Biotech Analysis Central Pharma News: Johnson & Johnson's Partnership, Dynavax's Advancements, Aveo's Positive Results

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Includes: AVEO, AZN, DVAX, JNJ, MRK
by: Terry Chrisomalis

Summary

Johnson & Johnson acquires rights to a drug that treats rare forms of cancer.

Dynavax works hard to obtain success on two fronts.

Aveo Pharmaceuticals announces positive results from TIVO-3 cancer study.

Welcome to Biotech Analysis Central Daily News, a daily news report and analysis about what has happened lately in the biotech industry.

Johnson & Johnson Acquires Rights To A Drug That Treats Rare Forms Of Cancer

News: Recently, Johnson & Johnson (JNJ) announced that it had created a partnership deal with a Korean biotech named Yuhan (OTCPK:YUHNF). The reason for creating this deal is so that JNJ could get its hands on Yuhan's 3rd generation EGFR tyrosine-kinase inhibitor known as lazertinib. In order to obtain such a deal, JNJ only had to pay an upfront payment of $50 million to Yuhan. If clinical trials proceed accordingly, then Yuhan could also receive up to $1.205 billion in potential milestone payments as well. JNJ will also have to give the biotech tiered double-digit royalty payments for net sales made on any products sold.

Analysis: I think this is a good deal for JNJ for a few reasons. The first reason is that it gets to work on the drug itself. A majority of these partnerships are where the small-cap biotech finishes work up to an extent, and then the partner finishes off the rest of the studies/regulatory filings. In this instance, JNJ will take full responsibility upfront to develop lazertinib. This also includes it being responsible for manufacturing and commercialization costs as well. This is good because it gives JNJ full control of getting the drug through the clinic. The most important aspect involves the potential market size. There is no doubt that should lazertinib be successful, it will have to go up against AstraZeneca's (AZN) Tagrisso. The reason why I bring this up is because they are both 3rd generation EGFR tyrosine-kinase inhibitors. On top of that, it is estimated that Tagrisso could bring in AstraZeneca as much as $3 billion for its respective market space. This means JNJ could enter this space and possibly take market share.

Dynavax Works Hard To Obtain Success On Two Fronts

News: Recently, Dynavax (DVAX) reported its financial results for its third-quarter ending September 30, 2018. It noted that there was a slight increase in sales from the previous second-quarter to the current third quarter for HEPLISAV-B sales. Sales in Q2 2018 were $1.2 million, and in Q3 2018, they came in at $1.5 million. Sales have been slow to take off, but many analysts still believe that HEPLISAV-B could eventually reach $500 million in sales. Another piece of good news was the updated data from the company's SD-101 cancer drug in combination with Merck's (MRK) Keytruda. This updated data was from a study treating patients with advanced melanoma who are naive to PD-1 therapy. The most notable piece of data that was updated was that 47 patients naive to anti PD-1 therapy, who received the 2 mg dose of SD-101, obtained an overall response rate (ORR) of 70%.

Analysis: Dynavax is taking a bit longer to boost sales for HEPLISAV-B; however, you have to put things into perspective. This is the first year where the vaccine was launched. In addition, the competing vaccine ENGERIX-B has been out for decades and has a huge chunk of the market share. I don't believe that HEPLISAV-B would have dethroned a drug such as ENGERIX-B after only the first year of being on the market. The good news is that at least sales grew from Q2 to Q3 from $1.2 million to $1.5 million respectively. In terms of the cancer combination of SD-101 and Keytruda, the 70% ORR is strong. However, a much better context is that the ORR of 70% remained the same from the last data point that was noted back in ASCO in June of 2018. Why is this significant? That's because the same ORR was achieved, despite the increase of 50% of patients being added to the study. On top of that data point, the other good news stems from the 6-month progression-free survival (PFS) rate which came in at 85%. I think that HEPLISAV-B is a good bonus indication for Dynavax, but the results to date achieved with the SD-101 and Keytruda combination will be the main driver of growth for this biotech.

Aveo Pharmaceuticals Announces Positive Results From TIVO-3 Cancer Study

News: Recently, Aveo Pharmaceuticals (AVEO) announced that it had received positive results from its phase 3 TIVO-3 study. This was a phase 3 study that recruited 351 highly refractory advanced or metastatic renal cell carcinoma (RCC) patients. In other words, tivozanib (FOTIVDA) is being used to treat third- and fourth-line patients with RCC. It was shown that the primary endpoint was met with a median progression-free survival (PFS) rate of 44%. In addition, treatment with the company's drug also achieved a 26% reduction in the risk of progression or death compared to Sorafenib.

Analysis: This is good initial data, but there is still opportunity for the trial to do better. This is in the form of the secondary endpoint of overall survival which has not yet matured. The final data for the OS endpoint is not expected to mature until August of 2019. That gives another opportunity for the company to gain additional value. In the meantime, I think that Aveo is in great shape. Especially, since it has plans to file an NDA for tivozanib in 6 months anyways. That will get the biotech rolling in the right direction to obtain FDA approval for this patient population.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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.