Earlier this week, Immunogen (IMGN) got closer than ever to having a commercial product in the market. During its quarterly call (see transcript here), Roche (RHHBY.PK) removed the regulatory overhang on T-DM1’s near term fate after it disclosed plans to file for T-DM1’s approval already this year. The submission will be based on results from a recently announced phase II trial where T-DM1 demonstrated overwhelming activity in late stage breast cancer patients. Until now, it was unclear whether the FDA would be willing to consider approval based on a single arm phase II trial. Roche’s decision implies the FDA gave its unofficial and non-binding blessing for the accelerated approval.
High likelihood of approval
As a way of background, T-DM1 is based on Immunogen’s technology and the company retains financial interest in the drug in the form of mid single digit royalties. T-DM1 is Immunogen’s most important opportunity for generating commercial revenues as well as validating its antibody drug conjugate (ADC) platform. More info on ADCs and why they are becoming a focal point in the pharmaceutical industry can be found in some previous entries here, here and here.
Last December, Roche published results from the 110 patient phase II where T-DM1 was given to patients with Her2+ breast cancer who failed both Herceptin and Tykerb (3rd line patients). Results were extremely positive, with about a third of patients achieving meaningful and sustained tumor shrinkage. The trial was originally touted by Genentech as a potential pivotal trial despite its small size and the lack of control arm since there are no approved treatments for 3rd line patients.
As the trial advanced, Roche, who acquired Genentech, became more cautious in its statements, saying that it will file for approval only if it receives positive feedback from the FDA. In the second half of March, Roche had a meeting with the FDA about the filing and although nothing formal has been published, the fact that Roche intends to file implies that the FDA was willing to consider early approval in third line breast cancer.
As with other drug candidates, the FDA will probably convene an advisory panel (ODAC) which includes experts in the relevant field. The sentiment towards T-DM1 within the medical community is extremely positive, so it is hard to imagine a vote against T-DM1. This obviously does not guarantee approval, but given the strong data and the high unmet need, I ascribe an 85% probability of FDA approval.
Market size
If approved, the market potential for T-DM1 in the third line setting will be in the $150M-$250M range, based on US sales of ~$85M Tykerb had in 2009. As I discussed in a previous article, Tykerb’s sales under represent the actual market opportunity, as it has been poorly accepted by physicians and patients. This creates an opportunity for T-DM1 to become the leading agent for the untapped market of Herceptin refractory patients.
Nevertheless, Tykerb’s position is improving following a phase III study presented at SABCS last December. The study evaluated Tykerb+Herceptin versus Tykerb alone in Herceptin pretreated patients. The combination arm demonstrated an impressive 4.5 month improvement in overall survival over the control arm, but most physicians tend to attribute the improvement to Herceptin rather than Tykerb. Many physicians prefer to keep patients on Herceptin even after they progress on the drug, so it remains to be seen how this trial will affect clinical practice and whether it will create a new treatment line. The bad news for T-DM1, though, is that unlike Tykerb, it cannot be combined with Herceptin as T-DM1 is comprised of Herceptin and a toxic payload.
Looking beyond third line
T-DM1’s real potential is in earlier treatment lines of breast cancer as well as other tumor types such as gastric cancer. In its latest analyst day, Roche predicted peak sales of $2-$5 billion for T-DM1 with a success probability of over 50%.
The next expected filing for T-DM1 is for 2nd line Her2+ breast cancer, following results from a phase III trial vs. Tykerb and chemotherapy. Although I was initially skeptic on the trial’s outcome following results from a phase II study presented at ASCO 2009, the recent phase II data made me much more optimistic.
The first phase II trial, which included both Tykerb-pretreated and Tykerb-naïve patients, the median PFS achieved by T-DM1 was 4.9 months, which is lower than the 6.2 months Tykerb achieved when given with the chemo drug Xeloda. Bearing in mind that drugs usually perform worse in phase III studies compared to single arm phase II studies, I thought T-DM1 will be inferior to Tykerb+Xeloda. In the recent phase II trial, T-DM1 was given only to patients who progressed on Tykerb and achieved preliminary PFS of 7.3 months. This figure is impressive given the short follow-up and will probably be higher in the final analysis.
Although the 2nd line approval is expected only in late 2012, results from two additional trials are expected during 2010.
At ASCO next June, investigators will present data from a phase II trial combining T-DM1 and pertuzumab (another Her2 antibody) in Herceptin failures. Later at ESMO in October, data from a comparison study evaluating T-DM1 versus Herceptin+chemo in first line patients will be presented. This study is extremely important as the first trial to evaluate T-DM1’s activity in patients who have not been treated with Herceptin, at least not in the metastatic setting. Interestingly, Roche already submitted a protocol for a registration trial of T-DM1 in first line Her2+ breast cancer where T-DM1 is given either as a single agent or in combination with pertuzumab. This might imply that data from both phase II trials are compelling.
Looking beyond T-DM1
T-DM1’s value for Immunogen cannot be overestimated, both financially and as a proof of concept for its technology. Nevertheless, Immunogen has multiple agents in clinical development by the company or by its partners. Some of these agents already generated efficacy signals in clinical trials, as I previously discussed, but to date none of them came close to T-DM1 in terms of clinical activity and market potential. Of course, this might change in the future as more data emerge and new agents enter the clinic.
Immunogen’s second most advanced asset is IMGN901, which is wholly owned by the company. This ADC is currently being evaluated in multiple myeloma and small cell lung cancer, which represent substantial market opportunities, but to date demonstrated limited activity as a single agent. Consequently and given its good safety profile, Immunogen decided to evaluate IMGN901 in combination with approved agents for these indications, but meaningful results are not expected in the near future.
The real near term opportunity for this agent is in a niche indication: Merkel Cell Carcinoma (MCC). MCC is a rare and aggressive skin cancer, with an incidence of 1000 patients per year in the US. Similarly to other skin cancers, the disease has high cure rates if detected early, but about half of cases are diagnosed at more advanced stages which are associated with poorer prognosis. In particular, metastatic MCC patients have a median survival of less than a year and are bereft of approved treatments.
IMGN901’s promise in MCC is based on data from only six patients with advanced MCC. One of these patients achieved a complete response (disappearance of lesions) which is ongoing for more than four years. Another patient had a partial response which was still ongoing after 9 months at of the latest data presentation. Of note, both patients had relapsed shortly after chemotherapy prior to entering the study.
Investors should remain cautious about this opportunity due to the limited number of patients. In addition, IMGN901’s activity profile in the trial was quite unusual. The patient who achieved a long lasting CR received a relatively low dose of IMGN901 whereas the patient with the PR received just one cycle of IMGN901, but her disease kept on regressing for months, according to the company. This could demonstrate the potency of IMGN901 but can also suggest that the effect seen is not entirely related to IMGN901. Although spontaneous regressions are extremely rare in cancer, more patients are needed to validate IMGN901 efficacy.
Immunogen launched an expansion cohort in MCC in order to validate these efficacy signals in a larger patient population. If this kind of efficacy is mirrored in the larger trial, Immunogen could start a pivotal trial in 2011. The market opportunity in metastatic MCC is modest, probably less than $50M in the US (depends on pricing), but this represents a very fast route to market with practically no competition. Most importantly, unlike T-DM1, IMGN901 is 100% owned by Immunogen.
Summary
In summary, Immunogen should start to generate commercial revenues already in 2011. The royalty stream will probably start at a low level of ~$2M next year and can go up to $8M in 2012. FDA approval and perhaps even filing will probably trigger a milestone payment of more than $10M. From 2013 onwards, royalties could climb substantially if T-DM1 is approved for 2nd line patients. Importantly, this approval will add non-US sales to the mix. In the meantime, Immunogen has plenty of irons in the fire, which could support the stock during 2010. The most important of these will be first line data for T-DM1 at ASCO and results from IMGN901’s MCC expansion trial towards year end.
Biotech portfolio updates
We decided to sell Santarus (SNTS) and one of our positions in Incyte (INCY) for a profit of 97% and 120.5%, respectively. We are initiating a position in AVEO Pharmaceuticals (AVEO) on which I hope to elaborate in the future.
Portfolio holdings as of Apr 18th 2010
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Disclosure: Long IMGN
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