ASCO 2011: Opportunities for Biotech Investor Success and Failure

by: Chemistfrog

Attracting more than 30,000 oncology professionals from around the world, the 47th annual meeting of the American Society of Clinical Oncology (ASCO) will meet this year from June 3-7th in Chicago, Illinois. Big pharmaceutical companies from $166 billion market cap Pfizer (NYSE: PFE) to $2.6 million market microcap biotech Genta Incorporated (OTC: GNTA.PK) will be showcasing trial data, their sciences and their capabilities. Attendees will witness the latest information on cancer research and novel methods of attacking the disease in its many forms. Pharmaceuticals and biotech companies will be networking, educating themselves, garnering the opinions of others in their fields, speaking with future and current investors and potentially be looking for partnerships or buyout candidates.

For biotech and pharmaceutical investors, the 2-3 months leading up to the ASCO presentations is a key time to take entry-level positions in their securities of choice. For the smaller and mid-cap biotechs whose existence and financials may be dependent on the data presented, there can often be a significant run up to ASCO rivaled perhaps only by anticipations of PDUFA decisions, FDA panels and 510K clearances with the FDA. Provided below are examples of some biotechs, which may experience stock price run up to early June based on their respective market caps and marketing potential of the drugs they hope to have approved. If the past few years is any indication, risk aversive investors may again take their profits before the data presentations, causing a dip in prices while the more hardy and risk tolerant investors may hold their positions through the data presentations based on what they perceive the data may yield.

NASDAQ: AGEN Market Cap:$107 Million Market Close 04/29/2011at $0.95 PPS

Agenus will have updated phase 2 data presented on its Prophage G-200 vaccine for recurrent glioma at a poster presentation at ASCO. Agenus’ Prophage vaccines are patient-specific therapeutic vaccines produced from the patients’ own tissue, and according to the company, are designed to target only cancerous cells and have limited toxicity relative to broader-acting cancer treatments. Data from this trial will be key because it could substantiate or disprove analysts’ and investors’ perceptions of the Prophage line of vaccines, at least for the glioma indication. The data presented will not be the final data presented from this trial as it is on going, but it will be new and updated data and likely a good indicator of efficacy and safety.

NASDAQ: ALNY Market Cap:$434.5 Million Market Close 04/29/2011at $10.26 PPS

Alnylam Pharmaceuticals will present phase I data from its ALN-VSP dose-escalation trial, which is the company’s first venture into oncology. The study's objectives are to evaluate safety, tolerability and efficacy in patients with advanced solid tumors with liver involvement. The data from this trial will not only affect the phase II trial planning (scheduled to begin in 2012), but will also aid in the overall advancement of systemically delivered RNAi therapeutics, the mechanism by which ALN-VSP works. RNAi (RNA interference) is a novel means of turning genes off and on in cells, and if targeted appropriately it may potentially be used to control replication of cancer cells. The ALN-VSP study is also significant because of its indication for primary and secondary liver cancers for which currently the prognoses are very poor with new diagnoses of more than one million combined cases annually.

LON: SLN Market Cap:$5.99GBP Million Market Close 04/29/2011at $2.14 PPS GBP

Silence Therapeutics will be presenting interim phase I data on another drug utilizing RNAi as its primary mechanism, Atu027. The Atu027 trial is focused on advanced solid tumors and is slated to complete in the 2H 2011. Earlier preclinical data demonstrated that Atu027 prevented the spread of breast cancer to the lungs in preclinical models, while interim data from the phase I trial suggests that Atu027 could have a similar effect in humans. Located in London, England, and trading on the London stock exchange, their security is currently trading at near its 52-week low of 2.05 GBP. The more illiquid pink sheets form of the security traded in the United States, OTCPK:SLNCF, closed Friday, April 29th at its 52-week low of 0.03 with a one year range of 0.03 – 0.22 USD. The company is operating at an annual loss with no approved drug in its pipeline, however it is generating some revenue with its RNAi licenses. Of particular note is the list of current licensees including AstraZeneca (NYSE:AZN), Altana Pharma, Sankyo, Sanofi-Aventis (NYSE:SNY) and Quark Biotech. Silence will soon receive a $1.5 million dollar payment from Quark Pharmaceuticals, its development partner, as a milestone payment and from the same agreement could receive up to US $80 million due to Quark’s licensing agreement with Novartis (NYSE:NVS). Trading at or near the 52-week lows, the stock could experience a significant increase in the upcoming weeks if analysts’ and investors’ opinions on the drug, its licensing agreements or partnerships turn more positive.

NASDAQ: OXGN Market Cap:$13.2 Million Market Close 04/29/2011at $1.76 PPS

Oxigene will be presenting the final phase 2/3 (FACT study) data for its flagship drug, ZYBRESTAT, for anaplastic thyroid cancer at ASCO. The low PPS and market cap for the company is surprising for a company whose phase III data many are expecting to be positive. Interim data announced in October 2010, were mostly positive with overall survival improvements and good drug tolerance. A good candidate for buyout and for run up to ASCO, this company may see some surprising gains over the next couple of months. A phase 2 trial for ZEBRESTAT for ovarian cancer was initiated in early April, and enrollment has completed in two other ZEBRESTAT trials for advanced platinum-resistant ovarian cancer and non-small cell lung cancer. Please see associated links for information on each trial. Speculation on the upcoming data presentations could provide investors with a volatile run up to ASCO.

NASDAQ: SPPI Market Cap: $468 Million Market Close 04/29/2011at $9.00 PPS

Spectrum Pharmaceuticals has two approved and marketed drugs, FUSILEV (obtaining recent April 29th FDA approval for expanded use of the drug to treat advanced metastatic colon cancer) and ZEVALIN. However their focus at ASCO this year will likely be two drugs in late-stage development, Belinostat and Apaziquone. Belinostat is being tested in a pivotal phase II trial for patients with relapsed/refractory peripheral t-cell lymphoma (PTCL). Enrollment has completed and the company will likely file a rolling NDA in latter 2011 or early 2012 pending favorable final data. Apaziquone in currently being tested in two pivotal phase III trials operating under a SPA, Special Protocol Assessment, with the FDA for non-invasive bladder cancer. Total enrollment of the trials is 1600 patients, and the SPA should give Apaziquone a better chance of approval with favorable data. Positive data from this trial would be a huge catalyst for the company’s stock price.

NASDAQ: EXEL Market Cap:$1.52 Billion Market Close 04/29/2011at $12.26 PPS

Exelixis will be making presentations on cabozantinib (XL184) covering ovarian cancer, castration-resistant prostate cancer and also covering the randomized discontinuation trial covering nine tumor types. However, their most anticipated presentation will be the EXAM trial, the cabozantinib phase III trial for medullary thyroid cancer. Exelixis hopes the data from this trial will be strong enough to support a NDA for the latter part of 2011. A company with a lot to say at ASCO 2010 looks to be sitting in the spotlight again for ASCO 2011. Already up more than 49 percent for 2011, the stock still has room to run before the ASCO presentations with an NDA dependent on the data presented.

NASDAQ: ARIA Market Cap:$1.12 Billion Market Close 04/29/2011at $8.55 PPS

ARIAD Pharmaceuticals is rapidly becoming a premier biotech with a robust pipeline focused on cancer drugs. Presentations by ARIAD at ASCO will likely focus on their two lead compounds, Ridaforolimus and Ponatinib. Ridaforolimus is and will continue to be a key compound for ARIAD. Its current trials focus on soft tissue/bone sarcomas, endometrial cancer, sarcomas (Japan), breast cancer, lung and colon cancers, ovarian cancer and kidney cancer. The most advanced Ridaforolimus trial is the recently completed SUCCEED phase III trial for soft tissue/bone sarcomas. ARIAD announced in January that the SUCCEED trial met the primary endpoint, improved progression-free survival compared with placebo, in patients with metastatic soft-tissue and bone sarcomas who had a favorable response to chemotherapy. Ridaforolimus is being co-developed with Merck (NYSE: MRK) who will likely file an NDA for the drug later this year. The SUCCEED trial data presentation will be a key event at ASCO 2011. Ponatinib is currently early in a phase II trial for chronic myeloid leukemia and a phase I trial for acute myeloid leukemia. A presentation on Ponatinib would likely be on the completed phase I for CML and perhaps some interim data on its phase II trial that will probably not complete until sometime in 2012.

AMEX: YMI Market Cap:$363 Million Market Close 04/29/2011at $3.29 PPS

YM Biosciences has three main drugs at various stages of development. Like many of the afore-mentioned companies, there has been no official press release from the company stating what data they intend to present so one has to review the pipeline to ascertain what completed trial and interim data could be candidates. CYT387 is in a phase I/II trial for myelofibrosis. Interim data reported by the Mayo Clinic on the first 60 of 140 planned patients was positive with the data being presented at the American Society of Hematology annual meeting. YM notes that full enrollment into this trial would be complete in 1H 2011 with another interim data set available in 2Q 2011 and the completed data available by year end. Nimotuzumab, YM’s lead drug, is a humanized therapeutic monoclonal antibody against epidermal growth factor receptor (EGFR). It has currently been approved by 25 countries and has a host of clinical trials by YM Biosciences and its partner, CIMAB S.A., and its licensees. Nimotuzumab’s most advanced trials are phase III trials for pancreatic cancer, squamous cell carcinoma of the head and neck, adult glioma, pediatric diffuse intrinsic pontine glioma and cervical cancer. Updates on either of these phase III trials or Nimotuzumab’s other trials could be possible. From its third product, CYT997, we could see preliminary data from their ongoing phase I/II trial for glioma. The last company update noted that the data would not be available until 2H 2011, however the chance to present data at ASCO could coerce YM into putting full effort into at least giving the oncology community a peek at some of the data earlier.

The above list of biotechs to watch for the ASCO 2011 run up is certainly not complete and perhaps not even the best chance of profiting for investors. Investors should research these and other companies and trials and ascertain their levels of risk and determine what types of positions they should take in these biotechs. For a list of tentative companies presenting at ASCO, please see this site and this file (pdf).

For run up potential one must determine the importance of the data to the company’s financials in terms of potential approval and marketability of the drug. One must also determine if the perceived positive or negative outcome is already priced into the company’s current share price. If success has not been priced in, then a long position may be wise. If it has been priced in, investors may await the dip that often precedes the early June presentations as traders take their profits and then take a position.

Browsing through interim data for the final data sets to be presented and through previous trials for the more advanced trials are good starting points to determine chances of success or failure. Remember, marginal interim data can turn into positive or negative final data quickly depending on sample size. A company heavily dependent on one or only a few drugs for income may make dramatic gains or losses for investors depending on what the data presented at ASCO 2011 indicates. Not only could positive data mean potential revenue coming down the line, but it could also represent future support by institutional investors, partnerships or even buyouts in merger and acquisition 2011. Although blockbuster potential is not there for every biotech with an oncology pipeline, the revenue stream from any approved drug, particularly the smaller and medium sized ones, would be welcome.

Although all data presented will be welcome to the oncology world for research purposes and as indicators for new mechanisms of attacking cancer, not all data presented will be welcome to investors or the publicly traded companies that depend on their support. Investors and traders should also always remember as they comment on articles, post on forums and communicate in chat rooms that behind all the “indications,” “approvals,” “CRL’s,” “LOI’s,” “data,” “trials” and “revenue” there are people and physicians fighting cancer daily at ground zero. Some of these battles are much easier to win now because of all the hard work and money that ASCO and other organizations, pharmaceuticals and biotech companies put into conceptualization, testing, working through the regulatory process and marketing the drugs that are the current best weapons. Conversely, many cancer battles now have grim prognoses with slim chances of recovery. The author hopes that ASCO 2011 will be the venue where many physicians and patients will see new hope for their daily battles with this killer in its many forms.

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