ABGX(IL/N) GS Conference update:
ABX-EGF main focus
Annual Earnings Expectations
52-Week Range US$19-10
YTD Price Change -7.61%
Market Cap US$1.0bn
At the 25th Goldman Sachs Global Healthcare Conference today, management reviewed
recently announced Phase II data on ABX-EGF, in development with Amgen. Time to
potential completion of ABX-EGF Phase III studies in colorectal cancer, given
competitive environment, is a key investor focus. With little detail given on Phase III
design and the commercial availability of new agents, it is difficult to know what the
timeline will be. Abgenix did say that they are preparing to be ready for potential BLA
submission in 2005. We look for potential Phase II data with ABX-EGF in lung cancer in
Q4 or early 2005. Abgenix also provided top line detail on its pipeline, spanning
oncology, inflammation, cardiovascular & infectious diseases as well as manufacturing.
We are introducing 2005 estimates of a loss of $176.8 million or ($1.95) p/s. The
company has not yet given 2005 guidance, results will depend on clinical spend and
partner revenues. Maintain IL rating and Neutral coverage view. Key risks include
potential clinical failures or delays.
INVESTMENT OUTLOOK: We believe that Abgenix is best suited for risk tolerant
investors with a long time horizon. Abgenix is distinguished by its ability to make fully
human antibodies to a broad range of targets, a platform technology that can fuel a diversified
pipeline. Abgenix has established a blue chip partner list and a growing roster of proprietary
therapeutic antibodies. Over the next several years, we expect a range of new antibodies to enter
the clinic on a proprietary and partnered basis. We believe that the main valuation driver will likely
be clinical progress with lead antibody ABX-EGF, in Phase III studies. Abgenix is developing
ABX- EGF through a 50/50 profit share agreement with Amgen. Regulatory approvals of
AstraZeneca's Iressa, and ImClone/Bristol Myers' Erbitux, as well as clinical data on
OSIP/DNA/Roche's Tarceva have fueled interest in the EGF mechanism. While ABX-EGF is
further behind in development, we believe that the market will support multiple entrants.
ABX-EGF could potentially have safety and dose convience advantages relative to Erbitux, which
will have to be established in the clinic.
I. ABX-EGF (panitumumab)
ABX-EGF is a fully human antibody to the EGF receptor, which is over- expressed in a range of
cancers. Regulatory approvals of AstraZeneca's Iressa, and more recently ImClone/Bristol Myers'
Erbitux, as well as the announcement that OSIP/DNA/Roche's Tarceva data in lung cancer, have
fueled interest in and validated the EGF mechanism. The recent approval of Genentech's Avastin,
a VEGF inhibitor, with potent impact in the colorectal setting was also a significant advance. While
the biological approaches are being validated, the availability of several treatment options can
complicate the development path. Under Subpart H procedures, more than one company can get
accelerated approval for a cancer indication, until one agent confirms clinical benefit in a
confirmatory study. Abgenix and Amgen could pursue accelerated approval for third line
colorectal, where phase III studies are underway in the U.S. and Europe and a series of Phase II
studies are underway in renal, colorectal, prostate cancer and non-small cell lung cancer.
Phase III Colorectal cancer - 2 pivotal trials initiated in January
In January, two pivotal studies with ABX-EGF were started in patients with advanced metastatic
colon cancer. For competitive reasons, details on the studies with respect to size and timing, have
not been provided. Patients will have 3rd line colon cancer and will have been exposed to 5-FU,
leucovorin, oxaliplatin and irinotecan. One trial will be conducted in the US and the other trial will
be outside of the US.
Phase II colorectal studies - data presented at ASCO
Data was presented this weekend at ASCO (6-7-04 note) from an ongoing Phase II study in
colorectal cancer. The study includes 148 patients (expanded from 100 to get more data on
oxaliplatin treated patients) who received monotherapy intravenous infusions of 2.5 mg/kg of
ABX-EGF weekly over an 8- week treatment cycle, for up to 6 cycles. Data were presented from
the first 44 patients at ASCO 2003, where an approximate 10% response rate was observed. At
ASCO 2004, data were presented which showed a 10% response rate, median time to progression
of 2 months and median overall survival of 7.9 months. One patient had a grade 3 infusion-related
reaction which was related to ABX-EGF treatment. The patient received premedication for ther
treatments, and ABX-EGF dosing was not interrupted.
In a separate Phase II study in colorectal cancer, initiated in January 2002, up to 84 patients will
receive weekly intravenous infusions of 2.5 mg/kg of ABX-EGF in combination with standard
doses of irinotecan, leucovorin, and 5-fluorouracil (Saltz regiment) over a 6-week treatment cycle,
for up to eight cycles. We believe this study is still enrolling and it is not clear when we might see
data.
Non-small cell lung cancer - early but encouraging data at ASCO
Data were reported from interim data from a trial with ABX-EGF in combination with paclitaxel
and carboplatin for first-line non-small cell lung cancer. Nineteen patients were evaluated of which
there was one complete response and four partial responses. We regard this data as encouraging
but early.
Renal cancer - not clear when data will be available
Positive initial Phase II data on ABX-EGF as monotherapy in 88 advanced kidney cancer patients
were reported at ASCO in May, 2002. At 8 weeks, stable disease was achieved in 50% of the
patients. We believe this is a strong start given the severity of the patients studied, and the fact that
ABX-EGF was studied as monotherapy. The second part of this study will assess less heavily
pretreated patients and has enrolled 115 new patients. The dose is 2.5 mg/kg weekly over an 8
week cycle.
II. OTHER CLINICAL PROGRAMS
A. ABX-MA1 - data not likely until late 2004
Phase I studies are underway in metastatic melanoma for ABX-MAI. ABX-MA1 is a
XenoMouse-derived fully human antibody antagonist of the MUC18 cell surface adhesion
molecule, which is expressed on metastatic melanoma cells, but not on normal skin cells. MUC18
is also expressed on sarcomas, including smooth muscle and blood vessel-derived sarcomas,
prostate and renal cell cancers, suggesting additional potential cancer targets.
B. ABX-PTH
In Q1 2004, Abgenix initiated Phase I trials for ABX-PTH, for the potential treatment of secondary
hyperparathyroidism (SHPT). SHPT results from a decline in kidney function associated with
end-stage renal disease (ESRD). The ABX-PTH antibody targets and neutralizes the parathyroid
hormone (PTH).
III. COLLABORATION HIGHLIGHTS
** AstraZeneca - broad cancer antibody focus **
In October 2003, Abgenix and AstraZeneca announced a strategic collaboration for the joint
development of antibodies to up to 36 cancer targets. As part of the agreement AstraZeneca
invested $100M in Abgenix convertible preferred stock, with $50M convertible at $30 per share in
7 and 10 years, and will possibly invest an additional $60M in convertible preferred stock,
depending on the achievement of certain milestones. Abgenix will receive milestone payments as
candidates progress and royalties on potential sales. For these candidates, Abgenix will conduct
early clinical testing, process development, early clinical manufacturing, and manufacturing for the
first 5 years of commercial sales. AstraZeneca will pay Abgenix for its work at competitive market
prices. It is not clear at this point when the first antibody candidates may enter the clinic.
In addition to antibodies to the 36 targets, the collaboration provides for the development of a
separate pool of antibodies by Abgenix, with the potential for 50/50% cost and profit sharing
between the companies. We believe that this partnership provides solid leverage to Abgenix
technology in oncology.
** Amgen - EGF **
In October 2003, Abgenix and Amgen amended their agreement to develop anticancer antibody,
ABX-EGF. The agreement grants Amgen authority for development and commercialization
decisions. Abgenix has agreed to manufacture clinical and early commercial supplies of
ABX-EGF. As before, both companies will share equally in the development costs and in
worldwide profits. Amgen will make an advance of $60 million to Abgenix after each company
contributes $20 million in 2004. The advance would be returned with interest out of potential
profits only if ABX-EGF is commercialized. We believe the amended agreement will facilitate
more rapid development and provides important financial flexibility to Abgenix.
** Amgen - AMG-162 **
Amgen's pipeline candidate AMG-162 (osteoprotegrin) was developed with Abgenix's technology.
Amgen intends to initiate Phase III trials for osteoporosis in 2004.
IV. MANUFACTURING - Possible manufacturing agreements late 2004
Abgenix manufacturi
ng facility includes four 2,000-liter and two 12,000 liter bioreactors, and is capable of producing
200-400 Kg of material annually. Given the typically high production requirements for antibody
therapeutics, we regard the facility as a strategic asset. The company hopes to monetize its
manufacturing, in part, with the establishment of manufacturing agreements. Depending on the
scale up of ABX-EGF, it is possible that an agreement may be established in late 2004.
=== 2004 milestones ===
ASCO
* Phase II data for ABX-EGF monotherapy in second and third line colon
cancer
* Phase II safety data for ABX-EGF combination therapy in non-small cell
lung cancer
Additional Phase II data on ABX-EGF, possibly:
- Phase II ABX-EGF monotherapy time-to-progression data in renal cancer
- Phase II data for ABX-EGF combination therapy in non-small cell lung
cancer
- Phase II data for ABX-EGF combination therapy in first-line colon cancer
- Phase I data for ABX-MAI in cancer
* Milestone attained
I, Meg Malloy, hereby certify that all of the views expressed |
