The ECC/ESMO meeting, the European equivalent of ASCO, will take place next weekend. Historically, this event has received limited investor attention (since most of the important late stage stuff is reserved for ASCO) but in recent years its importance is growing as more practice-changing data are presented. As a proof of this trend, this year’s meeting will include the two most important breakthroughs in renal cancer in almost a decade.
BMS (BMY) and Exelixis (EXEL) will present P3 data for Opdivo and cabozantinib (cabo), respectively, in 2nd line renal cancer. Although full details are not available, both agents are likely to become the first drugs to demonstrate a statistically significant survival benefit in the general renal cancer population.
The renal cancer field saw multiple drug approvals in the past decade (Sutent, Nexavar, Inlyta, Votrient, Afinitor, Avastin) but only one of these drugs (Sutent) demonstrated a survival benefit, which was almost statistically significant (p=0.051). All other agents were approved based on a PFS (progression-free survival) benefit and did not show a statistically significant survival advantage. Sutent is the market leader in the 1st line setting while the 2nd line is dominated by Afinitor and Inlyta (each generates ~400M a year in renal cancer).
The trials for Opdivo and cabo were similar in terms of patient population (2nd line) and comparator arm (Afinitor). The Opdivo trial had overall survival as the primary endpoint whereas cabo’s trial had PFS as the primary endpoint. BMS did not provide information beyond stating that Opdivo led to a statistically significant survival benefit. Exelixis provided top line results including a statistically significant PFS benefit and a strong survival trend at an interim analysis (needs to be validated at a later analysis in 2016). Neither company provided the actual median values of PFS and overall survival.
I expect both companies to present solid results that will make Opdivo and cabo commonly used drugs for pre-treated renal cancer. BMS and Exelixis issued their press release on the same day and investors automatically assumed Opdivo will become the dominant agent, as was evident from the muted reaction in Exelixis’ stock.
I feel comfortable owning Exelixis going into ECC because no matter how strong Opdivo’s results are, it is not curative and most patients will require additional treatment options. In addition, there is still a chance for cabo to demonstrate superior efficacy (based on cross-trial comparison) at the meeting. Beyond efficacy, Opdivo appears to be better tolerated whereas cabo has the advantage of being an oral drug.
Down the road, Opdivo (with or without Yervoy) is expected to move to first line, leaving the pre-treated market to kinase inhibitors. If cabo demonstrates a significant survival benefit (my guess is 7 months), it is likely to make a big dent in the $3.5B renal cancer market that is dominated by undifferentiated products that do not have a survival benefit in their label.
The next catalyst on Exelixis’ horizon is FDA approval around mid-2016 (the drug recently received breakthrough therapy designation), followed by approval in Europe. As I discussed last month, I don’t expect Exelixis to stay independent for long given the discrepancy between its market cap ($1.5B) and cabo’s commercial potential in renal cancer ($600M using conservative assumptions). This excludes the drug’s potential in additional indications (approved for MTC, P3 in liver cancer) and cobimetinib, Roche’s MEK inhibitor for which Exelixis has co-promotion rights in the US.
Other companies with interesting data at ECC
ArQule (ARQL) will present P1b data for its Akt inhibitor, ARQ092. The company already disclosed four responses (lymphoma, breast and endometrial cancer) in the first 20 patients. All responders had a mutation in the Akt-PI3K pathway, which bodes well for future development utilizing biomarkers for patient selection. Acknowledging the small numbers and preliminary results, these results appear better than what was observed with other Akt inhibitors and may suggest ARQ092 is a best-in-class molecule that can be pursued as monotherapy (other Akt inhibitors are being pursued in combination regimens). The data set at the meeting will obviously be limited in terms of follow-up and sample size but it will be interesting to see actual response rates per indication/mutation and whether responses are durable.
Incyte (INCY) will present updated results for its IDO inhibitor (epacadostat) in combination with Yervoy in melanoma. Response rate and PFS in the abstract continue to look numerically better than historical data with Yervoy but it is hard to ascribe this to the drug without a control arm. This trial is viewed as a proof of concept for IDO and future development will be done with a PD-1 antibody. Epacadostat is in combination trials with the leading PD-1 agents and initial data are expected at ASCO 2016. Incyte recently acquired rights for a PD-1 antibody, which creates a path for the company to have its own combination regimen.
Roche will present results from the BIRCH study, which evaluated its PD-L1 antibody (atezolizumab) in non-small cell lung cancer (NSCLC). According to Roche’s press release the single-arm trial demonstrated a correlation between PD-L1 expression and response rate, further validating its strategy of using PD-L1 as a predictive biomarker in NSCLC. While this corroborates results in other trials (especially BMS’ CheckMate-057 study and Roche’s POPLAR), it is still unclear what role PD-L1 status will have in NSCLC as activity appears similar to chemotherapy and the safety profile is significantly better.
Array (ARRY) will have several presentations for its MEK inhibitor, binimetinib. The most interesting trial is a combination study of binimetinib and Novartis’ (NVS) CDK4/6 inhibitor in NRAS melanoma. Array is evaluating binimetinib as single agent in P3 for this indication, with data expected this year. Even if the trial succeeds, the clinical benefit will likely be modest and combination regimens are urgently needed. MEK is becoming an increasingly attractive target in combination trials. At the meeting, Novartis will present updated results from COMBI-v which evaluated its BRAF+MEK combination in BRAF+ melanoma and demonstrated a 7.5 month survival benefit vs. BRAF monotherapy. In June, AstraZeneca (AZN) reported impressive results for selumetinib (licensed from Array) in a rare tumor type (neurofibromatosis 1). The most exciting indication for MEK inhibitors is KRAS+ NSCLC, especially in combination with PD-1 antibodies. This strategy is pursued by Roche (with Exelixis’ MEK inhibitor) and AstraZeneca (with selumetinib) and could be the driver for the acquisition of Array by one of the PD-1 players.
Lastly, privately-held Stemcentrx will present P1 results for rovalpituzumab tesirine, an antibody- drug conjugate targeting DLL3. The abstract is still not available (late breaking abstract) but based on the title this agent appears to have encouraging efficacy in small-cell lung cancer (SCLC).
We are adding a third position in ArQule in anticipation of a positive readout at ECC. Next year, the company may be in potentially pivotal single-arm trials for ARQ092 (A biomarker defined tumor type and Proteus Syndrome) and ARQ087 (FGFR+ cholangiocarcinoma) which may have a dramatic impact on valuation given its low market cap ($120M).
Portfolio holdings – September 20, 2015