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AB Science : The French Exception ?

|Includes: AB Science, Paris (ABSCF)

On October 30th 2012, AB Science announced a breakthrough news for Pancreatic Cancer.

Let's go in detail with the press release, just to make sure people really understand the true meaning of that news :

"AB Science SA (NYSE Euronext - FR0010557264 - AB), a pharmaceutical company specializing in the research, development and commercialization of protein kinase inhibitors, announced today the results from a phase 3 study evaluating the effect of masitinib in combination with Gemzar® (gemcitabine, Eli Lilly and Company) on overall survival (OS) in patients with pancreatic cancer. Briefly, masitinib in combination with Gemzar® significantly extended median OS by 6 and 2.7 months in two independent patient populations, representing 65% and 45% of the overall population; namely, patients with a genetic biomarker - collected from simple blood sample - indicative of aggressive disease progression, and patients with cancer pain. Pain intensity and the discovered genetic biomarker were shown to be of prognostic value for survival under Gemzar® alone and at the same time predictive of increased survival with masitinib in combination with Gemzar® for those patients identified as having a poor prognosis with Gemzar® alone."

Nobody succeed in Pancreatic Cancer in the past, the only viable treatment is Gemzar (Gemcitabine), as we see in that portion of the release. It seems that AB Science has been statistically significant in term of efficacy for two independent group (that could overlap each other) of 65% and 45%. That is an impressive samples and more important a first in that Cancer. Now, more important we see the notion of BioMarker and Genetics. It is the first formal case that I know off, where result are clearly linked to genetic for Cancer. That is the future of medicine concerning Treatment of Cancer.... and AB Science seems to be at the top of it.

AB Science also announced that the European Medicines Agency (NYSEMKT:EMA) has accepted to review a Marketing Authorization Application (NYSE:MAA) for conditional approval of masitinib in combination with Gemzar® in the treatment of pancreatic cancer, following filing of this dossier.

Needless to say that it speaks by itself. The EMA already accepts to study the conditional approval that is, with GIST 2nd Line of treatment, the second AMM under study. Pretty impressive.

Full data has been submitted for presentation at the American Society of Clinical Oncology (OTC:ASCO) Gastrointestinal Cancers Symposium (24-26 January 2013, in San Francisco, California).

I guess many Fund that never heard of AB Science will have their awareness raise concerning AB Science during that conference as I assume, if the EMA accepted the AMM for study and that AB science deposits some patents and based on the little info that this release provide, the full data will probably be pretty impressive to say the least and could be one of the attraction at ASCO.

Filing for the conditional approval of masitinib in combination with Gemzar® in the treatment of non resectable, advanced adenocarcinoma pancreatic cancer was accepted by EMA on the basis of results from a phase 3 study that showed masitinib in combination with Gemzar® significantly extends overall survival in two independent patient populations having the worst prognosis. These populations consisted of patients with a gene expression profile (or genetic biomarker) indicative of aggressive disease progression (65% of pancreatic cancer patients), and patients with cancer pain (45% of pancreatic cancer patients). In this prospective, international, randomized, double-blinded clinical trial, 348 patients received either masitinib in combination with Gemzar®, or placebo in combination with Gemzar®. A planned ancillary pharmacogenomic study, based on RNA extracted from whole blood samples before treatment start, was also conducted to identify genetic expression patterns predictive for overall survival and/or treatment benefit.

AB Science seems to have found a clear genetic pattern that they can diagnose to identify the profile of patient and therefore the right treatment to take (Gemcitabine alone or along with Masinitib). I assume the diagnostic by itself already have a lot of value as it is a first clearly. It also explain a little more why the EMA accepted to review the MMA

AB Science made two important discoveries based on data from these studies.

  • First, pancreatic cancer patients characterized by the discovered genetic biomarker (approximately 65% of all patients) reported very poor survival when receiving placebo plus Gemzar®, with a median OS of 5 months. However, this same genetic biomarker was highly predictive of significantly extended survival in patients receiving masitinib in combination with Gemzar®, with a median OS increased by 6.0 months to 11.0 months, corresponding to a hazard ratio of 0.29 (p=0.000038). OS rates at 12 and 18 months were respectively, 41.4% and 18.5% in the masitinib plus Gemzar® treatment arm versus 11.1% and 4.2% in the placebo plus Gemzar® arm.

So now we come down to the clear 65% of the patient are reacting positively to the combinaison of Masintinib and Gemzar. That is an impressive level. Aside of being able to identify exactly the profile concern, the data itself are impressive : Hazard Ratio of 0,29, that is exceptionnal. Usually when you have an HR of 0,66 it is already a hit so the lower the HR is the best it is.... The survival rate at 12 and 18month compare to placebo + Gemzar is just incredible. But now, the biggest news is the P-Value.... We are talking about a P-Value of 0,000038. To give you an order of idea it is the same P-value for the Bozon of Higgs.... that is the most impressive portion of those data (along with the HR i would say)

  • Second, patients presenting with a certain threshold of pain intensity at the time of study entry (approximately 45% of all patients) were revealed to have a very poor prognosis when receiving placebo plus Gemzar®, with a median OS of 5.4 months. In these patients, the combination therapy of masitinib plus Gemzar® showed a statistically significant extended survival, with median OS increased by 2.7 months to 8.1 months, corresponding to a hazard ratio of 0.61 (p=0.010). OS rates at 12 and 18 months were respectively, 32.2% and 18.2% in the masitinib plus Gemzar® treatment arm versus 17.8% and 7.8% in the placebo plus Gemzar® arm.

Those data are less impressive then the previous one, but stays very strong and are still unique in the pancreatic cancer. The Hazard ratio is strong and the p value is good too. Again here the impressive part is the 12month and 18month survial along with the Median OS.

Besides being predictive for masitinib plus Gemzar® treatment efficacy, these two factors were also of prognostic value for overall survival in patients treated with Gemzar® as a single agent. Regarding the genetic biomarker, patients harboring this 'aggressive genetic fingerprint' had a median OS of 5.0 months whilst patients without this fingerprint had a median OS of 14.3 months. Regarding the prognostic factor of 'pain intensity', patients exceeding a certain threshold of pain at baseline had a median OS of 5.4 months versus 15.4 months in patients without pain.

Now, according to me, that portion of the release is also very impressive because it talks about the diagnostic aspect of their discovery. It seems that AB Science have been able to demonstrate (and probably be able to diagnose) the profile of each patient and therefore they can define which treatment is the best. Aside of that, it also show a huge difference between a third of those patient that has a OS median of 14,3month and the two third that has a OS median of 5.0. The diagnostic tools AB science probably develop is more then valuable and should not be ignore in the middle of that amazing release.

Results in the overall study population did not show a significant advantage for masitinib in combination with Gemzar® as compared with Gemzar® treatment alone. Median OS was 7.7 months in the masitinib plus Gemzar® treatment arm versus 7.0 months in the placebo plus Gemzar® treatment arm (p=0.74; hazard ratio=0.90). This finding of a non significant survival improvement in the overall population is explained by the fact that masitinib is not indicated when Gemzar® is highly efficient; namely, the situation defined by an absence of both pain and genetic biomarker detecting "aggressiveness".

No surprise here, and it in fact increase the value of the previous data disclose.

In fact, I will give you some personal though overall and the end of that post to make you realize how big of a revolution that is...

Olivier Hermine, MD, PhD, President of the Scientific Committee of AB Science commented: "The prognostic factors of 'pain intensity' and 'aggressive genetic fingerprint' revealed by AB Science are two major discoveries in this devastating disease that has a high unmet medical need. We previously knew that pain was correlated with poor prognosis in pancreatic cancer. Our current working hypothesis is that pain flags the presence of mast cells in the tumor microenvironment and mast cell activation may help transform the tumors into a more aggressive form. On the other hand, the genetic biomarker is really revolutionary since it would be the first time that RNA expression from whole blood samples is capable of predicting overall survival in patients depending upon the treatment received. In addition, this genetic biomarker could be used as a prognostic tool: patients with the 'aggressive genetic fingerprint' and receiving the standard treatment of Gemzar® monotherapy had a median OS of only 5 months, whilst patients without this genetic biomarker survived on average for 14.3 months. It is encouraging that masitinib seems to improve significantly survival in patients with the worst prognosis and who represent the highest unmet medical need".

Alain Moussy, CEO of AB Science declared: "We knew that masitinib had an antimetastatic potential thanks to our recent GIST study as 2nd line treatment in Gleevec-resistant patients. That study revealed masitinib did not outperform sunitinib, the current 2nd line treatment for GIST, in terms of PFS (progression-free survival) but did significantly improve median OS with a hazard ratio of 0.29. The pancreatic cancer phase 3 study delivers a second clinical proof of masitinib's antimetastatic effect in cancer, again showing comparable PFS between treatment arms whilst overall survival was significantly increased in two independent subpopulations. In patients with 'pain' median OS was increased by 2.7 months with a corresponding hazard ratio of 0.61, and in patients with the 'aggressive genetic fingerprint' median OS was improved by an impressive 6.0 months with a hazard ratio of 0.29, when treated with the masitinib plus Gemzar® combination. It seems that the inhibition of mast cell activity in cancer is one of the key drivers of masitinib. However, masitinib evidently does more since other tyrosine kinase inhibitors of mast cells have failed in the pancreatic cancer or GIST indications. Masitinib seems to touch key pathways that are involved with metastatic progression in cancer, the very mechanism which eventually leads to death".

Masitinib received orphan drug designation in the treatment of pancreatic cancer from both FDA and EMA.

Both quote are very instructive and explain even more the power of Masinitib and its potential. The antimetastatic effect can clearly be consider for many others cancers. One could say, sky is the limit and he might not be wrong.

Some personal thoughts :

I would like to say a couple of things that draw my interest and share it with you :

- the P-value of the study is just amazing, especially on Pancreatic cancer that is ..Unique

- the true increase of survival on Pancreatic is even more impressive. If you look in details you will see that the combination of their diagnostic discovery + their efficacy on 65% of patient leads to a much higher OS Median. Here is why :

With their diagnostic, they identify 35% of the population with gemcitabine alone has a median OS of 14,3month, 65% other had a median OS of 5.0 but now their true Median OS will be 11month thanks to the treatment using Masintinib + Gemcitabine.

So the real Median OS now for pancreatic cancer, if we use the combination of their diagnostic tools + Masintinib + Gemzar or Gemzar alone (pending the diagnostic) is : 35% * 14,3 + 11*65% = approx 12,3month... that is impressive... and that is the true meaning of that press release.... for people that take times to read.

- Value of the market : 220K case per year, let's assume 80K in accessible market for AB Science, 65% of 80K = 52K. Assumption of treatment price : 25K euros? So revenue per year = 52K * 25K = 1,3 billions euro per year.

- Gaining market share won't be hard because the treatment would be in addition to Gemcitabine and therefore carries a great interest for Gemcitabine producer as it increase revenue on their product too.

- It was the hardest Phase 3. Analyst had pretty no expectation on it. So just imagine the integration of that in the true value of the company over the long term?

Anyway, to summarize, AB Science is just getting one step closer to their goal of being a Pharma. The P-value and data just has that one (along with GIST 2nd Line) are just another "solid" (if not guarantee) element that they will succeed. It is now just a matter of TIME.

What is the true value of AB Science? I won't go into describing what I believe is the long term true value except if I'm ask because I think any people trying to calculate it will realize it is in billionS if not tens of billions....

However, here is the joke...... (there is always a joke).

You would assume that a company with :

- 8 phase 3 on-going

- 1 Phase 3 data on pancreatic cancer (where everyone failed) with an unbelievable HR and P-value on a pretty big population size (and therefore market)

- 2 Phase 2 data with statistical significantly in term of p-value on efficacy (GIST 2nd Line but also - let's not forget - Alzheimer)

- 2 AMM under study by the EMA.

- A probable product to be approve in the next 2 years top

- FULLY OWN their product and therefore the profit that it could generate

- APPROVAL already in Veterinary (with some small double digit growth revenue)

- Enough cash without revenue until first potential approval

would be value how much ? by Nasdaq standard you would assume somewhere around 2-3 billions right ?

Well here is the French Exception, AB Science is value as i'm writing today less then 600 millions euros (780Musd). Amazing right ? Why ?

There is many reason according to me :

- Euronext isn't a biotech index

- Awareness on the company is still low

- Company is control by the founders which kills the "speculation effect"

- Most Fund in Europe (that are the mainly expose to the story) are not clever and long term enough to realize the true undervalue of the company

- French Quality : We always have hard trouble in believing in true success and therefore we always miss it (the gain of it) so we are often late in the party....

- Retail base shareholder that also don't think long term. Small profit is enough.... they would say :)

Another French exception : Doing -4% on such a news... They did -10% on Alzheimer Phase 2.... so i guess they still had room to drop further on such a great news day.

Anyway, I will keep the same position I always kept all along : IT IS A SCREAMING BUY FOR ANY MID-LONG TERM investor that just know HOW TO COUNT.

IT WILL EVENTUALLY RISE TO THEIR TRUE VALUE IN THE LONG TERM. PATIENT and WISE long term INVESTOR will understand that days like today and value like now are gift from god for people that missed the train many times already.

So I hope you guys will take full advantage of it. AB Science just did a breakthrough in Science... and nobody realized it in France so far... It is the Famous French Exception (if not the European Exception) so take advantage of it... because amazing story like that could spread out quickly at any moment...

DISCLOSURE : LONG through equity, through ALL the convertible debt and buying regularly to take advantage of the stupid market

DISCLOSURE 2 : Thank you stupid market :) keep doing that, I LOVE IT

DISCLOSURE 3 : Hopefully I won't be the only one taking advantage of the stupid market :)

Disclosure: I am long OTCPK:ABSCF.