PaineWebber Morning Notes
July 2, 1988
Agouron: Preliminary, promising data on Remune
KEY POINTS
1. Phase II data on Reumne Released at 12th World AIDS
Conference. Yesterday, at the 12th World AIDS Conference
in Geneva, preliminary results were released of a binded,
controlled Phase II clinical trial on Reumne, an HIV therapeutic
vaccine that Agouron recently licensed from Immune Response.
These data will also be the subject of an oral presentation in a late-breaker
session on Friday, July 3. As a reminder, Remune is made from an
inactivated HIV depleted of its viral envelope protein (gp120)
and combined with an adjuvant (IFA-incomplete Freund's
adjuvant) that serves as a potent stimulator of the immune
system.
- Design of the trial: A total of 43 HIV-infected patients (median viral load
of 8159 copies/ml, median CD4+ T cells of 493 cells/mm) who had not
been treated with 3TC or protease inhibitors before were enrolled in the
trial and randomized into two groups. Both groups were initially treated
with AZT, 3TC and Crixivan for 4 weeks. After this period, one group
(22 patients) had Remune added to their anti-retroviral regimen, while the
other group (control group, 21 patients) had placebo (adjuvant) added to
their anti)viral regimen. Remune was administered every 12 weeks
through intra-muscular injection. These data represent an interim analysis
at 20 weeks (16 weeks after the first immunization with Remune). Patients
Will be followed for a total of 32 weeks. Key measurements include viral
load, CD4+ cells and lymphocyte proliferative response (LPR) to several
HIV-related antigens.
Preliminary results: In the interim analysis, 18 of the 21 measurable
patients (86%) in the Remune group had viral load below the level of
detection (<40 copies/ml using the Roche ultra-sensitive assay) whereas
12 of the 18 measurable patients (67%) in the control group had viral load
below the level of detection. The mean increase in CD4+ cell counts of the
Remune group (137 cells/mm) was slightly higher than that of the control
group (109 cells/mm). The Remune group showed statistically significant
higher lymphocyte proliferative response to HIV-related antigens than the
control group. These antigens include the gp-120 depleted HIV used in
Remune, whole HIV of a different viral strain, and native and recombinant
versions of an HIV core protein (p24). in addition, patients in the Remune
group experienced significant increases in the production of MIP-1 beta (a
chemokine associated with viral suppression) as compared to the control
group.
Conclusion: In our opinion, there are preliminary yet promising data from
a relatively small trial. Although the difference in viral load reduction was
not yet statistically significant between the Remune group and the control
group, there is an obvious trend in favor of Remune (an improvement of
nearly 20%). Most promisingly, the immunological measurements indicate
that Remune induced cell-mediated immune response specifically against
HIV. The lead investigator of this trial, Dr, Fred Valentine, Professor of
Medicine at New York University Medical Center, noted that the immune
response in patients receiving Remune is comparable to that seen in some
HIV-infected individuals who did not develop AIDS (non-progressors).
We believe that these observations lend support to the possibility that
Remune potentiates anti-retroviral therapy and helps reconstitute the
immune system. The final results of this trial should be available in the
second half of this year. In the meantime, Agouron and Immune Response
are planning a larger Phase II trial (expected to enroll more than 300
patients) which will use Remune in conjunction with a combination
anti~retroviral therapy that includes Viracept.
2. Reaffirming Buy (1) rating. With the licensing of three HIV
therapeutics in the three weeks, Agouron has significantly expanded its
anti-HIV portfolio and filled a gap in its product pipeline. In our opinion,
Viracept continues to be viewed as the optimal first line protease inhibitor
given its oombination of durability and potency of effect, ease of use, mild
side effect profile, and favorable cross resistance profile. We continue to
believe the market underestimates the capabilities of Agouron's
management team and the potential of the company's product pipeline. Our
12-month target remains $65-70 based on our fiscal 2000 EPS estimate of
$3.43 using a 25-30% discount rate and a 30 multiple. The stock is
currently trading at a P/E multiple of 11.7x bur 1999 calendar year
estimate of $2.56 per share.
RISKS:
-Stock volatility and speculative nature of biotechnology investment
-Competition in the HIV protease inhibitor market
-Potential for resistance and cross resistance among HIV protease
inhibitors
-Potential for manufacturing shortfalls
-Loss of major corporate collaborations
(UPCOMING MILESTONES
-Marketing approval for Viracept in other countries - Q2 1998
-Clinical results of Phase I dose ranging study for GART inhibitor
(AG2034) - mid-1998
-Initiation of clinical studies for MMP inhibitor in acute macular
degeration - H2 1998
-Announcement of product licenses/aquisitions
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