Post by stcks on Jan 4, 2017 20:50:27 GMT
www.seekingalpha.com/article/4034342
Clinical data and regulatory action remain the most eagerly watched binary events for biotech investors, and even in the midst of the holiday season they did not let up.
While Biogen (NASDAQ:BIIB)/Ionis’ (NASDAQ:IONS) Spinraza sprinted across the US approval finish line way ahead of the FDA’s action date, Cempra (NASDAQ:CEMP), Opko Health (NYSEMKT:OPK) and Seattle Genetics (NASDAQ:SGEN) all suffered major clinical or regulatory setbacks that should serve as a lasting reminder of the continued risk of investing in biotech.
December 30
Opko’s setback came as a nasty surprise to see out 2016, with the group slumping 19% after its long-acting human growth hormone project Lagova flunked a phase III trial. Lagova, which is licensed to Pfizer (NYSE:PFE), has 2022 consensus sales forecasts of $502m, according to EvaluatePharma, and Opko says it is analyzing the dataset to see if outliers might have skewed the result.
December 29
Meanwhile, Cempra investors had gone into the holiday break knowing that their company faced two pivotal events: FDA action on oral and intravenous versions of its antibiotic solithromycin, on December 27 and 28 respectively (Panel nod gives Cempra little solace, November 7, 2016).
Caution quickly set in, and after the second date passed with no news some feared the worst. They were proved right when finally Cempra announced that both had been rejected, by way of a complete response letter citing manufacturing facility inspection deficiencies and the need for additional safety information.
Most importantly, the FDA said the data set was too small to quantify the risk of liver toxicity. It was this that had resulted in a negative panel vote on safety that would have hobbled solithromycin had it been approved; with the agency now requesting a 9,000-patient study the project looks dead in the water.
While Cempra slumped 57% Fortress Biotech was up 21% on what seemed to be a clear case of misplaced exuberance. All the group had done was have a single case report published in the New England Journal of Medicine with its anti-IL13Rα2 CAR-T project MB-101, and the glioblastoma patient in question relapsed.
December 28
Immunogen (NASDAQ:IMGN) climbed 29% on December 30, but it was actually two days earlier that positive phase I ovarian cancer data were published in the Journal of Clinical Oncology with its folate receptor-targeting antibody-drug conjugate mirvetuximab soravtansine.
Folate receptor targeting does not have a great track record, and Endocyte (NASDAQ:ECYT) was sunk when its small molecule-drug conjugate vintafolide underwhelmed in ovarian cancer (Esmo – Missed Target leaves Endocyte clutching at straws, September 28, 2014). However, the phase I data bode well for Immunogen, which says they support the design of mirvetuximab’s ongoing phase III study, Forward I.
December 27
Investors buoyed by the good news before the Christmas weekend were brought back to earth with a thud when the US FDA put some clinical trials of Seattle Genetics’ vadastuximab talirine on hold after seeing six cases of liver toxicity and four deaths. Seattle stock lost 15%, or $1.3bn of market cap, on December 27.
This looks like an overreaction given that, according to EvaluatePharma consensus of sellside figures, vadastuximab has an NPV of just $277m, and Leerink points out that its phase III Cascade study in first-line AML is not affected by the hold.
Still, vadastuximab is an important asset for Seattle, which is trying to diversify beyond its flagship, Adcetris, and phase I data were good enough to feature in a press briefing at Ash (Ash interview – Seattle’s aspirations versus big pharma’s appetites, December 6, 2016).
However, the clear risk now is that the entire program will be pulled, but first the reason behind the toxicities must be ascertained. It is not yet clear whether these are due to vadastuximab’s target, CD33, its cytotoxic moiety, a problematic linker, other treatments given or patients’ disease.
December 23
Portola (NASDAQ:PTLA), Biogen and Ionis all got early Christmas presents from the US FDA, Portola’s coming from a relatively innocuous-seeming announcement that the agency had accepted the filing for its Factor Xa inhibitor anticoagulant betrixiban, giving it priority review. The EMA also has validated the group’s filing.
However, betrixiban’s path to market has been tortuous, and the project stumbled in phase III. Despite this the group insisted on sticking to its filing schedule, and positive noises from the regulators seem to validate this strategy; Portola stock surged to close up 34%.
If this spells good news for betrixiban then that is one out of two for Portola, which has resubmitted its anticoagulant reversal agent Andexxa after an FDA rejection in August. A recent $50m loan agreement with Pfizer and Bristol-Myers Squibb – repayable in Andexxa royalties – could be another positive sign.
It is certainly good for sentiment that, despite all of biotech’s 2016 setbacks, the FDA is still capable of approving drugs with alacrity.
A case in point is Biogen’s spinal muscular atrophy agent Spinraza, licensed from Ionis, which got the US green light on December 23, well ahead of the FDA’s April 2017 action date. Along with approval Biogen received a pediatric priority review voucher, which it could sell on, though the prices paid for these vouchers are falling.
Analysts at Evercore ISI and Leerink highlighted the breadth of Spinraza’s label in all subtypes of SMA, calling this a best-case scenario commercially. Sellside consensus, as compiled by EvaluatePharma, sees Spinraza sales hitting $1.4bn by 2022.
With such events as the readout of Roche’s (OTCQX:RHHBY) Aphinity trial of Perjeta, and regulatory action on Tesaro’s (NASDAQ:TSRO) niraparib, to come in the first half of the New Year, investors have plenty more binary outcomes to look forward to.