GS: ABGX (IL/N):Panitumumab on track for
potential H2 2005 submission, front line
study started
52-Week Range US$19-7
YTD Price Change -32.79%
Market Cap US$617.4mn
Fiscal Year (ending in Dec)
2004 2005E 2006E
US$-1.92 US$-2.05 US$-2.00
ABGX reported a Q1 loss of $43M or ($0.48), p/s, slightly lower than our $44M or
($0.49) p/s est. We maintain our estimates. Abgenix reiterated its goal of H2 2005 BLA
submission for Panitumumab for 3rd line colorectal cancer with partner Amgen, assuming
positive data. The companies also launched a Phase III trial with Panitumumab in first line
colorectal cancer in the Avastin plus chemotherapy setting, which may be important for
potential positioning longer term. In H2 2005 we look for phase II data in the lung, renal
and colorectal cancer settings. We regard progress with Panitumumab is the primary
valuation driver. We look for dose finding studies with ABGX-PTH as well as progress
with partnered candidates. We maintain an In-Line rating on Abgenix and Neutral
coverage view. Key risks include potential clinical failures and/or delays.
I. Investment Outlook
We maintain an In-Line rating on Abgenix and a Neutral sector view. We believe that
Abgenix is best suited for risk tolerant investors with a long time horizon. The successful
submission of a Panitumumab BLA filing in the second half of 2005 would represent an
important milestone for Abgenix as would potential data indicative of Panitumumab's potential in
other cancer settings and as part of earlier treatment regimens. Abgenix is developing ABX-EGF
through a 50/50 profit share agreement with Amgen. Amgen controls clinical studies. Behind
Panitumumab, the proprietary pipeline is relatively early stage: with the most advanced candidate
being ABX-PTH, in Phase I for secondary hyperparathyroidism. With partners, 11 antibodies are
now in clinical testing. Partnered antibodies that are gaining visibility include Amgen's AMG-162
for osteoporosis, in Phase III studies, and Pfizer's CTLA4 antibody for cancer, in Phase I. We note
that in addition to these, Amgen has an additional antibody in the clinic, Pfizer has 3, Curagen,
Chiron and Human Genome Sciences each have an antibody in the clinic.
II. Financial review and outlook: maintain estimates
ABGX reported a Q1 loss of $43 million or ($0.48), per share, slightly better than our $44 million
or ($0.49) per share estimate, based mainly on lower operating expenses. We maintain our 2005 loss
estimates of $2.05 per share. Our quarterly loss estimates are unchanged at ($0.50), ($0.50) and
($0.57) for Q2,Q3,and Q4 respectively.
Management reiterated previously provided 2005 guidance, which includes revenues approximating
2003-2004 levels ($17-$18 million), operating expenses in the $185-$200 million range, and cash
use approximating $105 to $120 million. If Panitumumab is successfully commercialized,
management expects to be cash flow positive in the 2008 to 2009 timeframe, which may be
aggressive.
Balance sheet
Abgenix ended the first quarter with $400 million in cash and marketable securities. The company
has convertible debt of $463 million, including $300 million, 1.75% debt due 2011, and the
remainder at 3.5% due 2007. During the quarter Abgenix drew an additional $14.7 million of a $60
million loan facility from Amgen. The company's goal is to manage operating expenses such that at
any given time it has at least two years of cash.
III. Pipeline highlights:
* Panitumumab BLA submission on track for H2 2005, assuming positive data
* Panitumumab Phase III enrollment complete international study
* Start of Phase III 1st line colorectal studies with Avastin
* Phase II data in the lung, renal and colorectal settings expected in H2 2005
* ASCO (May 2005) likely data will be updates from previously presented studies.
* Decision not to pursue further development of ABX-MA1
A. Panitumumab, BLA goal H2 2005 reiterated, enrollment complete ex-U.S. study.
Management reiterated that it has received regulatory feedback that submission of data from either
of the two ongoing pivotal studies, plus supportive data, would be acceptable for filing. Enrollment
of the ex U.S. study is complete and will likely be used as the basis for filing, assuming data are
positive. Data from the U.S. study, which has been slow to enroll due to competitive products, will
likely filed in support of the international study. Both studies were initiated in In January 2004. For
competitive reasons, details on the studies with respect to size and design have not been provided.
Patients have 3rd line colon cancer and will have been exposed to 5-FU, leucovorin, oxaliplatin
and/or irinotecan.
PACCE Study Initiated
Abgenix and Amgen announced today the initiation of the PACCE (Panitumumab Advanced
Colorectal Cancer Evaluation) study, a Phase III trial to involve roughly 1,000 patients, in first line
colorectal cancer. The study will be a randomized, open label study with the endpoints of
progression free survival, overall survival and response rate. Patients will receive Panitumumab plus
Avastin, with either oxaliplatin (Eloxatin) or irinotecan (Campostar) based therapy. Results from
this study may be important for longer term positioning of Panitumumab, an EGF inhibitor, as part
of combination therapy with VEGF inhibitors, which Avastin is. In addition to Avastin,
Panitumumab is also being studied with an Amgen VEGF inhibitor, AMG706. As we expect
Panitumumab may be the fourth potential EGF inhibitor on the market (although only the second
antibody), and given the strong efficacy established with Avastin in this setting, combination studies
will be important.
Non-small cell lung cancer - first line, data expected in H2 2005
Approximately 175 patients have been enrolled in this study which compares ABX-EGF plus
chemotherapy to chemotherapy alone (paclitaxel and carboplatin) in first-line non-small cell lung
cancer. Data from this study is expected in the second half of 2005. The study will assess time to
tumor progression (primary endpoint), response rate, and survival. Interim data from this study were
reported at ASCO 2004. 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
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 patients. The dose is 2.5 mg/kg weekly over an 8 week
cycle. We may see updated results from this study in 2005.
ASCO Updates
Phase II second and third line monotherapy colorectal study
We look for updates on previously presented data with Pantinumumab at ASCO in May. Data on a
Phase II study in colorectal cancer was presented at ASCO (6-7-04 note). The study included 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. A 10% response rate was reported, consistent with data from the first 44
patients, presented at ASCO 2003. The median time to progression was 2 months and median
overall survival was 7.9 months.
Competitive landscape
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, ImClone/Bristol Myers'
Erbitux, and Genetech/OSIP's Tarceva have fueled interest in and validated the EGF mechanism.
The 2004 approval of Genentech's Avastin, a VEGF inhibitor, with a mortality benefit in the
colorectal setting was also a significant advance. While the market for newer biologics has gotten
more competitive, we believe that there is room for more than one player. We believe that
Panitumumab could potentially have dosing, side effect and possibly pricing advantages with
respect to the other EGF antibody, Erbitux. Moreover, we believe there is greater commercial
opportunity for Panitumumab and the class, with label expansion and in combination therapy with
different chemotherapy and other growth factor inhibitors. Early clinical studies are under way with
Panitumumab in combination with Amgen's AMG706 which is a VEGF inhibitor inhibitor. As with
clinical data so far released from the BOND studies with Avastin and Erbitux, it is thought that the
combination EGF and VEGF inhibitors may provide added benefit.
B. ABX-PTH - Phase I dose escalation study planned for 2005.
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 neu
tralizes the parathyroid hormone (PTH). Data from preclinical studies were presented at the
American Society for Bone and Mineral Research meeting and at the American Society of
Nephrology in October 2004. Management plans to initiate Phase I dose escalation studies in 2005.
I, Meg Malloy, hereby certify that all of the views expressed in this report accurately reflect my
personal views abou |
