Mirati: Lead Candidate Shows Superiority Over Opdivo In NSCLC

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About: Mirati Therapeutics, Inc. (MRTX)
by: Avisol Capital Partners
Summary

Mirati stock recently went up, but on news unrelated to its lead drug candidate.

Here, we take a closer look at sitravatinib, its lead drug.

Our analysis shows possible superiority of the combo therapy versus opdivo monotherapy alone.

Mirati Therapeutics Inc. (MRTX) stock has seen quite some interest in recent times, especially after Amgen (NASDAQ:AMGN) reported preclinical data from the study of their KRAS G12C inhibitor drug AMG 510. However, this is not its lead candidate, and we don't gauge companies by looking at molecules that don't have efficacy data. So, we will look at lead candidate sitravatinib alone in order to see if MRTX is investible.

Catalyst

Mirati’s lead drug candidate sitravatinib is being tested in combination with nivolumab (OPDIVO) in NSCLC in a phase 3 trial and will have topline data sometime in mid-2020. So, there is no near-term major catalyst for this stock.

However, the stock recently spiked because of Amgen’s data in KRAS G12C inhibitor, where Mirati has an early stage candidate called MRTX849 with similar MOA. These are the only two KRAS G12C inhibitors currently in clinical studies. There are nearer term catalysts for this particular candidate, including completion of a phase 1/2 study in April 2020, with preliminary data expected late this year.

Trial data

Mirati conducted a phase 2 clinical trial of sitravatinib with OPDIVO (nivolumab), Bristol-Myers Squibb’s (BMS) anti-PD-1 immune checkpoint inhibitor, in patients with NSCLC who have experienced documented disease progression following prior treatment with an immune checkpoint inhibitor. Sitravatinib oral capsule was administered daily in combination with nivolumab administered as 240 mg IV every 2 weeks.

The company presented updated data on 10/22/2018, from the ongoing phase 2 clinical trial of sitravatinib + OPDIVO, as of the data cutoff date of August 27, 2018.

56 patients with a median of two lines of previous therapy were evaluable for response with at least one radiographic scan. Out of the 56, 45 patients demonstrated tumor reductions, 18 demonstrated tumor reductions of greater than 30%, 16 achieved a Partial Response (PR) or Complete Response (CR), of which 9 confirmed PRs or CRs, 2 remain on trial awaiting confirmation, while 5 will not be confirmed. 26 of the 56 evaluable patients remained on treatment at the time of data cut-off, including 8 responding patients.

A preliminary Kaplan-Meier estimate of median duration of response was greater than 9 months, with 6 treated for more than 6 months, and 2 treated for more than 12 months.

The combination has been well-tolerated and most adverse events (AES) were Grade 1 or 2.

We also looked at comparable data of the trials of the drugs nivolumab and docetaxel. In a randomized, open-label, international phase 3 study of nivolumab versus docetaxel in advanced nonsquamous NSCLC, among patients with advanced nonsquamous NSCLC that had progressed during or after platinum-based chemotherapy, overall survival was longer with nivolumab than with docetaxel. However, their individual data is as below, and is not as good as sitravatinib data.

Sitravatinib+Nivolumab

Nivolumab

Docetaxel

Patients

56

292

290

Overall survival rate at 1 year

51% (95% CI, 45 to 56)

39% (95% CI, 33 to 45)

Overall survival rate at 18 months

39% (95% CI, 34 to 45)

23% (95% CI, 19 to 28)

Response rate

28% (16/56)

19%

12%

Median progression-free survival

2.3 months

4.2 months

rate of progression-free survival at 1 year

19%

8%

Treatment related AEs -

grade 1 or 2

grade 3 or 4

10%

grade 3 or 4

54%

Chart by author

Table Source: New England Journal of Medicine

As we can see from the above data comparing across trials (of course, we cannot really do a one-on-one comparison at this stage), the combination therapy of sitravatinib + nivolumab has done better than nivolumab or docetaxel monotherapies. It is obvious with the complete response in the combo therapy at 9 out of 56 compared with 4 of 56 for nivolumab monotherapy and 1 of 36 for docetaxel. So, it appears that phase 3 trial will also do well.

Market

Combination therapies can cost up to $100K more (per patient per year) than single checkpoint inhibitors like OPDIVO that cost about $150K. The global market for cancer immunotherapies alone is expected to grow more than fourfold globally to $75.8 billion by 2022 from $16.9 billion in 2015, according to research firm GlobalData. [Source: Reuters]

According to a 2018 estimate by The National Cancer Institute, “approximately 234,000 patients in the United States ("U.S.") were diagnosed with lung cancer and 154,000 died due to the disease. Lung cancer represents over 13% of all new cancer cases in the U.S., and 25% of all cancer deaths. Approximately 85% of lung cancers are NSCLC. The five-year survival rate for lung cancer patients is 19%, indicating a significant need for novel therapies to extend overall survival in this patient population.”

OPDIVO, an anti-PD-1 monoclonal antibody, was the first immuno-oncology agent, approved by the FDA in 2015, for the treatment of squamous NSCLC. Subsequently, FDA approved three additional immuno-oncology agents in NSCLC - KEYTRUDA, TECENTRIQ, and IMFINZI. “These four agents, approved for multiple indications including NSCLC, accounted for over $10 billion in global sales in 2017.” The global immune checkpoint inhibitors market is projected to reach over $65 billion by 2025, registering a CAGR of 25.6% from 2018 to 2025. However, the percentage of patients who respond to approved immuno-oncology treatments is quite low as we saw in the chart above, and of the responding patients, the majority will still experience disease progression. Mirati has the data to “believe that combinations of checkpoint inhibitors with other agents like sitravatinib have the potential to improve efficacy outcomes and overcome resistance to checkpoint inhibitor therapy through complementary mechanisms.” This will help the company to capture a sizable pie of the market.

Competition

Competitors for sitravatinib in combination with immune checkpoint inhibitors are Nektar Therapeutics’ (NKTR) CD122 agonist, which is being evaluated in combination with checkpoint inhibitors in NSCLC patients that are naïve to immune checkpoint inhibitor therapy; Corvus Pharmaceuticals’ (NASDAQ:CRVS) Adenosine A2Ar inhibitor, BMS’ GITR inhibitor and LAG3 inhibitor, and Syndax’s (NASDAQ:SNDX) HDAC inhibitor, are being evaluated in combination with checkpoint inhibitors in NSCLC patients who failed previous immune checkpoint inhibitor therapy.

Direct mechanistic competitors to sitravatinib in immunotherapy include Exelixis’ (NASDAQ:EXEL) CABOMETYX, and Eisai’s (OTCPK:ESALF) LENVIMA, both antiVEGF agents that also inhibit other receptor tyrosine kinases (RTK).

“A large number of multi-targeted kinase inhibitors are currently commercially available or in clinical trials, with many more in the early research stage. Biotechnology and pharmaceutical companies are also developing monoclonal antibodies to inhibit kinase targets and their ligands.” However, there are no other companies with programs that specifically target patients with CBL alterations.

IP/Patents

As of December 31, 2018, Mirati has 11 patents granted under sitravatinib and other kinase inhibitor compounds with expiration in 2026-2029; 16 granted under Mocetinostat and other HDAC inhibitors expiring 2022-2035; 1 patent granted and 11 pending under KRAS inhibitors with expiration in 2036-2039.

Risks

Mirati is a clinical-stage company with no approved products and no historical product revenue. This is standard for all clinical stage biotech. What is more situational is that everything is still very early stage, and while that data is good, the phase 3 trial data readout is going to be a real binary event, with a lot of speculative risk. We have done the speculation here; but the risk is yours.

Financials

The company offered its common stock twice this year - 1,854,838 shares for a price to the public of $62.00 per share in January, netting cash proceeds of $107.9 million; and 2,415,000 shares at a public offering price of $97.00 per share in June, netting cash proceeds of $219.9 million. As of half year ending at 6/30/2019, cash, cash equivalents, and short-term investments were $485.5 million. Looking at annual expenses of the last three financial years, the company seems adequately funded to operate until 2023, when they might get an approval.

Opinion

Mirati would be a nice speculative buy, except that I am not sure why this company with no products, a single late stage candidate and one early stage - although both with strong potential - should have a market cap of $3.71bn. There are numerous companies - some with approved drugs - that are much lower than this. Like we always say, speculation values biotech more than markets. Hence, despite the strong results and cash position, we are averse to recommending this stock for a buy at these prices.

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.