Cel-Sci Is A Leader In The I-O Class Of Cancer Therapies

| About: Cel-Sci Corporation (CVM)
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Tumor cells that refuse to die have led researchers to develop immuno-oncology drugs, a brand new class, with Big Pharma participation.

Cel-Sci Corporation has been ahead of the game for years with Multikine, now in advanced clinical trials for head and neck cancer.

Smaller biotechs are entering the race, with varied results.

Cel-Sci may face deep-pocketed competition, and must surmount clinical and regulatory hurdles.

If successful, a huge global market awaits Cel-Sci's solution to disfiguring surgery.

Tumor cells, tending to persist after treatment, lead to remission and have been a bane to cancer researchers and doctors for decades. Only recently, immuno-oncology, labeled "I-O" first by Bristol-Myers Squibb Co. (NYSE:BMY), has emerged to become a new class of cancer medicines that may someday take a meaningful place alongside chemotherapy, surgery, and radiation. Investors associate cancer immunotherapy with forerunner Dendreon Corporation (NASDAQ:DNDN), whose PROVENGE vaccine shocked health plans with its exorbitant price that only extended life a few months. I-O, in its new form, has sparked a pharmaceutical rivalry reminiscent of the antihypertensive race of the 1990s. Central roles in I-O are occupied by Merck & Co. (NYSE:MRK), Bristol-Myers, AstraZeneca PLC (NYSE:AZN) and Roche Holding AG (OTCQX:RHHBY) in various stages of clinical trials, but with a common scientific theme - the inhibition of programmed cell death proteins, or PD-1 and PD-L1, that block immune responses to allow tumor proliferation.

Cel-Sci Corporation (NYSEMKT:CVM), with its flagship drug Multikine, has been ahead of the pack, investigating the I-O space for many years and currently enrolling a global Phase III trial in head and neck cancer. Multikine is a leukocyte interleukin injection, a cocktail of proteins and cells designed to augment the human immune system in fighting tumor cell infiltration into tissue. In studies as early as 2003, treatment with Multikine in patients with primary tumors of the head and neck proved beneficial by stimulating T-cell migration into cancer "nests", enabling the immune system to elicit an anti-tumor response before tumor recurrence.

Decision Resources, data provider to the biopharmaceutical industry, predicts the I-O market will grow to almost $9 billion worldwide by 2022, from $1.1 billion in 2012, dominated by only a handful of firms. Small wonder four of the top Big Pharma companies are in what has been described by analysts and journalists as a race to reach FDA approval first.

Merck, AstraZeneca, Bristol-Myers and Roche have all developed drugs in the PD-1 or PD-L1 class to treat lung cancer, with potential indications in melanoma and kidney. The method of action sounds like science fiction - PD proteins allegedly let tumors disguise themselves from the immune system. Inhibiting these proteins from their receptor targets allows biochemical components to recognize the tumor cells as invaders, and kill them as they would any virus or bacteria. Whether the immune response is sustainable against constantly mutating tumor cancer cells has not yet been proven.

Boosting its position in the I-O contest, this past spring, AstraZeneca began a Phase III trial for MEDI4736, acquired with its purchase of MedImmune in 2007, for non-small cell lung carcinoma (NSCLC), the first of its kind. Around the same time, MedImmune joined forces with Incyte Corporation (NASDAQ:INCY) to combine their biochemical potions to erect immune responses to different tumor types.

Bristol-Myers has succeeded in being first to approval: its nivolumab will be available for sale in Japan, and it recently formed a pact with Ono Pharmaceutical Co. (OTC:OPHLF) to market I-O therapies in select Pacific Rim countries upon commercialization of nivolumab and Yervoy, Bristol-Myers' monoclonal antibody for melanoma, gained in the acquisition of Medarex. Working feverishly against big competitors, Bristol-Myers also cut a $350 million deal with Five Prime Therapeutics (NASDAQ:FPRX) for I-O drug discovery.

Merck's I-O pembrolizumab was recently submitted as a rolling biologic license application (BLA) for melanoma, viewed as a coup among its rivals. The drug is fast-tracked at the FDA, and has been given the desired "breakthrough" designation because clinical trials show the possibility of extending life for one year. Merck's intent is to gain approval for pembrolizumab for melanoma patients who have failed Bristol-Myers' Yervoy, a pharmaceutical nose-thumbing to a fellow drug firm developing I-O therapies. Marking its place in the race, Merck began collaborating with foreign-based Ablynx NV (OTCPK:ABLYF) for joint development of I-O drugs in a deal worth up to $2.3 billion. Pembrolizumab is currently enrolled in 10 clinical trials, a total of 4,000 patients, for cancers of the bladder, stomach, kidney, colon and breast, including some hematological disorders.

Roche, known more for its diagnostic tests and services, bought its way into the I-O field with its 2009 acquisition of Genentech's deep knowledge of making monoclonal antibodies. Toiling behind the curve of its drug company counterparts, Roche's MPDL3280A only recently publicized results of a Phase I study that shrank tumors in 43% of people with refractory metastatic bladder cancer.

The drug is also tested in melanoma and kidney. Roche, like Merck, has been granted the FDA's breakthrough therapy designation.

Cel-Sci has a handful of smaller competitors; some promising, others not. Celldex Therapeutics (NASDAQ:CLDX) has a potential I-O in a late-stage study for brain cancer that is designed to help T-cells better recognize tumors. It caught the attention of Bristol-Myers, who wants to mix Celldex's varlilumab with its nivolumab in a Phase I/II trial on various solid tumor cancers. The technology of NewLink Genetics (NASDAQ:NLNK) looks like voodoo science to me - an immunotherapy platform called HyperAcute is intended to stimulate the immune system via cancer cell lines modified to express a carbohydrate, basically a starch, to attack tumors. Yet, the company is in two Phase III trials for pancreatic cancer. Inovio Pharmaceuticals (NYSEMKT:INO) recently announced positive Phase II results with its I-O for cervical neoplasia related to human papillomavirus (HPV), an area Cel-Sci investigates, but treatment is for precancerous lesions, and the company has met with some controversy whether cancer itself can be addressed.

Two additional firms are particularly troubled. Peregrine Pharmaceuticals' (PPHM) lead drug bavituximab, a monoclonal antibody turned I-O, is in Phase III for NSCLC, but critics question improvements following lackluster and unreliable Phase II data and wonder why more robust statistical information is not provided. The worst in the I-O hopeful category is Northwest Biotherapeutics (OTC:NWBO), in Phase III with DCVax for brain, ovarian and prostate cancer. Widespread controversy not only exists about its choice of clinical endpoints and their acceptance by regulators, but also the dissemination of information, for which it was chastised by renowned cancer center MD Anderson for making unjustified claims related to DCVax.

Yet, these companies carry much higher valuations than Cel-Sci, despite being neck-in-neck along in clinical trial progress, as the table below illustrates. Their separate issues apparently do not figure into investor opinion. However, disparity in value makes for opportunity, especially in this new class of drugs that has captured medical attention.



Market Cap

Disease Indication and Trial Phase

Celldex Therapeutics


$1.35 billion

Glioblastoma - Phase 3

NewLink Genetics


$691.3 million

Pancreatic Cancer - Phase 3

Inovio Pharmaceuticals


$539.6 million

Cervical Dysplasia HPV - Phase 2

Peregrine Pharmaceuticals


$301.1 million

Non-small Cell Lung Cancer - Phase 3

Northwest Biotherapeutics


$385.5 million

Brain Cancer - Phase 3

Cel-Sci Corp.


$72.57 million

Head and Neck Cancer - Phase 3

Smaller biotechs that have traditionally adopted other medical modalities to treat cancer have been drawn by I-O's promise. Recently, Celsion Corporation (NASDAQ:CLSN) acquired privately held EGEN, Inc., developer of an immunotherapeutic using a small circle of DNA called a plasmid that, combined with interleukin (IL)-12 and a chemotherapeutic agent wrapped inside a nano-sized material, can be directed to tumors to induce remission.

Big Pharma's approach wants to combine I-Os with other cancer remedies or treat patients that have failed prior therapy, but Cel-Sci seeks to use Multikine first, before any compromise of the immune system takes hold, to create a greater anti-tumor response. The company has undertaken the huge task of enrolling the largest Phase III for an I-O, in head and neck cancer (a disease with very poor prognosis), with the goal of petitioning the FDA and other agencies to approve Multikine as a first-line treatment. Besides its potential benefit as the first medicine given before surgery, radiation or chemotherapy, Multikine has been developed to be an "off-the-shelf" drug, much easier to manufacture large-scale. Making monoclonal antibodies (the basis for I-Os) is tedious business, and batch-to-batch consistency is an ever-present challenge.

There are side effects to consider. Drugs that stimulate the immune system run the risk of damaging healthy tissue or triggering autoimmunity. Bristol-Myers' Yervoy may well extend a melanoma patient's life by four months, but colitis can result. Merck's leading I-O caused fatigue in 30% of subjects, rash and itching in another 21%. Patients developed inflammation of the lungs. Roche's drug fared better, although 12.6% of patients had more serious Grade 3 or 4 side effects, including fatigue, shortness of breath and vomiting. By contrast, Multikine's trials have shown no severe adverse effects, with events limited to pain and swelling at the injection site, headache and nausea.

Cel-Sci's change in contract research organizations (CRO) is resulting in faster enrollment: the company announced last month's total patient enrollment of 232 people, more than one-quarter towards its goal of 880 by the end of next year. Critics complain that Cel-Sci cannot meet its target, but do not take into consideration acceleration of enrollment made possible by the number of countries and organizations for which trials have been and continue to be approved, with multiple sites available in each. In the past three months alone, Turkey, Austria, Sri Lanka, France and the UK have come on board, totaling 17 countries in all. This is truly a global trial - sites also include those in Canada, India, Israel, Poland, Hungary, Russia, Taiwan, Ukraine, Serbia, Croatia and Bosnia and Herzegovina.

In the US, Cel-Sci gained approval from Detroit's Henry Ford Health System, one of the nation's largest group practices, with over 1,200 doctors in 40 specialties. This followed 21st Century Oncology of Greenville, North Carolina, with 166 treatment centers in 16 states and six Latin American countries. My question is why would management, by keeping a running count of enrollees, hold itself up to public embarrassment and investor scorn if it did not fully expect to reach its desired enrollee numbers?

No doubt, Cel-Sci has a long road ahead, and a pivotal trial of this magnitude may quickly burn through its remaining cash, forcing it to seek dilutive financing. Its own clinical and regulatory risks notwithstanding, Cel-Sci faces upcoming competition from AstraZeneca, Merck and Bristol-Myers, who plan studies in head and neck cancer, big firms with deep pockets. The I-O arena is also drawing critics: oncologists have gone on-record urging caution concerning the results being churned out by Big Pharma, citing small sample sizes, lack of control groups, efficacy in only a minority of cancer patients and bad side effects. Particularly when using two I-Os in combination for best results, a trend seen recently.

Regardless of risks, Cel-Sci is well-positioned to enter the I-O race. Head and neck cancer, including disease of the larynx, thyroid, salivary glands and nasal passages, account for up to 5% of all cancers in the US and cause 12,000 deaths per year, for a total market of slightly over $3 billion. Because of its prominent, visible position on the body, better agents are needed to reduce the size of tumors and limit the amount of disfiguring surgery. Cel-Sci is ahead of Big Pharma in filling this medical need, and given its undervalued status compared to competitors large and small, presents a golden opportunity to take advantage of the budding I-O industry.

Disclosure: The author is long CVM, CLSN. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it. The author has no business relationship with any company whose stock is mentioned in this article.

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