YM's Positive Results Have Incyte Investors Worried

| About: Gilead Sciences, (GILD)
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YM BioSciences (YMI) is the big winner emerging from the American Society of Hematology annual meeting. Positive phase I/II data presented for its Janus-kinase-1/2 (Jak1/2) inhibitor CYT387 in myelofibrosis impressed enough to drive shares up 15% to $1.69 on Tuesday and damage likely competitor Incyte (NASDAQ:INCY).

Pharmacyclics (NASDAQ:PCYC) also bounced back from profit-taking following its licensing deal with Johnson & Johnson (NYSE:JNJ) on strong signs of efficacy for PCI-32765 in chronic lymphocytic leukaemia and mantle cell lymphoma. On the negative side, confirmation of four drug-related deaths in a mid-stage trial of Ariad’s (NASDAQ:ARIA) ponatinib offset encouraging efficacy data; shares have slid 5% since Friday as hopes for a partnership and gaining accelerated approval have been tempered.

Second to market

Should it be approved by regulatory authorities, YM’s CYT387 would be the second JAK inhibitor to treat myelofibrosis following Incyte’s Jakafi, and as such needs to outperform in the clinic. Anemia among myelofibrosis patients is an indicator of poor life expectancy, so achieving improvements in hemoglobin levels and reducing transfusion rates is a major goal – in clinical trials 45% of patients taking Jakafi experienced serious anemia necessitating medical intervention such as transfusion (Event – Jitters ahead of Incyte approval, October 14, 2011).

Sixty-eight of the 166 patients in the CYT387 trial were dependent on transfusions at the start of their treatment cycles, and of those 54% no longer needed transfusions after 12 weeks of treatment, consistent with interim findings presented at Asco and meeting the highest expectations of observers (ASH Preview - Novel drug classes facing important tests, December 7, 2011).

In the treatment arm taking the highest dose of the pill, 300mg daily, 65% of anemic patients were transfusion free. In a call with investors, chief executive Nick Glover said YM is planning on pushing ahead with that dosage in phase III trials hoped to begin next year.

Tuesday’s 15% share price surge is encouraging; however, the Canadian group’s market capitalisation is down nearly one-third this year. Since it has reached the key end of phase II milestone, partnership talks are likely to accelerate; any news of a licensing deal would help drive prices higher.

Meanwhile, Incyte’s investors clearly were worried by the competition; shares in the Delaware company fell 5% to $13.62 on Tuesday.

Good news not done

Whilst the recent signing of a $150m upfront licensing deal with J&J on PCI-32765 diverted some attention and reduced expectations on Pharmacyclics' Bruton’s tyrosine kinase (Btk) inhibitor, the release of data still generated investor excitement (J&J pays handsomely for first-in-class blood cancer drug, December 9, 2011). Shares rose 8% to $13.71 Tuesday following a spate of news in several types of blood cancers, the most advanced being in chronic lymphocytic leukaemia (CLL) and small lymphocytic lymphoma (SLL).

The phase Ib/II data in CLL/SLL for the most advanced Btk in clinical development showed the candidate achieved an overall response rate of 67% in a 420mg daily dose group and 68% for those taking 840mg daily. At 12 months, 86% of patients were free of tumor progression. The company said the results support advancing the drug into phase III - a conclusion that J&J had clearly already come to.

More data needed

For Ariad, news of deaths in the phase II ponatinib trial in chronic myeloid leukaemia (CML) and Philadelphia-positive acute lymphoblastic leukemia (Ph+ ALL) was disclosed in the ASH abstracts released in November. Confirmation that four deaths were drug-related will give potential partners pause for thought.

Efficacy looks promising, with 47% of chronic phase patients achieving a major cytogenetic response. Of the four deaths possibly or probably related to ponatinib treatment, three had advanced-phase CML or Ph+ ALL. Causes were pneumonia, hemorrhage and cardiac arrest, and all had complex medical conditions.

Further safety data will shed light on the significance of those deaths. As the results are preliminary, and as the Massachusetts company is recruiting for a second phase II trial in ALL, more will be known in the near future on the emerging safety profile of this dual inhibitor of tyrosine kinase and fibrolast growth factor receptor. Potential partners could well chose to wait.