An Opportunity in the Shifting Perceptions of the FDA

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On April 20, 2015, The Therapeutic Goods Administration – the FDA’s counterpart in Australia – announced that it had approved a breakthrough drug called pembrolizumab – commercially referred to as Keytruda. Marketed and distributed by pharmaceutical giant Merck (MRK), Keytruda targets the PD-1 programmed cell death receptor, and is currently aimed at treating metastatic melanoma.

The treatment is also approved as of September 4, 2014 under the FDA fast-track development program for the same incidence in the US with patients that have already been treated with ipilimumab, or after treatment with ipilimumab and a BRAF inhibitor in patients who carry a BRAF mutation.

In clinical trials, Keytruda was shown to have associated with it a moderate side-effect profile, with common side effects including fatigue, cough, nausea, decreased appetite, and diarrhea. The drug was also shown to have the potential for severe immune-mediated side-effects, with common examples involving the lungs, colon, endocrine glands and the liver.

The risk-benefit ratio is the most important rubric of a successful phase 3 trial, given that the ratio itself includes both efficacy and safety, essentially the relationship between the two for a given drug. That ratio plays a pivotal role in whether a drug or treatment actually receives approval once phase 3 trials are complete, and using the example of Keytruda, we can see that the FDA is willing to approve cancer immunotherapy treatments, despite a moderate risk profile, since the potential benefit greatly exceeds the risk.

This same hurdle is presenting itself with Amgen’s (AMGN) T-VEC now. On April 27, an FDA panel suggested that it might reject the drug. Two days later, however, an advisory panel to the agency voted favorably on the drug’s risk-benefit profile for melanoma treatment, with 22/23 members voting yes. The FDA decision-makers are under no obligation to follow the recommendations of their advisory panels, but it is an extremely positive indication that we will see T-VEC approved shortly. There were a number of other issues with T-VEC that could have potentially impede its pending approval, including concerns about the trial design when compared to newer treatments undergoing clinical trials, but it looks as though the low toxicity and risk profile has led the administration to afford the drug an opportunity. Essentially, if the drug can help treat cancer and the only real side-effects associated with it are flulike symptoms that eventually subside, why not give it a go, even if it wasn’t compared directly to newer drugs? Risk-benefit wins out over other considerations.

This attitude towards breakthrough cancer treatments presents investors with an opportunity. It helps investors pinpoint what is most crucial measurement in an FDA approval, and it all begins with a low-risk profile compared with a higher risk disease. The flipside of the coin is that those that have an exceptionally low risk profile gain preference even if they have not performed perfectly or exactly as expected in trials.

Due to the recent explosion of autologous and otherwise fully human immunotherapy treatments, nearly all of which have exceptionally low risk profiles, we could see a wave of FDA approvals in the immunotherapy niche assuming the FDA keeps the risk-benefit ratio as its top metric. Here are three on the horizon. Here HeHHasdfasdfasdfasdfc cxxxxddd

MabVax (MBVX)

First up is MabVax. On May 5, MabVax announced that it had received the final report on toxicology testing of its fully human HuMab 5B1 antibody, which is being trialed simultaneously for both pancreatic cancer and as a diagnostic imaging tool for the same disease. In the report, an independent research organization highlighted the fact that “the antibody, given in either a single dose or repeated doses, had no significant adverse findings even at the highest dosage levels tested.”

The treatment was tested on nonhuman primates across multiple dose levels, with further repeated doses targeted at identifying any adverse toxicology signals. No significant adverse findings occurred, and – as David Hansen, CEO of MabVax reported alongside the announcement – the company is “moving forward with our plan to enter the clinic later this year.”

MabVax announced the antibody as being its lead candidate back in October last year, and with a confirmed low risk profile, the chances of eventual approval rise, assuming at least some efficacy with its structured endpoints.

With MabVax, even if the antibody fails to receive approval for the treatment of pancreatic cancer –HuMab 5B1 could still enter the imaging market worth just short of $477 million if the second of the two trials is successful.

Sorrento (SRNE)

In March 2014, Sorrento initiated a pivotal clinical trial for Cynviloq – the treatment targeted at metaplastic breast cancer and non-small cell lung cancer. Only partial results associated with the first eight patients involved in the trial are available, and so far the pharmacokinetics data are all positive in these patients. According to a recent report, the ongoing safety assessment from treated patients continues to reveal no unexpected adverse events and safety data is consistent with the toxicity profile reported in the literature with albumin bound paclitaxel. Detailed data is expected to be disclosed over the coming months, and – if we see a continuation of the positive pharmacokinetics and a maintaining of the low toxicity profile – it would put the company squarely within the favorable risk-benefit ratio.

Agenus (AGEN)

A third option is Agenus. One of Agenus’ lead candidates is its QS-21 Stimulon – currently being trialed for a number of incidences in combination with two of Glaxo Smith Kline’s (GSK) vaccinations. The first, is with QS-21 incorporated as part of RTS,S, Glaxo Smith Kline’s malaria vaccination. A study reported on April 24, 2015 showed a statistically significant reduction against malaria in children who receive the vaccination, followed by booster shot at 18 months. While this treatment differs from the previous two in that it targets malaria, annual global malaria deaths are actually at about the same level as annual US cancer deaths, so don’t be fooled. The risk prolife here is mainly injection site pain, fatigue and myalgia, so it is reasonable to conclude that regulatory authorities could take a similar stance here.

The second is the use of the same treatment with GSK’s HZ/su – a vaccine targeted at the prevention of shingles. While this treatment is unlikely to be perceived in the same realms of benefit-risk as is cancer and malaria, results in a recent phase 3 clinical program reported that the vaccine containing QS-21 achieved close to 98% protection in people aged 70 or older, and 97% protection in people over the age of 50. Again, with a low toxicity profile, and with Agenus set to benefit from a milestone payment upon first approval of QS-21 and royalties from commercial product sales of both HZ/su and RTS,S, both of these applications could translate to an upside revaluation in the company’s market capitalization heading forward.

Conclusion

A number of recent moves by the FDA have hinted at a shift in perception towards the approval of breakthrough treatments, with the two examples mentioned, Keytruda and T-VEC , highlighting a tendency to focus on potential benefit for treatments that have a low to medium risk/toxicity profile. There are a number of companies whose pipeline and lead candidates may be set to benefit from this shifting perception, with MabVax and Sorrento two potential allocations in the cancer space and Agenus a potential allocation in Malaria.

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