The past 12 months have been anything but boring for Micromet’s shareholders (NASDAQ:MITI). Last summer, Micromet’s stock climbed to $7 following excellent clinical data (discussed here) and a landmark publication in Science Magazine (discussed here), but since then the company has lost half of its value. Volatile trading is quite standard for small, cash burning biotechnology companies, however, Micromet’s case was particularly frustrating.
Micromet invented a new class of antibodies it calls BiTE (Bispecific T-Cell Engager) antibodies. Unlike conventional antibodies, BiTE antibodies bind two targets; the first target is presented on a cancer cell and the second is presented on an immune cell. The simultaneous binding of both cells by the BiTE antibody can redirect the immune cell to attack the cancer cell, thus exploiting the body’s natural immune mechanisms to fight cancer. Conceptually, a BiTE antibody is similar to cancer vaccines, which also aim at producing an immune response against tumors. Despite a history of failures in the field of immunostimulating antibodies, it looks like Micromet has found the right formula.
The company’s lead drug, blinatumumab (MT103), was being developed in collaboration with Medimmune (MEDI) since 2003. On the clinical front, 2008 was an excellent year. Micromet published a follow up from a study of blinatumumab in Non Hodgkin’s Lymphoma (NHL) which showed that previously observed responses were durable, lasting over a year in some cases. Micromet also published preliminary, yet exciting results from a phase II trial in a rare blood cancer that might create a fast route to market. Another milestone achieved by the company was the initiation of a phase I trial for a second BiTE antibody, MT110, in solid tumors.
Mixed signals from Medimmune
Blinatumumab started 2009 with all the right ingredients: Clinical proof of concept in two different indications, a clear and fast path to regulatory approval and a strong partner. There were some doubts with respect to Medimmune’s commitment to the program after the company postponed the initiation of a phase II trial in the US for over a year, but as long as Medimmune kept picking up the bill, nobody was complaining. In January, Micromet announced a new lucrative collaboration with Bayer-Schering (OTC:BYERF) for an undisclosed BiTE antibody. In conjunction with the Medimmune partnership, this deal was viewed as a testament for the interest in BiTE antibodies across the industry. But shortly after that, the doubts regarding Medimmune’s commitment proved to be right.
Last month, Micromet announced that Medimmune decided to return the North American rights for blinatumumab, leaving Micromet responsible for global development of the drug. Although Medimmune did leave the door open for future involvement in the blinatumumab program by retaining an option to reacquire the commercialization rights for North America upon first marketing approval, it was clearly no longer interested in the drug. Medimmune’s decision had serious financial implications, as it left Micromet the sole sponsor of the development program, at a point where development costs are expected to climb sharply. In addition, the decision made investors more cautious toward blinatumumab.
Whenever a large partner chooses to opt out of a joint development program at such a critical stage, it rightfully raises a lot of concern with respect to the program’s prospects. The basic rationale is that if a large company which is intimately familiar with the project is not interested, there must be a reason for its decision. Since so far, the clinical data for blinatumumab was very encouraging, many investors feared that Medimmune knew something they did not. The termination was announced in March, so the decision was probably made several months beforehand. Bearing in mind that Micromet presented an update from the two trials last December, the decision does not seem to be data driven. On the last earnings call, Micromet’s CEO, Christian Itin, addressed this issue in the most direct manner by stating that Medimmune’s decision could not have been based on unpublished data simply because all the data had already been published.
So what could have guided Medimmune other than clinical data?
A possible explanation might be a disagreement between the two companies over the development path for blinatumumab. Micromet’s wanted to get the drug to market as quickly as possible by pursuing a niche indication, whereas Medimmune might have wanted to focus on larger indications. On the other hand, as part of AstraZeneca, Medimmune could have easily supported the development of blinatumumab in additional indications, so the decision could be part of a pipeline prioritization process, following the 2007 acquisition of Medimmune. As previously mentioned, AstraZeneca never seemed too excited about blinatumumab in the first place.
Infinity Pharmaceuticals (NASDAQ:INFI), which was also developing its lead agent, IPI-504, in collaboration with Medimmune, found itself in a similar position. Similarly to Micromet, Infinity chose to pursue a small indication for approval and use it as a stepping stone for label expansion. Several months ago, while the drug was in phase III trial, Medimmune returned the rights for IPI-504 to Infinity, this time without an opt-in right but with double digit royalties on future sales. Last week, Infinity halted the phase III trial due to safety issues, but it is highly unlikely that Medimmune’s decision was related to this event, as both companies were blinded from the results until the safety review that took place last week.
Looking at the bright side, Medimmune still seems to be interested in Micromet’s technology. The collaboration between the companies, which dates back to 2003, entails several preclinical programs, including a recently initiated program for an undisclosed target expressed on blood cancers. According to Medimmune’s web site, it views this program as a replacement for blinatumumab.
It is important to remember that Medimmune is evaluating technologies that may compete with BiTE, such as cancer vaccines and Seattle Genetics’ (NASDAQ:SGEN) antibody drug conjugate (ADC) technology. In some cases, Medimmune is evaluating more than one technology for the same target. For example, Medimmune has two agents that target EphA2, MEDI-547, which is an ADC, and MEDI-544 which is a BiTE antibody. In this case, Medimmune favored Seattle Genetics’ technology and a phase I clinical trial for MEDI-547 is expected to begin imminently. Micromet’s next shot with Medimmune is MT111, a BiTE antibody for solid tumors. MT111 is expected to enter the clinic next year, and according to Micromet, the collaboration is on track to achieve this goal.
Now that Micromet has global rights for blinatumumab, it will strive for a fast approval in Acute Lymphoblastic Leukemia (ALL). The lack of treatment options for ALL patients, coupled with the relatively low prevalence of the disease make this program an ideal fast route to market, with a possible commercial launch already in 2012.
Blinatumumab for ALL
Last summer, Micromet initiated a phase II study for the evaluation of blinatumumab in acute lymphoblastic leukemia (ALL). Unlike most cancers, ALL occurs in children as well as adults and is considered to be the most common pediatric cancer in the US. Today, there are treatments that can cure pediatric ALL with a very high success rate, however, adult ALL, especially in mid-aged and older patients still remains a highly unmet medical need. In the US, approximately 1500 adults succumb to the disease every year.
Micromet launched the phase II ALL study in cooperation with the German ALL study group (GMALL), one of the world’s leading ALL research groups. This trial has a unique design, as blinatumumab is not given as a standalone treatment but following conventional treatments in patients who responded but are still at high risk of relapse.
Another unique characteristic is the study’s primary endpoint – The presence of disease remnants in the bone marrow. Despite the ability to clear tumors from the blood in most patients with standard treatments, many ALL patients eventually relapse due a small amount of tumor cells that remain in the bone marrow. The presence of these cells, which is referred to as minimal residual disease (MRD), has become an important parameter for assessing patient prognosis after multiple studies have shown a strong correlation between MRD presence and early relapse. Because MRD is assessed by a very accurate technology in a quantitative manner, the results are expected to be objective and reliable. The trial was therefore designed to evaluate blinatumumab’s ability to clean the bone marrows of patients in the most stringent and objective manner.
The study was launched in June 2008 and already managed to produce compelling read out at last year’s ASH conference in December. Of four evaluable patients who entered the trial with MRD positive status, three were converted to MRD negative. These results are highly encouraging, especially when considering the fact that the patients were not eligible for stem cell transplant, the last resort for ALL. Obviously, the ultimate goal is longer remission and survival, which were still premature to assess at the time, but more light will be shed on that issue in June, when Micromet presents an update from the trial.
Unfortunately, the majority of MRD positive patients typically experience a relapse in 6 months. By June, Micromet will have a 10-12 month follow up on the three responders, so if they remain in remission it would be regarded as a positive sign. In addition, the data set will include additional MRD positive patients. Any signs of activity in these patients would validate blinatumumab’s ability to wipe out cancer residues from the bone marrow. Judging by the expectation build-up by the company, and the higher than expected accrual rate, it seems that blinatumumab continues to show some sort of activity.
The opportunity in ALL
Micromet views the ALL market as an opportunity to get blinatumumab approved in the quickest and cheapest manner. In developed nations, approximately 13 thousand people are diagnosed with ALL each year whereas the annual mortality is approximately 4,000.
Because the target blinatumumab binds (CD19) is typically expressed only on B cell ALL which account for ~75% of cases, the actual target market is just under 10 thousand cases per year. In the current study, Micromet is accruing patients who have a good response to chemotherapy regimens, but are still MRD positive ( i.e have a small amount of cancer cells in their bone marrow). MRD status started to get included in large clinical trials only recently, so from the few available datasets, it seems that approximately one third of patients are MRD positive after initial therapy. Thus, the target market further shrinks to just over 3000 patients per year.
MRD positive patients are considered a high risk group, so physicians may want to treat them with stem cell transplant. Nevertheless, in many cases stem cell transplant is not an option due to the increased risk associated with the procedure (up to 30% mortality rate), the lack of a suitable donor and patient’s willingness to undergo the procedure. In addition, studies have shown that in many cases, stem cell transplant does not lead to a real benefit. Micromet is currently focusing on those patients who are MRD+ but are not eligible for stem cell transplant. It is hard to estimate exactly how many patients fall under this category, but the number is probably in the 1000-2000 range. Assuming a cost of $45,000 per patient, the near term market opportunity for blinatumumab is approximately $70M per year.
So why is Micromet going through all this trouble for a tiny market of less than $100M?
The company’s hopes to first get blinatumumab approved in a distinct, well selected group of patients, and use this approval for label expansion and clinical proof of concept for the BiTE platform. This strategy seems reasonable given the company’s limited financial resources and the novelty of its technology.
From a business standpoint, even if initial sales are modest, the revenue stream can be used to set up a small sales force in Europe, which could support expansion to future indications. In addition, the initial proof of concept would substantially increase the value of blinatumumab in the eyes of potential partners.
Blinatumumab’s label in ALL could also be expanded to additional ALL patients, providing the drug prolongs survival in the original patient population. Expansion to the relapsed/refractory setting or incorporation of blinatumumab’s into first line setting can increase market opportunity to $450M annually. Nevertheless, the real opportunity for blinatumumab lies within Non Hodgkin’s Lymphoma (NHL), a group of blood cancers with a prevalence of more than 160 thousand cases per year in developed countries. To put that in context, the NHL market is responsible for for the majority of Rituxan sales, which were $5 billion last year.
NHL can be divided into several subtypes, and Micromet believes that blinatumumab’s ability to purge the bone marrow of cancer cells could be a gateway to some aggressive subtypes of NHL, such as DLBCL and Mantle cell lymphoma. In the phase I NHL study, blinatumumab demonstrated a sharp decrease in the amount of cancer cells in the bone marrow, including five cases of complete bone marrow clearance. The company expects to start a phase II trial in an aggressive subtype of NHL, probably Mantle cell lymphoma, in the second half of 2009.