Cytokinetics (CYTK) looks to turn around their fortunes following last year’s unsuccessful readout of Tirasemtiv in ALS. As the lead investigator had highlighted in his presentation of the data, 65.8% of patients were still in the active cohort as compared to 87.8% in placebo at the 24 week follow-up. Early dropouts were driven by neurological toxicity such as dizziness, fatigue and nausea. Although the effect size was not significant in the study, there were some small signs of slowing the rate of decline in slow vital capacity.
The company’s follow on asset Reldesemtiv, is built on the same mechanism but looks to resolve the dropout issue. It is designed not to cross the blood brain barrier, and the phase 1 study in healthy patients shows that it is far more tolerable. Further, the drug seems to be more potent than its predecessor, which may help amplify the signal we saw in respiratory function. Upcoming this week on June 16th, the company will be presenting initial findings from the phase 2 study of Reldesemtiv in spinal muscular atrophy (SMA). The study will enroll at two dose levels, 150mg and 450mg in both ambulatory and non-ambulatory patients who are over the age of 12.
This is an exploratory trial with many end points, but our primary focus is on respiratory outcomes. We will be watching to see not only if the drug is well tolerated in a target patient population, but also if the diaphragm function will improve more noticeably. A benefit here should change sentiments towards the name, and should get the stock price up to around, or over $12 a share. A longer shot outcome with more meaningful upside would also show benefit in motor function, such as the 6 meter walk test.
We see downside here as low as the $5 range, which assumes a total miss on all endpoints. We do not feel this is likely because via The April 27th earnings call, the company mentioned (earnings call paragraph that starts with “As a reminder”) that The Data and Safety Commission stopped enrollment early because they saw a significant effect size within undisclosed endpoints. In other words, this is not un-similar to what we saw with Myokardia (MYOK) before that company released good phase 2 data in August of last year. It’s also worth noting that Myokardia’s technology platform is based on Cytokinetics core platform. While Myokardia was not a spin-off stock out of Cytokinetics, its technology is in fact what has been behind MyoKardia’s platform.
ArQule (ARQL) is looking to build upon the initial successes seen with Pharmacylics’ Ibrutinib in B-cell driven cancers. Like Ibrutinib, ARQ-531 targets the Bruton’s tyrosine kinase (BTK) pathway, which is now a highly validated mechanism essential to B-cell growth. However, unlike Ibrutinib, ARQ-531 does not permanently bind to the BTK receptor and as such, does not rely on the C481 site for binding. A common mutation to this therapy is through this portion of the BTK receptor. The company is enrolling both wild-type and C481S mutant patients with CLL and related diseases.
Investors will be looking to see if this therapy could potentially replace Ibrutinib, or will remain as a relapse treatment option by comparing results from both. In addition, safety will be a question as a function of selectivity of the molecule. If results at EHA on June 15th show the broad applicability of this asset with a favorable safety profile, there could be yet further upside in the name. Investors should note that another BTK inhibitor, acalabrutinib, is in development by Acerta Pharma (now subsidiary of Astrazeneca ((AZN)) and has demonstrated significant efficacy and a strong safety profile. Acalabrutinib boasts a response rate of 95% and appears more tolerable than Ibrutinib due to its high selectivity.
Needless to say, the bar is set relatively high for ArQule to find its place in CLL. The upside/downside case here is hard to ascertain, as the stock has already seen strong price appreciation running into this event, notwithstanding that there is already a strong response in Acalabrutinib which is further along in clinical development as mentioned above.
Conclusion: ArQule as mentioned, has a very high bar to climb over here. In order to get stronger price appreciation from its current level, we will need to see the company in fact, reach and/or exceed this bar. Downside seems to be the $3 range, with upside to around $7.
Affimed (AFMD) has gone through a measurable drought of meaningful, stock-moving data for the last 2 years. However, progress has been made in the background for its AFM13+Keytruda study in Hodgkin’s Lymphoma as the study wrapped up enrollment in February. In the dose escalation phase where AFM13 was increased against a fixed dose of Keytruda, the maximum tolerated dose (MTD) was not found (Phase studies for catalyst in focus here are 1A and 1B).
Afterwards, the study went on to expand at the highest dose level. Data from the first 9 patients released in February at active doses showed a complete response rate of 44% (4/9) and an overall response rate of 89% (8/9) in Adcetris refracted patients. Impressively, AFM13 which relies on CD30 for target recognition still demonstrates efficacy in these patients which may have extremely low copy numbers of this receptor following Adcetris failure.
Interestingly, one of the current CRs was previously reported to be a partial response (PR) at ASH, potentially suggesting that depth of response comes with time. This is consistent with the hypothesis we have previously highlighted that both innate and adaptive immune mechanisms are necessary to generate an immunologic memory synapse. In other words, we believe Affimed may have a Car-Nk construct here.
At The European Hematology Association ((EHA)) on June 16th, the company will present data following up these 9 patients further to see if responses continue to be durable and deepen with time. An additional 9 patients at the highest dose will be included with a minimum of 3 months of follow-up. If the clean safety profile continues to hold along with strong responses, AFM13/Keytruda may be able to challenge the Adcetris/Nivolumab combination which has wrongly been the source of scrutiny towards Affimed in our opinion.
It should be noted that at recent conferences, the CEO of Affimed had stated that more updated data will be released following EHA. This could lend credence to the notion of time driven efficacy/durability with this combination. Positive results here also serve as a strong proof of concept for the rest of the company's pipeline.
We think the upside/downside case here for this catalyst is very favorable as the stock price has been stuck in the current range for 2 years now. We think a continued positive trend here should get the stock to, and maybe over its very strong resistant $2.85 to $3.20 range. On the flip side, if the company’s data does not continue its strong trend towards the positive and sees a setback, downside could see the stock trading in the $1.50 range or so.
Affimed is one of our long term investment plays, as we believe this company in time will prove successful. As the data continues to trend to the positive (in our opinion), we will be writing more in-depth on Affimed shortly.
Disclosure: I am/we are long AFMD, CYTK. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
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