Aduro Misses On Its Primary Pancreatic Trial: How Will They React?

| About: Aduro Biotech (ADRO)

Summary

Aduro Biotech is developing a Listeria-based immunotherapy for several tumor types.

Results of the phase 2b ECLIPSE study showed that its lead, CRS-207, did not improve overall survival in heavily pretreated patients.

Other programs should continue forward for Aduro, despite the disappointment in pancreatic cancer.

Two companies are tackling immunotherapy in a special way: by delivering bacteria called Listeria engineered to train the immune system to fight tumors. I have written about both Advaxis (NASDAQ:ADXS) and Aduro Biotech (NASDAQ:ADRO) in the past to provide the lay investor some insight into how these technologies work, along with some early, tantalizing evidence of efficacy.

Now, the rubber has hit the road for Aduro as they guide their lead therapy, CRS-207, through clinical trials. As I detailed before, the combination of CRS-207 and GVAX Pancreas was shown in a phase 2 study to be better than GVAX Pancreas alone. However, neither of these therapies are standard treatments for pancreatic cancer.

The real proof was the randomized ECLIPSE study, which compares CRS-207 to chemotherapy in heavily pretreated patients. Patients were given CRS-207 alone, CRS-207+GVAX Pancreas, or chemotherapy.

In a press release published today, Aduro announced that the ECLIPSE study failed to meet its primary endpoint of overall survival.

Overall survival for CRS-207 alone was 5.4 months compared with 4.6 months for chemotherapy. Patients given the combination saw overall survival of only 3.8 months, suggesting a trend toward inferiority with the combination. This is surprising given the previous phase 2 results.

This is the end?

The field Aduro was operating in, metastatic pancreatic cancer, is notoriously difficult to treat, especially after patients fail on first-line therapy. Does this study mean CRS-207 is a dud? I don't think so. There was a marginal but insignificant improvement in overall survival, suggesting that CRS-207 may have some clinical activity. As such, it will be interesting to continue following other studies with this agent, such as STELLAR. This trial is looking at CRS-207 in combination with nivolumab, BMY's blockbuster immune checkpoint inhibitor.

It is possible that Aduro can identify an efficacious partner for CRS-207 yet.

Moreover, the live, attenuated, double-deleted (LADD) platform is not done yet. ADRO is exploring CRS-207 in mesothelioma, which is another challenging tumor type for patients who have failed one or more prior lines of therapy.

Then there are the alternate LADD-based products being explored in glioma, lung, and prostate cancer. The company is also studying a LADD vector in combination with Incyte's epacadostat.

Each of these therapies operates using different targets, so I don't think it is wise at this time to rule out the LADD principle just because the company couldn't smash pancreatic cancer to bits. They tried taking down a big target, and they missed the mark. But that's not where the LADD story ends.

On top of that, Aduro is still exploring their STING program for resistant cancers. This program is entirely differentiated from the LADD platform, giving Aduro an important alternate strategy in their pipeline.

Should you sell your holding in Aduro?

I would be careful about making such a rash decision at this time. Of course, bad news increases the risk associated with Aduro, but I feel that (at the time of writing) more-than 22% share price loss the company is taking might be an overreaction.

Aduro maintains a strong financial position. It has a collaborative agreement with Novartis that is worth up to several hundred million dollars. It had $120 million in cash on hand as of its most recent quarterly filing, with losses topping out at $25 million in the past quarter. With just its cash (not to mention its other assets), Aduro can fund its clinical trials for another year.

And they have substantially sped up their development of therapies since this time last year: the research and development budget has nearly doubled in that time.

These factors, taken together, suggest that Aduro may be down, but not out. CRS-207 is no one-trick pony, and Aduro has quite a few other promising programs. This recent news might be a strong buying opportunity as we wait for further guidance.

Of course, it is not without risk. We do not know why CRS-207 failed to improve outcomes for patients. If it's because the LADD thesis is flawed, then the program is in trouble. I'm inclined to believe at this time that the highly difficult nature of pancreatic cancer is more to blame. These tumors are tough.

We'll see with findings from other programs in the coming year whether this LADD has leg. In the meantime, keep an eye on Aduro Biotech. I feel that this bump in the road is temporary.

Disclosure: I/we 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.