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The annual meeting of the American Society of Hematology (ASH) was concluded last week and provided investors a peek into the future of blood cancer treatment. Below are 5 companies that presented promising data that could change the therapeutic landscape in the coming years.

Pharmacyclics – A blockbuster in the making

A week after announcing a huge deal with J&J (NYSE:JNJ), Pharmacyclics (NASDAQ:PCYC) presented promising data for its lead agent, PCI- 32765. The drug continued to show impressive activity in CLL (chronic lymphocytic leukemia) and MCL (mantle cell lymphoma) in two separate studies.

In both trials, two thirds of the patients had a response, a remarkable achievement for a single agent. This is even more striking considering the excellent safety profile and the advanced stage patients who were recruited. The drug’s exquisite safety profile could be a huge differentiator vs. other treatment options that are effective in these indications but are also associated with a lot of side effects. In particular, elderly patients often cannot tolerate chemotherapy regimens due to severe bone marrow toxicities, which are almost non-existent with PCI-32765.

Among the drugs on this list, PCI-32765 has the best chance to become a real blockbuster, due to its remarkable activity, size of potential indications and excellent safety profile. The only good benchmark for this drug is Rituxan, a drug used across the board in most cases of NHL and CLL and generates annual sales of over $6B. In fact, assuming the limited data is indicative of future results, PCI-32765 appears to be superior to Rituxan both in terms of efficacy and safety.

PCI-32765 will not replace Rituxan, though, and will probably be used in combination with it. There is still no mature data on this regimen but one can easily envision a scenario in which the two targeted agents will replace standard toxic chemotherapy regimens such as R-CHOP and FCR in a substantial part of patients. In other cases, PCI-32765 will be easily combinable with chemotherapy regimens as no overlapping toxicities are expected.

Pharmacyclics expects to start two phase III trials in CLL and MCL by mid-2012. The company already met with the FDA regarding the CLL trial and has a clear road map in terms of trial design. A second meeting is expected to take place in the coming months and should guide the way forward in MCL.

Given the activity in MCL as a single agent, it is somewhat disappointing that Pharmacyclics is not pursuing accelerated approval based a small single arm trial. The only drug which has been specifically approved for MCL is Velcade, which was approved based on a 31% (8% CR) response rate in 155 patients in a single arm study. PCI-32765 had a response rate of 69% (16% CR) in 51 patients. Importantly, PCI-32765 led to a response in 65% of Velcade pretreated patients, which is the relevant population for accelerated approval.

This strategy does not replace large randomized phase III trials, but provides a fast route to market. Such a strategy is common with highly effective drugs such as Seattle Genetics’ (NASDAQ:SGEN) Adcetris or Micromet’s (NASDAQ:MITI) blinatumomab. Alternatively, Pharmacyclics could built-in an early interim analysis as part of the phase III design. The company will announce details on PCI-32765’s registration programs in the coming months.

Micromet – Unprecedented activity, as usual

Micromet has been dazzling ASH attendees with impressive results for blinatumomab for the past 4 years. This time it was an updated phase II trial in relapsed refractory ALL (acute lymphocytic leukemia) as well as a phase II in DLBCL (diffuse large B cell lymphoma), two aggressive forms of blood cancer.

In the ALL trial, Bmab led to a complete response in ~70% of patients in a small single arm trial. These patients are very hard to treat, as their disease is highly refractory and their active disease precludes them from receiving the only potentially curative treatment - stem cell transplant.

The trial was small but results were dramatic both in terms of the percentage of patients achieving them, their depth (as evidenced by wiping out of disease remnants in the bone marrow, or MRD) and their duration. The only drug that comes close to this is Pfizer’s inotuzumab, which is now Bmab’s main competitor as I discussed here.

Based on the results, Micromet is about to start a potentially pivotal trial in relapsed/refractory ALL. At the company’s analyst event, the study’s principle investigator, Hagop Kantarjian from MD Anderson, sounded very excited with Bmab, suggesting it might be the “Gleevec of ALL”. Kantarjian, one of top Leukemia experts in the world, also noted he has patients for whom there are no good alternatives waiting for the trial to start to get on the drug.

Micromet also presented new data in DLBCL, probably the most attractive blood cancer in terms of size and unmet need. Of 11 evaluable patients, 6 (55%) achieved an objective response, including 4 complete responders. Strikingly, 5 of the 6 responses were still ongoing, two of which for over a year.

Albeit small, this trial leaves no doubt that the drug has ample activity in these heavily pretreated patients. Other targeted agents such as Afinitor and inotuzumab had a response rate of ~30% in small studies, but the duration of responses appear to be lower. The high response rate and more importantly the long response duration could provide Micromet with yet another route to registration, although results with more patients are needed.

Ariad – On track for 2013 approval

Ariad (NASDAQ:ARIA) continued to deliver spectacular data for its Bcr-Abl inhibitor for CML (chronic myelogeneous leukemia), ponatinib. With a high likelihood of approval in 2013, this drug is considered one of the most attractive assets in the biotech industry. This is particularly impressive given the fact that ponatinib addresses a market with very effective treatment options- three approved Bcr-Abl inhibitors.

Ponatinib looks very active in patients who failed two approved inhibitors, leading to a response in almost half of them. The most important finding for the drug’s near term potential is the 65% response rate in a subset of patients with the T315I mutation. This mutation confers resistance to the three approved Bcr-Abl inhibitors, thus creating a fast route to market via accelerated approval. If approved, ponatinib will have virtually no competition in this segment.

The company plans to file for approval in the middle of 2012. Initial label will probably be limited to T315I patients and potentially patients who failed the three approved Bcr-Abl inhibitors. A main issue for the approval in T315I patients will be having a commercially available diagnostic kit that can identify the mutation, as the FDA will probably view it as a condition for approval. Ariad is working with MolecularMD on developing diagnostic test specifically for this purpose.

There is a consensus that ponatinib will get approved by early 2013, however the market potential is still unclear and will depend on the label and the prevalence of the T315I mutation. Current estimates range around sales of $250M in 2015, assuming usage in T315I mutations as well as last line patients. Sales are expected to gradually grow to over $1B in the following years assuming the drug gets approved for earlier lines. This is going to be addressed by a phase III trial in 1st line patients vs. an approved agent (Gleevec or Tasigna) Ariad will initiate next year.

The current market cap for Ariad represents an almost certain approval with initial sales in the range of $200M-$300M. Following last week’s offering, the company is valued at ~$1.7B, which is fair but certainly not cheap. Additional catalysts could be approval and initial sales of ridaforolimus in sarcoma, but these are expected to be very modest.

Ariad’s wild card is AP26113, a next generation inhibitor of EGFR and ALK. The company is using a similar strategy to the one that guided it with ponatinib – developing a drug for validated targets with potential superiority over existing drugs. In this case the approved drugs are Tarceva (EGFR) and Xalkori (ALK), both of which are very effective in patients with specific mutations. Just like in ponatinib’s case, Ariad believes AP26113 will be superior to approved drugs when compared head to head. Nevertheless, the company will probably try to gain approval in patients who failed Tarceva or Xalkori, with an emphasis on specific resistance-conferring mutations. Interestingly, Ariad will enroll patients with ROS mutations as well, based on positive activity of Xalkori in these patients.

Roche - Rituxan’s successor

Roche (OTCQX:RHHBY) presented results for GA101, a next generation CD20 antibody expected to replace Rituxan in NHL (non Hodgkin’s lymphoma) and CLL. GA101 belongs to a new class of antibodies with improved capacity to recruit the patient’s immune system and kill the cells they bind (Fc engineered antibodies). This antibody is based on technology from Glycart, which was acquired by Roche in 2005.

The trial compared chemotherapy with GA101 or Rituxan in indolent NHL with mixed results. Technically the results were positive, as GA101 had a higher response rate than Rituxan (45% vs. 27%) but PFS was not different. This lack of difference might stem from the short follow up so a difference could emerge in the future. In addition, this setting might not be the ideal one for comparing the two agents as this subtype of NHL is in general more responsive to Rituxan. Still, this is a nice validation for Glycart’s technology, with the first trial to compare an Fc engineered antibody and a conventional antibody that bind the same target.

Roche has a second Fc engineered antibody, GA201, which appears to be even more promising. This antibody binds EGFR, which is the target of Lilly’s Erbitux and Amgen’s Vectibix. Unlike GA101, which competes with a highly effective drug in blood cancer, available EGFR antibodies have mild efficacy, so there is more room for improvement. GA201’s phase I which was published earlier this year clearly revealed some interesting signs of efficacy, positioning it as a best-in class EGFR antibody that could replace Erbitux as the standard of care.

GA201’s profile could enable Roche to pursue patient populations for which EGFR antibodies are not used such as colon cancer with KRAS mutations or NSCLC, where Erbitux has only a 5 week survival benefit. A 2-3 month survival advantage could be a big deal, especially in squamous patients who cannot receive Avastin or Alimta (the two most effective drugs for NSCLC). Roche knows EGFR as a target very well through its small molecule EGFR inhibitor, Tarceva. GA201 might enable it to strengthen its presence in this arena, as Tarceva is expected to face generic competition in 2018.

YMI- Anemia effect prevails, so does skepticism

YMI (YMI) presented results for its controversial JAK inhibitor in myelofibrosis. As I discussed here, the drug will compete directly with Incyte’s (NASDAQ:INCY) recently approved JAK inhibitor for MF (myelofibrosis), Jakafi. Although the two drugs have a similar target profile, YMI claims its drug could have a superior clinical profile because it reduces anemia. This is in bright contrast to Jakafi which does not alleviate anemia and could even cause anemia in some patients. Anemia is an important co-morbidity in MF that usually requires patients to receive blood transfusion on a regular basis.

Until the ASH meeting, YMI’s results were very limited as they included a small number of patients (60) with limited follow up, all of whom were treated in one center. This time the data included more than 100 new patients who were treated at multiple centers.

Looking at the anemia effect in the entire study (166 patients), there were 68 patients who are considered “transfusion dependent”. Over half of these patients became transfusion independent after 12 weeks of treatment. The incidence of anemia as a side effect was very low, again, in bright contrast to Jakafi which leads to anemia in one of every 5 patients. In terms of other disease parameters, CYT387 had a clear effect on spleen enlargement and constitutional symptoms, similarly to Incyte’s Jakafi.

It is hard to argue with the numbers, which continue to show a clear signal in terms of resolution of anemia. This kind of signal has not been observed with other JAK inhibitors in clinical trials. If this effect is real, YMI will have a huge advantage over Incyte despite being 3 years behind it in terms of development stage.

The drug’s effect on anemia is still an enigma. It is so counterintuitive given CYT387’s profile and the data with other JAK 1/2 inhibitors, that until YMI comes up with a good explanation or a randomized study, skepticism will persist. This skepticism is what keeping YMI’s market cap below $200M.

Owning the stock seems reasonable at these levels, as the market assigns minimal value to the anemia effect and views CYT387 as a “me too” drug. If the anemia effect is real, YMI is worth 5 or 6 times its current valuation. If it isn’t, the drug still has real value as an advanced JAK inhibitor with a good safety profile in myeloproliferative diseases as well as potential for autoimmune diseases.

Portfolio Holdings as of Dec 18th, 2011 [click to enlarge]

Disclosure: I am long MITI, PCYC, YMI, INCY.