- Incyte and Merck's epacadostat/Keytruda combination Phase III trial in melanoma failed.
- OncoSec and Merck are pursuing a combination of ImmunoPulse IL-12 with Keytruda in melanoma also, with initial data from a Phase II registrational trial due this year.
- Incyte's failure has no implications for OncoSec because the mechanisms of action are different.
The failure of Incyte's (INCY) epacadostat/Keytruda Phase III trial last week has the oncology investment community asking if combination approaches with Merck's (MRK) Keytruda have a future. Keytruda is an immune checkpoint inhibitor, and combining it and other checkpoint inhibitors like it with other oncology candidates is a strategy being pursued by several companies. Does Incyte's failure have any implications for other company's combining their own pipeline drugs with Keytruda?
The answer would depend on how any given drug interacts with Keytruda to fight cancer. In Incyte's case, the mechanism of action is the important factor to consider here. The mechanism of action of epacadostat is (or rather was) to downregulate the production of enzyme IDO1. IDO1 degrades the amino acid tryptophan, an essential nutrient for T-cells that attack tumors. If there is not enough tryptophan to feed the invading T-cells, they will starve, and the immune attack on the tumor will slow or stop. Therefore, the theory was that inhibiting IDO1 will promote the T-cell attack against melanoma.
How would this have strengthened the Keytruda attack?
Anti PD-1 checkpoint therapies like Keytruda depend on T-cells to prime the immune system. The PD-1 checkpoint deactivates the T-cell attack, and blocking it promotes the attack. Without T-cells attacking to begin with, Keytruda has little to no effect. The theory for this combination then was a good one and had some solid evidence to support it in early-stage trials. If anti IDO1 therapy can increase the amount of T-cells attacking a tumor by stopping the starvation of T-cells and making the tumor environment more healthy for them, the patient response to Keytruda should increase.
Unfortunately, despite positive results last August, Phase III data was uninspiring. Progression-free survival statistics were not improved with the combination of epacadostat and Keytruda over Keytruda alone, and Incyte scrapped the study. This shows that once again, even if early trials show promise, it does not mean that results will be replicated in a larger Phase III study. The 56% overall response rate for the combination in the earlier trial didn't translate into Phase III.
There is currently another Keytruda combination trial ongoing specifically in melanoma, this one sponsored by OncoSec (ONCS), and data should be out by the middle of this year according to the company's last earnings call. Should investors get out now in light of the failure of Incyte?
No. I don't believe these specific results have any implications for OncoSec's own combination application with Keytruda. Why not? Because while both combinations are meant to increase the amount of T-cells in the tumor, OncoSec's combination with Keytruda is based on a completely different mechanism of action.
Epacadostat was supposed to work with Keytruda by making the tumor environment more conducive to T-cells by increasing tryptophan. OncoSec's combination with Keytruda encourages T-cell attack as well, but in a completely different way. It combines ImmunoPulse IL-12 with Keytruda. ImmunoPulse IL-12 inserts IL-12 DNA plasmids into the melanoma tumor cells. The DNA plasmids encode for the production of IL-12, which is the signal for T-cells to congregate around and attack the tumor. The combination of the two in this case then doesn't really "improve" the T-cell environment so much as activate it in the first place.
Without IL-12, melanoma tumors are known as "cold tumors". The T-cells are not there at all or are insignificant if they are. With IL-12, tumors become "hot", jumpstarting an immune reaction that Keytruda can then supercharge.
The different mechanism of action is not the only reason that the epacadostat failure has little implication for OncoSec. The other reason is the nature of the trial. If we look closely at the exclusion criteria for the failed Phase III trial of epacadostat with Keytruda, we find that patients who have undergone previous anti-PD-1 therapies were excluded from the trial. In contrast, the OncoSec trial is specifically designed for patients who are refractory to anti-PD-1 therapies like Keytruda, meaning they underwent treatment with anti-PD-1 prior but stopped responding to it subsequently.
Meaning, the OncoSec trial with Keytruda is designed to directly compare patients known not to respond to Keytruda monotherapy because their tumors are "cold", with patients on the combination therapy whose tumors should now be "hot" because of the ImmunoPulse IL-12 treatment. The two arms of the trial should then show sharp differences if the theory regarding the mechanism of action is correct.
In contrast, the epacadostat trial was only comparing Keytruda monotherapy with combination therapy for patients who are not refractory to Keytruda. This would make statistical significance between the two arms harder to distinguish, which is indeed what ended up happening.
Further, the Phase II trial OncoSec is performing with Merck is registrational in nature, meaning no phase III trial will be needed here if all goes according to plan. (It may not, of course, that is a risk.) If the trial succeeds, the two companies can file for approval after the Phase II trial is completed.
The risks with the OncoSec combination are still there though. Nothing like this combination has been tried before, so there could be many factors that may contribute to its failure. The main risk that comes to mind is that patients could be refractory to Keytruda for other reasons in addition to their tumors being cold. We won't know until results are in, and just because earlier trials showed promise, doesn't mean this one will succeed, as happened with Incyte.
The initial data should be a significant inflection point for OncoSec, and it will be published sometime this year. The cash runway for OncoSec is about 3 more quarters, which should take the company through initial data. If it is positive, OncoSec will likely refinance on a high point, my guess is 20-50% higher than current prices, depending on how positive initial results actually are. If negative, the stock could fall by 50% or more to where it held in the $1 range for most of 2017.
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