ADC-s, otherwise known as Antibody-drug Conjugates or armed antibodies, are a new technology in the fight against cancer. After many years of trial and error, the technology now seems to work. And the companies making it work, like Seattle Genetics, Inc. (NASDAQ:SGEN) or ImmunoGen, Inc. (NASDAQ:IMGN), offer promising investment opportunities.
ADC-s consist of three parts: the cancer antibody, a small but super-strong chemotherapy charge, and the linker that attaches the chemo to the antibody.
It all sounds easy, but it took decades and several failed attempts before one drug was finally approved and the other is getting ready for approval.
ADC-s are like floating sea mines. They drift harmlessly in the blood until they bump into a cancer cell, invade it, and from inside they kill it. Less then 1% of the drug is estimated to reach the tumor, but that is sufficient to produce better results than ever before.
The basic part of the ADC is a monoclonal antibody, like Herceptin, Rituxan or Erbitux, which are the current staples of targeted cancer therapy, all financially and clinically highly successful.
These laboratory-produced molecules mimic the antibodies made by a person's immune system to fight infection. But instead of attacking pathogens, the antibodies attach to specific proteins on the surface of cancer cells.
The antibodies by themselves have a limited ability to kill tumors. So along with the antibodies, conventional cell-killing chemotherapy drugs are usually given to the patient. While these kill cancer cells, they also attack healthy cells and cause adverse side effects.
What is revolutionary about ADC technology is that the toxins attach to the antibody, giving it killing power. At the same time, the effect is limited to the cancer cells only.
Seattle Genetics' auristatins, as their chemo agents are called, are 100- to 1,000-fold more potent than traditional chemotherapy drugs. They have to be that strong, because of the very small volume used.
Normally chemos that strong could not be given to patients. The linker is the key to this technology.
The linkers have to be stable in the bloodstream and release the potent cytotoxic agent once inside the targeted cancer cells. This approach is meant to spare non-targeted cells and thus reduce many of the toxic effects of traditional chemotherapy.
This is a tall order, and making the linker stable has taken considerable time and effort. In 2010, Pfizer Inc. (NYSE:PFE) pulled an approved ADC called Mylotarg from the market, because it had difficulty staying intact before hitting cancer cells.
Adcetris: In August 2011, the FDA approved Seattle Genetics' ADC drug Adcetris for Hodgkin's lymphoma. Adcetris is intended for Hodgkin's lymphoma patients who cannot receive an autologous stem cell transplant or for those whose disease has progressed even after a transplant or two rounds of chemotherapy treatment.
The antibody used in Adcetris binds to a protein on malignant cells called CD30. It showed little clinical effect when tested alone. But when linked to a toxin, it shrank tumors in 73 percent of those with Hodgkin's lymphoma. The chemo used here is called MMAE and the linker is Valine-Citruline.
Both the linker and cell-killing agents are synthetic, therefore the ADC technology is readily scalable. This represents an improvement over natural product drug systems that are typically more challenging and expensive to produce.
T-DM1 consists of Herceptin, Roche's wonder drug for many years for breast cancer, plus a chemo called DM1 and a linker called Thioether. The chemo and the linker are supplied by Immunogen. The results were reported in May 2012 at the ASCO meeting in Chicago.
In a trial of 991 patients, the new Genentech drug caused tumors to shrink in more patients, kept them in remission longer, and caused fewer significant side effects than the combo treatment of GlaxoSmithKline's (NYSE:GSK) Tykerb and Xeloda chemotherapy.
65.4 percent of the T-DM1 patients were still alive after two years of follow-up, compared with 47.5 percent of patients on the combo. The findings were encouraging enough for Genentech to submit an application for FDA approval.
Dietmar Berger, Genentech's vice president of clinical oncology, stated: "All of it validates what we've seen before. The clear surprise was the extent of the 2-year survival difference, which I believe is outstanding."
Genentech had previously sought FDA approval for T-DM1 on the basis of smaller studies and was turned down because regulators wanted an opportunity to review a data package that included results from the Emilia study.
Like any drug, though, T-DM1 comes with side effects. About 12.9 percent of patients on the new Genentech treatment had moderate-to-severe depletion of their clot-forming platelet blood cells, compared with 0.2 percent in the control group.
On the other hand, the new drug caused fewer cases of diarrhea, hand/foot rashes, and vomiting than the other treatments.
Genentech is also conducting a pivotal study called Marianne, which is investigating whether a combo of T-DM1 and another new Genentech antibody called Perjeta could be even more effective in HER2-positive breast cancer patients receiving their first round of treatment.
Both Seattle Genetics and Immunogen have numerous collaborating agreements with major pharmas.
Seattle Genetics has deals with Pfizer, Abbott Laboratories (NYSE:ABT), Celldex Therapeutics, Inc. (NASDAQ:CLDX), Genentech, Bayer, Astellas Pharma Inc. (OTCPK:ALPMY), Daiichi Sankyo (OTCPK:DSKYF), and Millenium Hldg Grp (MNHG).
This idea of antibody-drug conjugates is being pursued by a number of companies from small start-ups to pharma giants. Celtic Therapeutics, an investment firm, has recently committed $50 million to creating a new company, ADC Therapeutics, to develop antibody-drug conjugates. About 25 such drugs from a variety of companies are in clinical trials. Genentech alone has eight drugs besides T-DM1 in clinical trials, and another 17 in earlier stages of development.
In this story, everybody is a winner. Thanks to the success of the trastuzumab emtansine ((T-DM1)) trials, and assuming FDA approval (which is very likely now), Roche/Genentech will solidify their position as a leading force in the breast cancer field.
The two companies providing ADC technology, Seattle Genetics and Immunogen, are clearly promising. Seattle Genetics's drug Adcetris has been approved for Hodgkin's lymphoma patients who failed on other therapies. For now, this market is narrow.
Hodgkin's lymphoma will be diagnosed in an estimated 9,060 U.S. patients in 2012 and about 1,190 people will die from it, according to the National Cancer Institute. But the company is running trials to extend the drug's indication to other lymphomas and first line treatments. When that happens, hopefully in a few years, Adcetris could become a billion-dollar megaseller, like Roche's Rituxan. Analysts project Adcetris to reach $437 million in sales in 2015, according to a Bloomberg survey.
Immunogen does not have an approved drug and consequently no income from drug sales. But its income from the various collaborative deals will grow 150 percent in the year ending June 2013, to $41.4 million, according to Thomson Financial Network. The company is also running trials of its own proprietary drugs, the ovarian cancer drug IMGN853 and a drug for non-Hodgkin's lymphoma, IMGN529. The company is also in the process of raising $100 million from a secondary stock offering.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.