U.S. Biotech/Pharma Sector Daily Observations Letter: March 7, 2018

Summary

• While major U.S. equity indexes continue their sideways consolidation, the small-cap biotechnology stocks remain strong and seem set for new highs.
• Tocagen announced Orphan drug designation from the European Medicines Agency for Toca 511 (vocimagene amiretrorepvec) & Toca FC (flucytosine) for the treatment of patients with high-grade glioma. Buy or sell?
• Interim data (50% target events) is expected in the second half of 2018 and the next analysis (75% target events) is expected in the first half of 2019.

While major U.S. equity indexes continue their sideways consolidation, the small-cap biotechnology stocks remain strong and seem set for new highs.

Tocagen (TOCA) announced Orphan drug designation from the European Medicines Agency, EMA for Toca 511 (vocimagene amiretrorepvec) & Toca FC (flucytosine) for the treatment of patients with high-grade glioma, HGG, a form of highly aggressive brain cancer.

The annual incidence of HGG is about 160,000 worldwide. HGG has two forms: glioblastoma and astrocytoma. About 12,000 cases of GBM were diagnosed in 2017. Currently, available therapies for GBM include surgery, chemotherapy, and radiation therapy. Median survival in newly diagnosed GBM is about 16 months and 6-9 months after recurrence.

Toca 511 is injectable and help in the delivery of cytosine deaminase gene into the cancerous cells which will convert inactive Toca FC (given orally) into active anticancer agent within the same infected cancer cell. The therapy kills not only the infected cancer cells but also neighboring cancer cells (by activating acquired immunity).

Phase 1 data for TOCA-511 and TOCA-FC was excellent.

• "The durable response rate (objective responses lasting at least 24 weeks) to 21.7% at the phase 3 dose (5 out of 23 patients).
• The median duration of response had not been reached after a median follow-up of 35.7 months.
• Stable disease (lasting at least 8 weeks) was observed in 5 additional patients, bringing the clinical benefit rate to 43.5% (10/23 patients).
• Median survival was 14.4 months.
• Overall survival rates at two and three years (OS24, OS36) was 34.8% and 26.1% respectively." Source

The data is excellent considering that these patients live for just a few months with existing treatments.

The therapy already has Orphan drug as well as the Breakthrough Therapy designations in the U.S.

A phase 2/3 trial is ongoing (expected to be pivotal). Phase 2 portion of the trial in this indication completed enrollment in Q1, 2017. Interim data (50% target events) is expected in the second half of 2018 and the next analysis (75% target events) is expected in the first half of 2019.

Disclosure: This article represents my own opinion and is not a substitute for professional investment advice. It does not represent a solicitation to buy or sell any security. Investors should do their own research and consult their financial adviser before making any investment.

Editor's Note: This article covers one or more microcap stocks. Please be aware of the risks associated with these stocks.

Analyst’s Disclosure: I am/we are long TOCA. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Comments

[User 20587681]

VBLT announced it failed ph3. One less option for patients. Looking forward to interim results.