American Society of Clinical Oncology 2005

American Society of Clinical Oncology 2005

Targeted cancer therapies continue to demonstrate success

Rod Raynovich 5/23/2005

Cancer therapies are one of the most promising applications of biotechnology and the ASCO Meeting is the premier meeting for presentation of clinical results. Historically ASCO is the catalyst for driving biotech stocks however, in previous years there has been a “sell on the news” phenomenon. Many of the stocks held on to gains this year as product revenues are growing. The biotechnology sector is already primed and positioned for breakthrough results for cancer therapy products utilizing gene targeted monoclonal antibody and small molecule technology. From a technology perspective, monoclonal antibody based drugs, are the blockbusters and small molecule drugs such as kinase inhibitors are up and coming.

Another interesting area for future discovery and development are therapeutic cancer vaccines. Some of the smaller public companies in this area are: Antigenics (AGEN), CancerVax CNVX), Cell Genesys (CEGE), Corixa (CRXA) recently acquired by Glaxo, and Dendreon (DNDN).

Six blockbuster products are already on the market, For Genentech, Morgan Stanley analyst Steven Harr M.D. forecasts Herceptin U.S. sales of $635 mil in 2005 and over $1 billion in 2006. Herceptin sales were $482 million in 2004. Avastin revenues were $545 million in 2004 and forecasted to be over $1 billion in 2005 and over $2 billion in 2006. Tarceva sales in the U.S. are forecasted at $260 mil. Revenues outside the U.S. are also robust and managed by Genentech’s partner Roche. Rituxin sales are forecasted at $1.8 billion for 2005 (Partner is Biogen- IDEC).

Dr. Harr forecasts Erbitux sales by Imclone (IMCL) and Bristol Myers (BMY) are $396 million in the U.S. and $249 million for ROW. Yaron Werber M.D. of Smith-Barney forecasts Erbitux U.S. revenues of $379 million. Genentech is a marketing powerhouse in Oncology so with stronger marketing of Erbitux by Bristol revenues can be improved with the application in refractory colorectal cancer.

Novartis’ Gleevec has shown success in treating leukemia (CML) and colon cancer with revenues up 41% to $496 million in Q1 2005. Novartis also has a promising oncology portfolio in development.

A recent report (Drug Trend Report 2005) from Medco Health Solutions, Inc. (MHS) stated that spending on cancer related medicines increased by 15.3% in 2004, double that of 2003. Spending on prescription drugs to treat various forms of cancer grew 25.9% in 2004. Two therapies that accounted for most of that increase were Novartis’ Gleevec and AstraZeneca’s Iressa, however Iressa sales are expected to decline due to withdrawal from the European market. There are currently over 200 oncology drugs under clinical development, and this will be an important category for tracking overall drug costs. “The pipeline for oncology treatments is on the verge of exploding as are the estimates for diagnosis of new cancer patients”, said Steve Russek, R.Ph., Vice President of Medco Special Care Pharmacy Services. The American Cancer Society said there were 10 million Americans diagnosed with some type of Cancer with an estimated 1.4 million cases expected in 2005.

The molecular basis for the most promising drug candidates are antibodies that block receptors, such as EGFR (Epidermal Growth Factor Receptor) which is abnormal in cancer cells, and small molecules that control intracellular processes such as enzymes.

The overall clinical efficacy trend for new cancer therapies has been an increase in survival time for patients with a concomitant increase in the quality of life primarily because toxic chemotherapy regimens can be minimized. Although biotech drugs have demonstrated better efficacy year after year, no absolute cures have been discovered. This raises the question that with all the new expensive drugs forthcoming with modest improvements, does it portend even greater financial pressures on the U.S. Healthcare system? Nonetheless the success of these products is impressive and one must take into account that we are at an early stage of drug development and continuing clinical improvements are likely with the possibility of maintenance therapy.

Among the thousands of papers presented, some of the more significant pivotal results presented by biotech companies (excluding Genentech, Abgenix and OSI) were:

  • Ariad (ARIA) – Ariad Pharmaceuticals announced that its novel mTOR inhibitor AP23573 administered as a single agent provided clinical benefit in advanced sarcoma patients in an ongoing Phase II clinical trial. Almost all the patints had fialed alternative anti-cancer treatments. Thirty-seven per cent (37%) of evaluable patients (19/52) in the trial had clinical benefit responses-sustained anti-tumor activity as defined by strict RECIST guidelines-including three patients with partial responses and sixteen patients with stable disease for at least four months. The small molecule drug AP23573, starves cancer cells and shrinks tumors by inhibiting the critical cell-signaling protein, mTOR which regulates the the response to tumors and growth factors and controls tumor blood supply through effects on VEGF (Vascular Endothelial Growth Factor).
  • Celgene (CELG) – Cancer drug Revlimid (lenalidomide) significantly delayed time to disease progression in previously treated, relapsed or refractory Multiple Myeloma patients.The median time to progression in two studies with Revlimid plus dexamethasone was 53 to 60 weeks compared to about 20 weeks for dexamethasone plus placebo. The overall response rate was 58 to 61%. Celgene has completed its response to the FDA approvable letter for its Thalomid supplemental new drug application for multiple myeloma. Revlimid was also studies in refractory or relapsed Cll (Chronic Lymphocytic Leukemia). In a Phase II Study 12 out of 14 patients showed a 61% decrease in absolute lymphocyte count. The Company also achieved promising Phase II results with Revlimid in treatment of MDS (myelodysplastic Syndrome). Revlimid is a new class of novel immunomodulatory drugs or iMiDs.
  • Geron (GERN) – On May 23 Geron announced that it had obtained clearance from FDA to initiate clinical testing of its lead anti-cancer compound GRN163L in patients with chronic lymphocytic leukemia (CLL). The initial Phase I/II open-labe, dose escalation trial trial of GRN163L will be conducted in patients with advanced CLL. This study will provide Geron with a unique opportunity to measure both the magnitude and time course of telomerase inhibition in tumor cells. GRN163L is a potent inhibitor of telomerase that results in telomere shortening and leads to cell cycle arrest or apoptosis. GRNL has been characterized pre-clinically and shown to inhibit telomerase in human tumor cells of many cancer types.
  • Imclone (IMCL) – Imclone Systems and Bristol-Myers Squibb Co. released positive clinical results for a variety of cancers. Results from a mid-stage clinical trial showed that the use of Erbitux along with a chemotherapy regimen had a 10% response rate in colorectal patients whose disease had spread, a 71% partial response rate, and a rate of 17% of patients achieving disease stability. Another mid-stage trial showed that the use of Erbitux and Genentech’s Avastin along with chemotherapy had a 37% response rate in colorectal cancer patients who did not respond to chemotherapy alone, compared with the 20% response rate in patients that received Erbitux and Avastin alone. In a mid-stage study of advanced ovarian, primary peritoneal and fallopian tube cancer patients, the companies found that Erbitux used with standard chemotherapies had a 92% response rate in 12 patients in 12cpatients with Stage III progression of the disease-where the cancer has spread but not far-who had their tumors surgically removed, and a 44% response rate in Stage III who could not have their tumors completely removed. The longer term goal of these studies would be to better understand how Erbitux works in combination with other widely used cancer therapies and hopefully enable antibody therapies without the combination use of toxic chemotherapy drugs.
  • Millennium (MLNM) – Millennium Pharmaceuticals announced positive results from studies of Velcade in lymphoma and lung cancer. In NSCLS final data from a Phase II trial of Velacade with or without docetaxel showed a response rate and overall survival comparable to approved agents for use in second line lung cancer. In relapsed patients with mantle cell lymphoma (MCL), interim results demonstrated an overall response rate of 42%.
  • Onyxx (ONXX)Bayer and Onyxx presented favorable Phase III data on sorafinab for renal cell carcinoma (RCC). Progression free survival doubled to a median value of 24 weeks in patients receiving sorafinab vs. 12 weeks for patients receiving placebo. However, favorable results from a competitive experimental Pfizer drug Sutent took the spotlight away from Onyxx. Bayer and Onyxx expect to file an NDA later this year for approval in 2006. Sorafinab is the first oral multi-kinase inhibitor that targets serine threonine and receptor tyrosine kinases in both tumor cell and tumor vasculature.
  • Telik (TELK) – reported on their TELCYTA (TLK286) multicenter 1-2a trial in combination with carbplatin and paclitaxel in the first time treatment of advanced non-small lung cancer (NSCLC). In the trial, a 62% objective response rate and a disease stabilization rate of 92% were observed in evaluable patients. TELCYTA is a novel small molecule tumor activated drug candidate. Upon activation by the enzyme GST P1-1 present in cancer cells, apoptosis occurs.

Stock Market Effect-Genentech the dominant oncology company

As mentioned earlier ASCO is one of the major clinical meetings for biotechnology and tends to create a wave of interest in biotech stocks. As in previous years, biotech stocks started to rally in anticipation of the meeting. The IBB biotech portfolio was at it its low of 63 at the end of March and the beginning of May and has rallied to 67+ through ASCO. The 12 month high was at 77 in December 2004.

Chart Ten Biotech Stocks with Cancer Portfolio Focus:

Company Ticker Price 5/20 Market Cap(millions) Revenues(millions last 12 mos.) EPS
Abgenix ABGX 7.63 684 17.5 -2.12
Ariad ARIA 6.31 338 N/A -0.79
Celgene CELG 39.3 6,500 377 0.31
GenenTech DNA 75.5 79,700 4,230 0.84
Geron GERN 7.5 415 N/A -0.83
Imclone IMCL 32.9 415 365 0.93
Millennium MLNM 8.71 2,679 479 0.82
Onyx ONXX 26.7 943 N/A -1.56
OSI OSIP 41.5 2,130 44 -6.48
Telik TELK 15.3 793 N/A -1.68