GS: MLNM (IL/N): Growing pipeline with
renewed focus & new technologies
52-Week Range US$20-10
YTD Price Change -31.05%
Market Cap US$3.9bn
At its R&D day yesterday, MLNM discussed a growing pipeline that has benefited from
renewed focus and a broad platform of technologies to improve productivity. We expect 8
products drug candidates to be in clinical trials for inflammation, cancer and
cardiovascular diseases in 2005. Management also reiterated the goal of breaking even in
2006. We believe sustainable growth beyond 2006 will depend on expansion of
indications for Velcade & Integrilin, approval of some of the current drug candidates and
continued cost control. Despite the broad platform and growing pipeline, we maintain our
In-Line rating while awaiting for Phase II data on the next wave of candidates. Risks are
slower sales, failure in development and higher expenses. Our coverage view is Neutral.
1. REITERATED FINANCIAL GOAL OF BREAK-EVEN IN 2006
Management reiterated the guidance for net loss of $175-200MM in 2004, $100MM in
2005 and breakeven in 2006. The company restructured in 2003, leading to significant
reduction in R&D expenses in 2004 (down 16% year over year). We expect expenses to
continue to decline in 2005. In order to break-even in 2006, we believe expansion of
Velcade into first and second line therapy of multiple myeloma as well as Integrilin in acute
coronary syndrome would be required. We maintain our loss estimates of $175MM ($0.57/s) in
2004 and $113MM ($0.37/s) in 2005.
2. MILESTONES in 2004/05
* Additional Phase IV data from CRUSADE registry on Integrilin for acute coronary syndrome
(Q4/04) - Initiate Phase IV trial (EVEREST) of Velcade in retreatment of multiple myeloma
(H1/05) - FDA approval of Velcade in second line multiple myeloma (H1/05) * File FDA
application for early use of Velcade in second-line multiple myeloma (H2/04) * Phase IIIb data
from PROTECT trial of Integrilin in high risk angioplasty (Q4/04) - Phase IIIb REMOVE data of
Integrilin with heparin in low risk PCI (Q4/04) - Initiate Phase III trials of Velcade in front-line
treatment of multiple myeloma (late 2004/early 05) - Initiate Phase IIIb trial of Integrilin in
drug-coated stenting (Q4/04) - Phase II data of Velcade in first line non-small cell lung cancer
(H1/05) - Phase II data of Velcade in second line non-small cell lung cancer (Q4/04) - Phase II
interim data for Velcade monotherapy in mantle cell lymphoma
(Q2/05) - Phase II interim data on
Velcade in combination with Rituxan for low- grade follicular/marginal zone lymphoma (Q2/05) -
Phase IIa data on MLN-1202 in rheumatoid arthritis (late 2004/early 2005) - Initiate phase II trial of
MLN-1202 in relapsing remitting multiple sclerosis (late 2004/early 2005) - Phase II data on
MLN-2704 in prostate cancer (Q2/05) - Initiate Phase II trial of Velcade in bronchoalveolar
carcinoma (H1/05) - Phase I/II data of Velcade in prostate and ovarian cancers (H1/05) - Phase I
data on MLN3897 in rheumatoid arthritis (H1/05) - Initiate Phase I trial on MLN8054 in cancer
(2005) - Initiate Phase I trial of MLN 3907 in rheumatoid arthritis (H1/05)
Source: Company data and Goldman Sachs research estimates.
3. MOVING VELCADE TO EARLIER THERAPY OF MULTIPLE MYELOMA.
Velcade is approved for the treatment of multiple myeloma (MuM) patients who have failed at least
two prior therapies (i.e., third line use). Market share for Velcade is greatest in third-or-greater line
use (50%-60%) with smaller market shares in second line (10%-20%) and front line (2%-5%)
indications. Of the 45,000 MuM patients in the US, approximately 50%, 25% and 25% receive
first, second, and third line therapies, respectively. Key to the commercial strategy for Velcade in
MuM is moving usage to earlier stages of therapy through label expansion into the first and second
line settings.
In September 2004, Millennium filed an FDA application for Velcade in second line multiple
myeloma based on data from the Phase III APEX trial. Detailed data from the APEX trial will be
presented at The American Society of Hematology meeting (ASH) in 12/04. We believe that
presentation of the APEX data, along with growing physician confidence in Velcade's safety
profile should boost sales growth. We expect FDA approval of second line use by March 2005.
Earlier therapy can boost the sales potential of Velcade to $500 MM from $300 MM.
By the end of March, 2005, Millennium will initiate three Phase III trials in first line MuM patients
with and without transplants. Phase II data on first line monotherapy and combination therapy trials
will be presented at ASH in December. Initial Phase I/II data of Velcade in front line MuM
demonstrated high response rates when Velcade is combined with dexamethasone or
dexamethasone and doxorubicin (PAD).
In H1/05, Millennium expects to initiate the EVEREST trial to retreat Velcade responders.
Numerous Phase II studies are ongoing to explore dosing and extended therapy, as well as
combination regimens involving dexamethasone, thalidomide, melphalan, prednisone and
lenolimide.
4. LYMPHOMA AND LUNG CANCER REPRESENT LONGER TERM OPPORTUNITIES
FOR VELCADE
Velcade is being explored in solid tumors and lymphoma. Approval of Velcade for these
indications could add $300-500 MM to raise the market potential to $0.6- 1.0B.
There are about 300,000 non-Hodgkin's Lymphoma (NHL) patients in the U.S., of which
approximately 8,000 patients have mantle cell lymphoma (MCL) and 100,000 have
follicular/marginal zone NHL. Millennium is conducting a Phase II trial of Velcade monotherapy
for MCL. A Phase II trial of Velcade plus Rituxan in follicular/marginal zone lymphoma is also
ongoing. Interim data from both trials are expected at ASCO in May 2005. If the MCL data are
positive, they may be sufficient to support an FDA application. A 'go, no go' decision point for
Phase III trials on follicular/marginal zone NHL is planned for H1/05.
In non-small cell lung cancer (NSCLC), enrollment of 155 patients has been completed for a Phase
II study of Velcade +/- Taxotere as second line therapy. Millennium will make a 'go, no go'
decision on Phase III trial in Q4/04. Preliminary Phase II data were presented in June, 2004. Of 60
evaluable patients, there was a 10% partial response rate with Velcade monotherapy (3/29) and a
16% partial response rate for Velcade plus Taxotere (5/31). Historical response rates for second
line NSCLC have been 5- 10%. Newer therapies, such as Iressa and Tarceva, have demonstrated
similar response rates when used as single agents. Velcade is also being investigated in front line
NSCLC in combination with various therapies.
Enrollment for another Phase II trial sponsored by the SouthWestern Oncology Group of Velcade
in combination with gemcitabine and caraboplatin for NSCLC is almost complete. Data are
expected in mid-2005.
Millennium will initiate a Phase II open/label, monotherapy trial of Velcade in patients with
bronchoalveolar carcinoma (BAC) or BAC-like adenocarcinoma who have relapsed or progressed
after therapy with EGF blockers in H1/05. Of the 160,000 patients with NSCLC in the U.S., 6%
have BAC and 14% have BAC-like adenocarcinoma.
Outside of NHL and lung cancer, the company is conducting Phase I/II trials in prostate and
ovarian cancers. Previous trials of Velcade in colorectal and breast cancers have not resulted in
improved response rates.
5. GREATER PENETRATION IN ACUTE CORONARY SYNDROME IS KEY TO
INTEGRILIN GROWTH
Integrilin is a GP IIb/IIIa inhibitor indicated for the treatment of patients with acute coronary
syndrome (ACS; i.e., recent cardiac chest pain) and for patients undergoing percutaneous coronary
intervention (PCI; i.e., balloon angioplasty and stenting of the coronary arteries). The overall
market for IIb/IIIa inhibitors is slowing partly due to the use of drug coated stents, slow adoption
outside of catheterization labs, and competition from Angiomax (thrombin inhibitor).
Of the approximately 750,000 PCI patients in the U.S., 250,000 are untreated, 335,000 receive
Integrilin, and 165,000 are treated with other GP IIb/IIIa inhibitors, giving Integrilin a 67% patient
share of the PCI market. There are about 900,000 high risk early ACS patients in the U.S., 200,000
are treated with GP IIb/IIIa inhibitors and the rest are not treated. Integrilin has 85% patient share.
With such high market shares, the growth opportunity of Integrilin lies mostly with increasing the
number of treated patients, particularly in ACS. Millennium is concentrating its Integrilin
development efforts here. In September 2003, the company hired an additional 80 sales
representatives to promote the benefits of better compliance with AHA/ACC guidelines on the
early use of IIb/IIIa inhibitors in ACS. Millennium initiated the EARLY ACS trial in Q2/04. Th
e trial will enroll 10,500 high risk ACS patients who will be treated with Integrilin in combination
with new therapies, such as drug eluting stents and low molecular weight heparin.
At the recent American Heart Association (AHA) meeting in November 2004, Millennium
presented data from two Phase IV trials. The CLEAR Platelets trial randomized 121 low-moderate
risk patients undergoing elective stenting procedures to a standard (300mg) or high (600mg) dose
of Plavix +/- Integrilin. All patients received aspirin and heparin. Patients receiving Plavix plus
Integrilin had lower platelet reactivity and release of cardiac markers than patients receiving Plavix
alone. Release of cardiac markers can be a sign of damage to the heart muscle.
The second Phase IV trial PROTECT showed mixed results. The trial randomized 857 high-risk
patients to (1) Angiomax monotherapy (2) low molecular weight heparin (enoXaparin) plus
Integrilin or (3) heparin plus Integrilin. On the primary endpoint of coronary flow reserve
(epicardial blood flow), Angiomax was statistically better than Integrilin. However, Integrilin was
better on the secondary endpoints of myocardial perfusion, duration of ischemia, markers for
cardiac damage (CK-MB and troponin), and composite endpoints of death/heart attacks/recurrent
ischemia, or death/heart attacks. Major bleeding was observed in none of the patients receiving
Integrilin plus heparin nor Angiomax. However, 1.5% of the patients treated with Integrilin plus
Enoxaparin had major bleeding. Minor bleeding occurred in 2.5% of the pooled Integrilin groups
and 0.4% with Angiomax.
The REMOVE trial, with 150 low risk PCI patients receiving Heparin, is ongoing to evaluate
bleeding. Data expected in Q4/04.
6. PIPELINE BENEFITED FROM RENEWED FOCUS AND NEW TECHNOLOGIES
Millennium is among the first biotech/pharmaceutical companies to incorporate
pharmacogenomics, biomarkers, imaging and other new technologies to improve the productivity
of R&D. The rapid development of Velcade has been partly driven by this integrated approach.
The company has significantly focused its pipeline in the last few years, with cancer, inflammation,
and cardiovascular diseases remaining as the high priority areas. We expect the renewed focus and
integrated approaches to boost the pipeline. In 2005, 6-8 new drug candidates should be in clinical
trials.
The company announced yesterday that Phase I trials will start in H1/05 on two new molecules:
MLN3701, an oral, small molecule inhibitor of CCR1 for inflammatory diseases; and MLN 8054,
an oral inhibitor of Aurora protein kinases for cancer. The company also decided to terminate
development of 3 drug candidates that were in Phase I trials: MLN519, a proteosome inhibitor for
stroke; MLN591RL, a radiolabeled anti-PSMA for prostate cancer; and two DNA targeting agents
from a collaboration with Xenova - MLN944/576 for solid tumors.
7. UPDATE ON ONCOLOGY PIPELINE
a. MLN2704 is a monoclonal antibody targeting the prostate specific membrane antigen (PSMA)
conjugated to maytansinoid or DM1, a chemotherapeutic agent. A Phase I/II trial with multiple
ascending doses (MAD) is ongoing in prostate cancer. During Millennium's R&D day yesterday,
management noted that preliminary Phase I/II data have shown tumor shrinkage and declines in
prostate specific antigen (PSA) in the serum. There were also some hepatic transaminitis (liver
toxicities) and peripheral neuropathy. MLN2704 is being dosed every 2 weeks. Final data will be
presented at the ASCO meeting in May 2005.
Phase I data from a single ascending dose (SAD) trial in 23 patients were presented at ASCO in
June 2004. The study showed a durable biologic activity in refractory androgen independent
prostate cancer patients. There were 2 responses with a greater than 50% decrease in PSA levels
for four weeks, 1 partial response by RECIST criteria and 5 stable PSA responses. Toxicities were
mostly low grade and manageable.
In March 2004, MLN2704 was selected by the FDA for inclusion in its Continuous Marketing
Application (CMA) Pilot 2 Program. The program is limited to one fast track product for each
review division within the FDA. CMA is designed to facilitate communication between the
company and the FDA during clinical development and regulatory review. MLN2704 was also
granted fast track review in December 2003.
b. MLN-518 is a receptor tyrosine kinase inhibitor targeting FLT3, PDGFR, and c- KIT. Phase I/II
trials are ongoing in acute myeloid leukemia (AML) and glioma. Millennium obtained MLN518
through its acquisition of COR Therapeutics in February 2002.
c. MLN8054 is an Aurora protein kinase inhibitor. At its R&D day yesterday, Millennium
presented encouraging preclinical data in solid tumors. An IND filing is expected in 2005. Merck
and Vertex are also developing an Aurora kinase inhibitors and plan to initiate Phase I studies by
yearend.
8. UPDATE ON INFLAMMATION PROGRAM
a. MLN1202 is a humanized monoclonal antibody that binds to the CCR2 chemokine receptor on
monocytes, macrophages and activated memory T- cells. Potential indications are rheumatoid
arthritis (RA) and other inflammatory conditions, such as multiple sclerosis. Enrollment of the
Phase IIa MAD trial for RA has been completed. The study includes 30 patients in three dosing
groups and placebo. MLN1202 was dosed every 2 weeks. Biomarkers and ACR 20 scores will be
evaluated but the trial was not powered for the latter. A decision point is expected in Q4/04 while
the data are expected in late 2004/early 2005.
Millennium also plans to start a Phase II study in relapsing-remitting multiple sclerosis (RRMS) in
late 2004 or early 2005. MRI scans will be performed.
b. MLN3897 is an orally active small molecule blocker of the CCR1 chemokine receptor. A Phase
I/II trials for inflammatory disorders is ongoing. In Phase I studies, there was a dose dependent
blockade of the CCR1 receptor and pathway based on biomarkers. Millennium is developing
MLN3897 in collaboration with Aventis. Management indicated yesterday that negotiations are
ongoing to potentially split the assets at the end of the 5 year agreement in June 2005.
c. MLN3701 is also a oral small molecule blocker of the CCR1 chemokine receptor. It is a backup
to MLN3897. Phase I trial are planned for H1/05.
d. MLN02 is a monoclonal antibody to alpha-4 beta-7 integrin. It has potential as a treatment for
inflammatory bowel disease. Phase II data in Crohn's disease were mixed while those in ulcerative
colitis were favorable. The manufacturing process is being improved to achieve higher yields.
Millennium plans to restart studies on MLN02 in early 2006. Millennium gained back the rights for
MLN02 from Genentech in Q2/04.
e. MLN273 is a small molecule proteasome inhibitor targeting the ubiquitin- proteasome pathway.
It is in preclinical testing.
9. UPDATE ON THE CARDIOVASCULAR PROGRAM
a. MLN2222 is a fusion protein targeting the C3 and C5 convertase. Millennium is developing
MLN2222 in collaboration with XOMA. It is in Phase I trials for the treatment of reperfusion (the
restoration of bloodflow) injury resulting from coronary artery bypass grafting. XOMA will be
responsible for the development of MLN2222 through Phase II trials.
I, Maykin Ho, Ph.D., hereby certify that all of the views |
