route to market.

Ponatanib’s data set included 38 evaluable CML patients in chronic phase (the patient population used for approving Tasigna and Sprycel). Although these patients had previously been treated with two or three approved agents, two-thirds derived some sort of benefit from Ponatinib. The most striking finding was that all nine patients with the T315I mutation had responses, which appear quite durable. The drug was active in additional Bcr-Abl mutations, but no statistics were given.

The results in the overall population compare favorably with historical data but the efficacy in T315I patients represents a real breakthrough. Ariad is currently enrolling patients in a Phase 2 registration trial, which includes second and third line CML patients, as well as patients with the T315I mutation.

Assuming Ponatinib performs similarly to the phase I trial, it could create two specific niches for ponatinib: Third line patients who are refractory to 2 Bcr-Abl inhibitors and second line genetically-defined T315I patients. The second niche is smaller but represents a unique opportunity to capture market share with virtually no real competition. One potential competitor could be Omapro from Australia-based Chemgenex (CXSP), which is also targeting T315I patients. Ponatinib seems better positioned in terms of potency and ease of administration. Importantly, as Omapro is not a Bcr-Abl inhibitor, the two drugs could be combined. Chemgenex is in the process is being acquired by Cephalon (CEPH).

The market size for T315I patients is still unclear, as physicians do not always check mutational status. At present, there are several hundred cases of T315I CML diagnosed every year in the US. This figure probably under-represents the real incidence of the mutation, which is expected to increase further with exposure to Bcr-Abl inhibitors. Assuming a two-year average treatment and similar pricing to that of Tasigna or Sprycel ($80k per year), the immediate T315I opportunity is around $100M annually. Sales in third and fourth line patients could increase sales by several fold. Both indications will probably not be affected by Gleevec’s patent expiry.

As with any drug targeting a genetically defined patient population, Ariad must convince regulators and care givers that it can identify relevant patients. In order to do so, the company is developing a companion diagnostic kit in collaboration with MolecularMD. Having a reliable kit could be the difference between approval and rejection, as was observed in the FDA’s rejection of Chemgenex’s drug.

Ariad is expected to have results by mid-2012 and to file for approval later that year. On top of the clear potential in CML, Ponatinib could be effective in many other tumor types, as the drug inhibits additional cancer-related targets. At the recent AACR conference, the company presented an impressive poster on Ponatinib’s ablity to inhibit FGF receptors, which are becoming a hot target in oncology. This is demonstrated by the licensing deal between Human Genome Sciences (HGSI) and FivePrime last month as well as the initiation of phase I for Genentech’s FGFR3 antibody. Another hot target inhibited by Ponatinib is FLT-3. Last year, Astellas paid $40M to Ambit in return for commercialization rights for Ambit’s FLT-3 inhibitor.

Bellicum is a small Texas-based privately-held company that develops cancer vaccines, treatments that stimulate patients’ immune system to fight cancer. The field of cancer vaccines has become all the rage thanks to Dendreon’s (DNDN) Provenge, the first cancer vaccine to get FDA approval. Although there are tens of clinical stage companies developing cancer vaccines, Bellicum stands out in the crowd with its unique approach and unusual signs of activity.

Similarly to Provenge, Bellicum’s vaccine for prostate cancer (BPX-101) involves taking immune cells from patients, stimulating them against a specific target and then re-administering them to patients. BPX-101 targets PSMA, a well recognized protein expressed by prostate cancer cells. The uniqueness in BPX-101 is that the immune cells drawn from the patient are modified in a way that enables physicians to selectively activate them after they are administered, inside the patient’s body. This is done using a proprietary drug originally licensed from Ariad.

One obvious shortcoming of cancer vaccines is that they rarely lead to tumor shrinkage, which is the standard immediate endpoint to evaluate activity in cancer. Provenge, for example, led to a partial response in one out of 341 patients in its phase III trial. Obviously, this negligible response rate does not reflect Provenge’s overall survival benefit.

Based on preliminary results with Bellicum’s vaccine, it appears that some cancer vaccines have the potential of inducing tumor shrinkage in a substantial portion of patients. In February 2011, investigators reported data for 12 patients with metastatic prostate cancer. According to the company’s press release, three patients had an objective response, including one complete response. In addition, there were signs of immune activation, both general and tumor-specific, including infiltration of immune cells into cancerous tissues.

The data is still very preliminary; based on the poster investigators presented in February, only one case is described as a formal partial response, while the description of the two other responders is more vague. In addition, one patient appears to have received chemotherapy shortly after the vaccine, which could have contributed to the effect. Still, there is strong evidence that BPX-101 has an immediate anti-tumor effect to an extent that is not usually observed with cancer vaccines.

The inflammatory markers observed in patients who did not experience tumor shrinkage imply that the vaccine may be beneficial in patients who do not achieve tumor shrinkage. Eventually, Bellicum will have to prove its vaccine extends survival in large comparative studies but in the meantime the clinical responses are an excellent appetizer.

The company expects to advance BPX-101 to several phase II trials later this year. According to CEO Tom Farrell, the company completed enrollment of six additional patients who received a higher dose of the vaccine and a modified regimen. Updated results will be presented at ASCO this June.

Following the initial clinical validation, the company could utilize its platform for developing additional cancer vaccines against new targets. This path should be viewed as particularly attractive for a small virtual company, as the amount of new vaccines is limited solely by the amount of targets. The company can then monetize its proprietary platform by partnering the new programs.

Celldex (CLDX) is another company focusing on cancer immunotherapy. It has two mid-stage clinical programs that have generated some activity signals, but these programs are still awaiting validation in ongoing trials. Nevertheless, the two programs might be attractive for companies who are more risk tolerant, as one agent is about to begin a phase III trial and another one is already in a randomized phase II study.

The company’s lead program, rindopepimut (CDX-110), is a cancer vaccine for the treatment of brain cancer. The vaccine is aimed at EGFRVIII, a mutated form of EGFR, which is present in ~25% of patients. Targeting EGFRVIII carries two hypothetical advantages. First, the protein is mutated so it might be easier for the immune system to recognize it. In addition, since the mutation is present in a subset of patients, it can be used for patient selection.

Clinical data for CDX-110 is derived from single-arm studies in combination with chemotherapy and radiation. Survival and progression free survival data from three different studies, including a 65 patient trial recently reported, compare favorably to historical controls. Importantly, all three studies yielded similar results, adding to their credibility. Nevertheless, it is hard to interpret single-arm trials, which tend to overstate a drug’s efficacy, let alone long-term endpoints such as overall survival.

Last year, the program encountered a setback after Celldex’s partner, Pfizer (PFE), returned rights for the vaccine. This left Celldex with a phase III ready drug but without a partner who can pay for it. The company expects to initiate an international phase III trial in the second half of 2011, but it does not have the financial resources to support such an endeavor. Therefore, towards year end, Celldex will have to partner the drug or bring in additional capital.

One asset Celldex might monetize is CDX-11, currently in a randomized phase IIb trial. CDX-011 is an antibody drug conjugate (NYSE:ADC) against GPNMB, originally developed by Curagen which was acquired by Celldex in 2009. I have written about this program and the acquisition in the past.

With respect to efficacy, CR-011 demonstrated clear signs of activity in two melanoma trials and one breast cancer study in the form of objective responses. The response rate was rather low, ranging from 6% in breast cancer to 10% in melanoma, although tumor shrinkage was observed in ~50% of patients, who were heavily pretreated.

It is important to note that patients in the trials were not selected based on GPNMB expression, which is probably required for activity. In other words, many of the patients in the trials could not derive benefit from CDX-011 simply because their tumors do not express CDX-011’s target. When investigators stratified patients based on GPNMB expression on tumors or their microenvironment, the GPNMB-positive patients appeared to have better responses in terms of tumor reduction or disease control.

In order to validate this preliminary signal, Celldex initiated a randomized phase II trial, which is enrolling only GPNMB-positive patients who are randomized to receive CDX-011 or “Investigator’s Choice” chemotherapy. Results from the trial are expected next year; if positive, they could make CDX-011 a very attractive asset.

Endocyte (ECYT), which completed its IPO earlier this year, is about to start a phase III trial in ovarian cancer. The company is developing small-molecule drug conjugates (SMDC), which comprise a targeting moiety linked to a toxic cargo. The approach is similar to that of antibody drug conjugates in the specific delivery of drugs to tumors while sparing normal cells.

One big difference between SMDCs and ADCs is SMDCs’ small size. On the one hand, this property should make SMDCs more effective at penetrating solid tumors. On the other, they are cleared from the body very quickly, which limits their exposure and requires frequent dosing. In addition, SMDCs do not appear potent enough to be used as single agents, which requires phase II proof of concept in large randomized trials.

I was initially skeptical of SMDCs, but following phase II data presented last year, Endocyte seems to have a very attractive drug, especially in light of a unique patient selection approach. I mentioned the company two months ago as an attractively valued biotech company with a wholly-owned asset.

Endocyte’s lead SMDC, EC145, targets folate receptor, a well-recognized target that becomes upregulated in certain tumor types. EC145 generated impressive results in a large phase II study in platinum-resistant ovarian cancer patients, which is considered a particularly challenging indication, bereft of effective treatments. The trial evaluated the chemotherapy drug Doxil plus EC145 versus Doxil alone. In the entire patient population, the combination almost doubled progression free survival from 11.7 to 21.7 weeks.

This kind of difference is positive by itself, but Endocyte was able to generate even more promising data using a novel and unique approach of patient stratification. The company has developed EC20, a companion diagnostic for evaluating the expression of folate receptor on tumors. Unlike most companion diagnostics which rely on a tissue specimen from the patients, Endocyte’s diagnostic marker is injected to patients. This enables an accurate real time assessment of all the tumors a patient has.

Based on the companion diagnostic, Endocyte stratified patients into three groups. 40% of patients expressed folate receptor on all of their tumors (designated EC20++), another 40% expressed the target in some of their tumors (EC20+) and 20% had no expression (EC20-).

Ideally, there should be a profound benefit in EC20++ patients, a milder response in EC20+ and no response in the EC20- patients, which is exactly what the results look like. In the EC20++ group the addition of EC145 to Doxil more than tripled PFS from 6.6 to 24 weeks. The EC20+ patients appeared to benefit but to a lesser extent, whereas there was no difference in the EC20- group.

Endocyte plans to use the funds raised in its IPO for starting a phase III study in the coming months. Based on the biomarker data in the phase II, the trial will enroll only EC20+ and EC20++ patients, which increases chances of success. Importantly, the trial is designed in such a way that will allow approval only in EC20++ patients even if the trial fails in the overall population.

In contrast to the phase II, the phase III will be a double-blinded study (neither the patient nor the physician knows who gets the drug) and PFS will be evaluated by an independent blinded expert. These features were incorporated to neutralize investigator bias, which might had an influence in the phase II.

The market potential for EC145 is substantial, even assuming approval for EC20++ patients only. In the US, ovarian cancer leads to approximately 14,000 deaths per year. 40% (5,600) of these cases are expected to be EC20++, representing a market opportunity of ~$150-200M, depending on pricing. The ex-US market is similar assuming a larger patient population but lower pricing (which will depend on the survival benefit). Obviously, there are multiple opportunities for label expansion in ovarian cancer, as well as additional tumor types that express folate receptor.

There are two programs that target folate receptor and thus can be viewed as direct competition to EC145. Morphotek (a subsidiary of Eisai (OTC:ESALF)) is developing farletuzumab, an antibody-targeting folate receptor for ovarian cancer as well. Farletuzumab is currently in a phase III trial in platinum-sensitive patients, who have better prognosis than those targeted by Endocyte. In addition, Morphotek does not use a companion diagnostic for patients selection and does not have a robust phase II data set.

Another competitor is Immunogen’s (IMGN) IMGN853, an ADC-targeting folate receptor. This agent is expected to enter phase I next year, so by the time Immunogen has initial results, Endocyte should have phase III data. Nevertheless, as an ADC, IMGN853 could have several advantages over EC145 including potency as a single agent and convenient administration. IMGN853 also employs a new linker that was optimized to circumvent multiple drug resistance.

Results from the trial are expected in mid-2013, but Endocyte will probably sign a partnership deal next year for the EC145’s ex-US rights for the drug. In the first half of next year, the company should have overall survival data from the phase II study. A trend in the overall population or a statistically significant result in EC20++ patients will further validate EC145’s potential.

Exelixis (EXEL) has one of most interesting oncology programs in the industry, not only because of the good clinical data but also due to its potential to completely change the treatment paradigm of bone metastases. The company’s lead program, cabozantinib (XL184) is a dual VEGFR/MET inhibitor which has generated efficacy signals in multiple tumor types. Last year, the company wowed investors with unprecedented activity in prostate cancer, especially on bone lesions. Until then, no treatment has been shown to result in such a dramatic resolution of bone scans. The results were recently corroborated in an update from the prostate cancer trial.

The effect on bone scans seems to go beyond prostate cancer, as similar resolutions of bone scans have been observed in breast, lung and renal cancer patients. This might make cabo the agent of choice in patients with metastases in combination with standard of care. The potential market for this indication is huge due to the high prevalence of bone mets in many solid tumors and the lack of effective treatments. On a cautionary note, the unprecedented effect on bone mets also adds risk to this project, as it is very hard to interpret results and predict the clinical effect on survival. No drug has ever shown this kind of dramatic effect on bone scans, so the actual correlation with clinical endpoints remains to be seen.

Ironically, cabozantinib was already dumped by two partners. In 2008 GSK (GSK) decided not to in-license the drug as part of an option it had. Exelixis then partnered the drug with BMS later that year in a huge deal. But BMS bailed out last year after the drug did not perform as expected in a brain cancer study. This was just several months before the effect on bone mets was first reported. Earlier this month Bloomberg reported that Exelixis is looking for a buyer, so it is probably not pursuing a licensing deal for cabo.

Another high value asset investors often ignore is Exelixis’ large partnered pipeline, which is maturing nicely in the hands of various partners including Genenetch and Sanofi- Aventis (SNY). When I discussed Exelixis’ platform in my first write-up on the company three years ago, the company had agents against all the right targets but had limited proof of concept, and the industry was still figuring out how to optimally use them.

Although our understanding today is far from complete, new pieces of evidence are emerging, guiding investigators with respect to patient selection and drug combination. One example is trials combining PI3K and MEK inhibitors. At AACR Genentech presented for the first time data from such combination trial with Exelixis’ MEK inhibitor. Results were preliminary but very encouraging. Another example is patient selection for PI3K inhibitors, an issue that has experienced a lot of progress. Last month a group from MD Anderson published comprehensive work in the field with encouraging results.

It is therefore unfortunate that Exelixis’ board is trying to sell the company just when everything is falling into place. Exelixis could have followed the footsteps of other biotech such as Human Genome Sciences and Alexion (ALXN) that decided to build a sales force, remain independent and become a licensee of drugs instead of a licensor. In any case, Exelixis and its partners are expected to report a wealth of data at ASCO for cabozantinib and other programs. The company will also report results from a pivotal study evaluating cabozantinib in a niche indication later this year.

Disclosure: I am long ECYT, CLDX, EXEL.