Small-Cap Adjuvants For Cancer Treatment

Includes: AGEN, CASC, ONCS
by: The Swiss Trader

Cancer treatment advances in the last decade have been significant and offer more hope in curing the disease than in any other point in our history. ASCO 2012 was buzzing with clinical data from the immunotherapy approach to fighting the disease as made famous by Dendreon's Provenge in 2010 - the first FDA-approved vaccine for fighting cancer. Hormone therapy (often used for prostate cancer), targeted chemotherapy via antibody-drug conjugates, and a host of other advancements offer more options than ever for patients fighting many manifestations of the dreadful disease. However, with all these advancements something is beginning to be painfully clear for at least the interim; there may be no current magic bullet for fighting many cancers, but instead physicians' best weapons may involve a combination approach to combating the disease in its many forms.

When first diagnosed with cancer, patients may initially receive treatments termed frontline, first-line, or primary therapies. These are treatments such as resection (surgery), radiotherapy, or chemotherapy that are aggressive and serve to fight the tumors or cancer cells directly and may eliminate many or all the cancer cells targeted. However, these treatments may or may not offer a permanent solution to the cancer as many of these may miss marginal and/or metastasized cancer cells, and often have severe side effects such as scarring/disfigurement for surgery and a host of ailments due to the cytotoxic nature of chemotherapy and radiotherapy treatments. Even the newer immunotherapy and antibody-drug conjugates ((ADCs)) that are being developed to follow the frontline treatments may need additional help to maximize their efficacies. To complement or supplement these newer immunotherapy and ADCs, companies developing these therapies may utilize adjuvants as part of the therapy to increase the efficacy by helping maximize the immune response.

For investors, successful adjuvant therapies can offer tremendous upside potential as these may be utilized in a host of indications and offer the possibility of being part of the standard of care regimen. Following are some small pharmas to consider that have clinical-stage candidates that are being developed in the adjuvant cancer therapy setting. The indications targeted are varied and offer a diversified investment approach for consideration. Highlighted are three promising cancer immunotherapy adjuvants currently in trials: QS-21 Stimulon, IL-12, and fully synthetic PET Lipid A (penta erythritol lipid A).

A Natural Plant Extract? QS-21 Stimulon Adjuvant:

Agenus, Inc. (NASDAQ:AGEN) is likely the reigning small-cap king of adjuvants with QS-21 Stimulon leading the charge. QS-21 is a saponin extracted from the bark of the Soapbark tree native to Chile. It is the focus of a range of partnerships and trials (15 vaccine programs per the last company update) ongoing with indications including malaria, melanoma, shingles, Alzheimer's, genital herpes, and a host of others. Probably, the company's most exciting data comes from a completed phase 3 trial with GlaxoSmithKline's (NYSE:GSK) RTS,S using QS-21 as an adjuvant against malaria in 6,000 children in Africa, aged 5-17 months. Results indicated a significant "reduction in risk" against clinical and severe malaria by 56% and 47%, respectively. A second phase 3 trial is underway with data expected in Q4 of this year.

Along the cancer front, QS-21 is being used by GlaxoSmithKline with its MAGE-A3 Cl immunotherapy drug in phase 3 trials for patients with resected melanoma and patients with non-small cell lung cancer (NSCLC), both with results due out in 2013. With licensing rights and royalties on the line, QS-21 has much hope resting on it. Success in the phase 3 trials for the cancer indications will be a huge catalyst for the company, but its future appears to be secure already in at least the malaria indication with over 800,000 people dying from the disease annually - a huge market potential.

Adjuvant IL-12 via Plasmid DNA Construct Administered by Electroporation:

If Agenus deserves the title “king of the adjuvants” due to its promising and delivering pipeline with multiple indications targeted, then OncoSec Medical (NASDAQ:ONCS) takes the prize as having the most novel approach for administering an adjuvant. OncoSec’s electroporation administration device utilizes a short duration electric pulse induced across 6 electrodes (needles) with the targeted cancer tumor or tissue in between. This stimulation causes a dramatic but temporary increase in the affected cells’ membrane porosity which allows an approximate 1000-fold increase in uptake of previously injected immunotherapy agent, in this case the IL-12 plasmid DNA construct. Once the electrical stimulation is removed, the cells’ membranes seal back up and trap the agent inside the cells. The cells are then instructed to produce the IL-12 protein, which induces an immune response from the patient’s body via stimulation, proliferation, and maturation of both cytotoxic T-cells and NK-cells, and the production of IFN-gamma. This allows the immune system to recognize those cancer cells/tumors as foreign, and destroy them accordingly. With this thought in mind, the mechanism fits the definition of “immune adjuvant” according to the National Cancer Institute in which it states an immune adjuvant is “A drug that stimulates the immune system to respond to disease”. Based on this definition, the platform is really an adjuvant to the immune system as it provides IL-12 expressed tissues/tumors for the immune system to target that was not there before the treatment.

OncoSec's electroporation administration device utilizes a short duration electric pulse induced across 6 electrodes (needles) with the targeted cancer tumor or tissue in between. This stimulation causes a dramatic but temporary increase in the affected cells' membrane porosity which allows an approximate 1000-fold increase in uptake of previously injected immunotherapy agent, in this case the IL-12 plasmid DNA construct. Once the electrical stimulation is removed, the cells' membranes seal back up and trap the agent inside the cells.

The targeted immunotherapy approach utilized by OncoSec is particularly important for utilizing IL-12. Though an effective adjuvant, there are toxicity issues associated with the agent when it is simply injected into cancerous tumors or tissue. However, these toxicities are minimized while retaining efficacy by reducing systemic exposure to the agent. This is accomplished by injecting the IL-12 plasmid DNA constructs at the site needed and then applying the electrical current, and subsequently sealing much of the agent inside the targeted tissue cells. The result appears to be the best of both worlds with a much better safety profile and retention of the efficacy as indicated by the immune response.

Much will be revealed in 2012 for the company's ElectroImmunotherapy program with catalysts coming in the form of phase 2 interim data for metastatic melanoma, phase 2 interim data for Merkel cell carcinoma, and enrollment initiation for a phase 2 trial for the treatment of cutaneous T-cell lymphoma. The company is also developing its ElectroChemotherapy program utilizing bleomycin as its chemotherapy agent. The central focus of that program is the head and neck cancer indication with two completed phase 3 trials under its belt, with data presented July 22-24 offering much hope for patients and much upside for investors.

Fully Synthetic PET Lipid A (Penta ErythriTol lipid A) Toll Like Receptor 4 (TLR4):

Oncothyreon Inc. (ONTY) made headlines in October of 2011 via an announced collaboration with Merck Serono to develop and market oral multiple sclerosis candidate, ONO-4641, and co-develop and co-market cancer immunotherapy candidate, Stimuvax. The deal netted Oncothyreon an upfront payment of $19 million for ONO-4641 in which Merck Serono acquired worldwide rights excluding Japan, Korea, and Taiwan, with additional milestone payments pending. It also netted Oncothyreon an upfront payment of $6 million for Stimuvax, while sharing upcoming development and marketing expenses.

Stimuvax is currently in two phase 3 trials: the global START trial for patients with inoperable stage 3 non-small cell lung cancer (NSCLC) and the INSPIRE trial for Asian patients with NSCLC. A 171 patient phase 2 trial with Stimuvax for NSCLC yielded a median survival for that subset of patients with Stage 3B NSCLC of 30.6 months for patients treated with Stimuvax with standard of care versus 13.3 months for the control group treated with standard of care only. Additional data from the earlier trials on Stimuvax may be seen on the company's website.

With much of the company's attention due to its early successes in Stimuvax and ONO-4641, hopes are high for the company's future. However, a hidden gem in the company's pipeline may begin grabbing more of the spotlight in the future as its development progresses. Oncothyreon has developed a proprietary adjuvant that it is currently keeping in-house, synthetic PET Lipid A, a novel toll like receptor 4 (TLR4) agonist. Used as an adjuvant in a preclinical trial of ONT-10 in mice expressing the human MUC-1, results indicated that ONT-10, with the proprietary PET Lipid A, had enhanced potency relative to the commonly used monophosphoryl lipid A (MPL) in ONT-25.

The ONT-10/PET Lipid A team specifically targeted tumors expressing MUC1 and blocked the growth of two tumor types with the targeted expression. The pre-clinical trial concluded superior anti-tumor activity in WT (wild-type) mice relative to non-glycosylated MUC1 peptide vaccine (ONT-25) with up to 99% tumor control and high proportion of tumor free animals at end of study. The poster presented at the American Association for Cancer Research Conference in 2011 gives more details on the trial results and the vaccine's working mechanisms.

Oncothyreon initiated a phase 1 trial on March 14th of this year investigating the safety and immunogenicity of ONT-10 in patients with cancers expressing MUC1 with a host of cancer types to be included: breast, NSCLC, ovarian, colorectal, prostate, pancreatic, gastric, and others. In the two-part trial, Oncothyreon will evaluate ONT-10's ability to cause both humoral and cellular immune response. Promising results in this early-stage but real-world trial could be a huge catalyst for the company, as not only would it have a drug with multiple indications targeted in the future, but it would have a novel adjuvant that it could chose to license out for additional revenue or to tempt Big Pharma suitors for additional partnerships or acquisition purposes.

Hope is Still Coming, But Much is Already Here

Above, we've seen three solid examples of adjuvant immunotherapy approaches utilized to fight cancers. Although the immunotherapy approach is rapidly gaining validity, the use of adjuvants will likely be a necessity in order to maximize both safety and efficacy profiles. As the cancer vaccines are evaluated more deeply, adjuvants will likely be at the center of the clinicals and may ultimately decide the fate of the programs.

This article is only intended to "scratch the surface" of adjuvant use in fighting cancer. There are many approaches to investing in these companies with successfully or potentially successful adjuvants. These companies may choose to develop these therapies through to regulatory approval if the candidates are proven effective and market the therapy combinations themselves or through partnerships. At that point, they may also continue developing them in-house or may choose to license out the technology to others as Oncothyreon has done with Stimuvax. Investors are advised to read company updates carefully as any late-stage trials show signs of success to ascertain what plans the companies have as regulatory approvals (or rejections) approach and how they intend to manufacture and market the successful therapies.

Each mentioned company has its strong points and risks. The market capitalizations for Agenus, OncoSec, and Oncothyreon are $103 million, $18 million, and $233 million, respectively. Investors must ascertain which values are appropriate with their current pipeline successes, long-term potential of their therapies, and company financial situations. The presented companies represent diverse candidates with none of the "eggs in one basket" mentality that often plagues these low market capitalization development-phase biotechs.

Agenus's 15 vaccine programs are already showing late-stage success for malaria, and melanoma data is coming in soon which may or may not validate their QS-21's adjuvant for cancer indications as well. Their list of partners is indicative of the faith put into the company's program and is a result of a successful therapy program and solid management. With about $24.6 million in cash and equivalents on March 31st, the company is in decent financial condition depending on cash burn.

OncoSec has the smallest market capitalization of the three and is also the youngest of these three small pharma. However, it does have a phase 3 trial in ElectroChemotherapy utilizing bleomycin as the agent of choice against head and neck cancer under its belt with solid data reported earlier this week. The company also has additional catalysts from other indications in trials already underway via two phase 2 trials in its ElectroImmunotherapy program expecting interim data in 4Q 2012, and another set to begin enrollment this year. With no large pharma partnerships announced as of yet, and the likely poorest financial condition of the three, the company does have a $7.75 million offering from late March which resulted in a stock price drop giving new investors a good entry point if the company's trials continue proving successful. The offering's effectiveness was seen with $6.6 million in cash and equivalents still being available on April 30th.

With an impressive pipeline, Oncothyreon is showing late-stage success in Stimuvax with phase 3 trials for NSCLC and advanced/inoperable NSCLC underway, and possible hope coming via early-stage ONT-10 with the company's proprietary adjuvant. Its cash position is stable, with about $12 million in cash and equivalents as of March 31st. Solid ONT-10 data could prove to be a positive catalyst for the company with minimal downside if the trial fails to impressive as the therapy is in very early clinicals.

To better ascertain risks, investors should consider current cash conditions of each, cash burn rate, and upside/downside potential for success or failure in their current pipelines. Diversity of pipelines is evident in Agenus and Oncothyreon. However, the multiple indications targeted by OncoSec and the flexibility of the electroporation platforms should also be considered. Currently, the ElectroImmunotherapy platform is based on IL-12 and the ElectroChemotherapy platform is based on bleomycin. However, these agents may be substituted for a host of others that, in the author's opinion, should be investigated for diversification purposes regardless of the degrees of success in the company's current trials.

Much hope is now being seen in the fight against cancer. The earlier thoughts of a "magic bullet" to fight cancer are now changing over to a more teamwork type of mentality with differing adjuvants providing potential for increases in efficacy and improved safety profiles providing healthcare providers with more tools in their daily fight against cancer.

Disclosure: I am long ONCS.

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