Metastatic Melanoma : CTLA-4 Analysis Leaves us Bullish on M..
JPMorgan (Geoffrey Meacham, Ph.D. (1-212) 62) BMY PFE MED Metastatic Melanoma :
20 June 2007
J.P. Morgan Securities Inc.
[Copied from Yahoo! and edited to improve readability. It seems the theme of the summer will become improved survival rather than objective response rates. All in all a very positive review]
Metastatic Melanoma
CTLA-4 Analysis Leaves us Bullish on Medarex's MDX-010; Conf Call at 11 am ET Geoffrey Meacham, Ph.D. (1-212) 622-6531 geoffrey.c.meacham@jpmorgan.com (AC)
Matthew Roden, Ph.D. (1-212) 622-2327 matthew.m.roden@jpmorgan.com
Two drugs from a novel class of monoclonal antibodies, the CTLA-4 class, are currently in late stage development by Medarex / Bristol-Myers (MDX-010) and Pfizer (CP-675,206) for metastatic melanoma. Given that topline results from pivotal trials of both agents are expected near-term, we have discussed the emerging melanoma market with numerous investigators and have assessed the potential for MDX-010. To discuss the evolving pipeline and treatment paradigm for metastatic melanoma, we are hosting a conference call on Wednesday, June 20th at 11:00 am ET with a noted melanoma expert, Dr. Jedd Wolchok from Memorial Sloan Kettering Cancer Center. The dial in number for the call is 888-566-5774 (domestic) and 210-839-8947 (Int'l); Passcode: TREATMENT.
* Monotherapy trials the focus of the MDX-010 franchise. Second-line metastatic melanoma represents the fast-to-market strategy for Medarex, and results are expected from the headlining 150-patient trial as well as two companion trials in 2H07. Strong phase II data with overall response rates (ORR) averaging 13% compares favorably to 4-16% for currently FDA approved therapies of DTIC and IL-2. However, our discussions with key opinion leaders suggest that the durability of responses (and stable disease) observed in MDX-010 patients is differentiated and clinically meaningful in a population with a short life expectancy.
* Favorable risk/reward: potential $0.60 upside to 2009 EPS. With effective options for stage III/IV metastatic melanoma, we view the regulatory bar as low for MDX-010 but the opportunity large for this unmet medical need. We estimate that upside survival data (not widely assumed by the Street, but achievable in our view) could drive EPS upside of $0.60 to our 2009 EPS est of $0.07. Should ORR and survival data come in below expectations, we estimate ($0.56) downside to our 2009 forecasts, although we assign a lower probability to this scenario and we note that other combination trials are likely to push back (but not outright exclude) approval by ~12 months.
* Maintain OW. Data from MDX-010 in 2nd-line metastatic melanoma in 2H07 (likely in 4Q) is a key value-driving event for Medarex. The nearest competitor is Pfizer's CP-675,206, who would owe Medarex a 15-20% royalty should it reach the market. Hence, we continue to see a favorable risk/reward for MEDX shares and downside protection from a strong phase I-II pipeline, economics on CP-675,206 and JandJ's phase III candidates CNTO 148 and 1275 as well as an antibody technology platform that in our view, is a scarce and valuable asset to Big Pharma.
Executive Summary
Malignant melanoma is a highly aggressive form of skin cancer that ranks as the sixth most common cancer in the US with ~60,000 new cases per year (Source: American Cancer Society). While early stage melanoma is easily treatable with local excision, metastatic disease (stage III disease and beyond) is highly resistant to therapy and relatively few treatment options currently available.
In this report, we preview the registration study of Medarex's anti-CTLA-4 antibody MDX-010 or ipilimumab as monotherapy in second-line stage III/IV melanoma. MDX-010, in joint development with Bristol-Myers, is the lead suggest that the durability of responses (and stable disease) observed in MDX-010 patients is differentiated and clinically meaningful in a population with a short life expectancy.
* Disease control is durable. Although prior results have suggested that anti-CTLA-4 responses are durable, the poster by Hamid shows that patients achieving objective responses and stable disease are durable across five MDX-010 studies, where 25/46 objective responses are still ongoing, 4 of which are longer than 50 months.
* Survival data for anti-CTLA-4 therapy continues to impress. The poster presented by Dr. Gomez-Navarro for CP-675,206 shows that in a larger phase II study, overall survival of 10.2-11.5 months continues to impress compared to historical data (6-7 months). The prolonged survival was observed despite a low ORR of 7-10% indicating that response rates are not the whole story with the class.
* More support for higher dosing. Data from Weber et al showed that patients receiving repeated 10mg/kg doses of MDX-010 had a higher ORR (9% vs.5%) compared to those receiving single doses (ranging from 2.8-20 mg/kg) or repeated doses lower than 10 mg/kg. The disease control rate (DCR) in the 10 mg/kg cohort was also impressive at 39% considering stable disease is rarely observed in 2nd-line metastatic melanoma
What Have We Learned from Our Physician Calls?
We spoke with several melanoma experts and key opinion leaders who are investigators in either Medarex or Pfizer trials (or both). Our take-home message was that physicians have a favorable view on both compounds based on clinically meaningful benefits observed and a manageable toxicity profile.
* Disease control rates (DCRs) ARE clinically meaningful. In addition to the 13% ORR across MDX-010 studies (Hamid et al), 21% had stable disease (SD) as the "best response". In our calls with key opinion leaders, it was suggested that the DCR is an important metric in 2nd-line metastatic melanoma, since practically all patients quickly progress and are "dead within 6 months." Hence even SD is a dramatic result in this very sick population. In our view, a durable SD could translate into a survival benefit given the quick progression historically observed in these patients.
* Investigators believe both CTLA-4 mAbs will ultimately garner FDA approval. The most common view on MDX-010 and CP-675,206 is that the duration of response is clinically important with many oncologists extrapolating this into a survival benefit. Investigators believe the front-line trials of CTLA-4s (with DTIC or against DTIC or temozolamide) are also likely to show a survival benefit.
* "Too much is being made of the safety profile." One investigator labeled the cases of immune-breakthrough events (IBEs, essentially reversible autoimmune events) as "bothersome" but "not a deal-breaker." One key opinion leader emphasized the treatable/reversible nature of the tox issues, where methods are evolving that could potentially prevent some IBEs altogether.
* Key opinion leaders believe that the efficacy and safety profiles of MDX-010 and CP-675,206 are indistinguishable. Although there is a dosing frequency difference (CP-675,206 is given Q3M whereas MDX-010 is Q3W initially), investigators would see patients about Q3W anyway. The "bolus dosing may also help some patients by delivering more drug upfront," which may be important particularly in 2nd-line patients who have a short life expectancy.
What are the MDX-010 Catalysts? The near-term catalyst for MDX-010 is upcoming data from a registration-enabling phase II trial (part of a special protocol assessment, or SPA) in 2nd-line treatment of stage III and IV melanoma patients. We expect this data to be available sometime in 2H07 (weighted towards 4Q) with a BLA filing by YE07 or early 2008.
The clinical data release will include the topline results from the 150-patient trial, as well as the two companion studies of MDX-010 in a dose-ranging study (n=210) and a study of MDX-010 10 mg/kg with prophylactic budesonide. All three trials completed enrollment concurrently and data could be released within the same timeframe.
Previous Data Encouraging
Based on available clinical data on MDX-010 (see 'Summary of Clinical Data' section, p.8), we believe that this trial is likely to demonstrate an ORR (primary endpoint) that will support registration in the 2nd-line setting. We note that in previous phase I-II trials, patients receiving MDX-010 have achieved response rates ranging from 9-12% in 2nd-line monotherapy trials. According to an 8-K filed by Medarex in April 2006, the combined ORR for all patients on previous monotherapy trials is 11%.
We note that the previous studies have been conducted using RECIST criteria for determining objective responses, while the ongoing SPA studies will use WHO criteria. The company believes melanoma lesions are easier to detect using WHO criteria and hence expects upside to its response rates. Duration of Responses and Stable Disease Important, Too Investigators and key opinion leaders with whom we spoken believe that the long duration of the objective responses and the disease stabilization is an important factor given the fact that refractory metastatic melanoma is an extremely aggressive tumor type. One opinion leader stated that historically, 100% of his 2nd-line patients are not alive in 6 months or less, hence durable disease stabilization is of clinical value. We believe that the unprecedented percentage of patients achieving disease control may translate into a palpable survival benefits that may overshadow ORR as an endpoint. We note that contrary to Street sentiment, no ORR threshold exists within the SPA for the MDX-010 150-patient registration phase II trial. In other words, if a 10-15% ORR threshold is not met, a BLA is still viable.
Single-Arm Design Uses Historical Controls and Low-Dose As a Comparator The single-arm, open-label trial design of the registration trial raises questions as to whether comparing current data to historical controls is a valid measure of efficacy. However, there are no approved agents for the treatment of 2nd-line metastatic melanoma to use as a comparator. Medarex states that the FDA believes that a nominal response rate would be sufficient evidence that MDX-010 is active, and the agency's granting of a SPA is evidence that the single-arm trial should be sufficient.
The results from the dose-ranging study (see below) will be included in the BLA, where responses to the 0.3mg/kg dose will effectively act as a surrogate, sub-therapeutic comparator. However, these data as a comparator are little better than historical controls since the trials are not randomized or blinded, and since the use of these data would necessitate comparison across trials. Investigators with whom we've spoken emphasized that there are no effective agents in refractory metastatic melanoma, and that the community is desperate for an active agent given that historically, refractory disease is extremely aggressive and kills patients in months. Hence any nominal sign of efficacy (7-10% ORR) will be seen as a positive result, according to our conversations with key opinion leaders.
BLA Filing Will Include Data on 460 Patients
In addition to the 150 patient registration-enabling study, the SPA for MDX-010 (YE07e) covers a dose-ranging study (n=210) and a study of MDX-010 with patients receiving prophylactic budesonide (n=100), where the FDA stated the filing will consider the totality of the data from the 3 studies. Although Medarex management has stated that the SPA does not designate a specific ORR hurdle, Pfizer stated at the recent ASCO investor meeting that they had been guided to 10% as the lower ORR boundary in its SPA. Based on the unmet medical need served by MDX-010, a 9-10% ORR should be sufficient for FDA approval, in our view.
Sensitivity Analysis on MDX-010 Data
Although Medarex has a record of consistent value creation that is realized through out-licensing and partnership, MDX-010 is a critical near term driver for MEDX shares given a sizable opportunity in an unmet medical need and favorable economics (45% profits to Medarex; only 30% of costs in the partnership with Bristol). Therefore we have conducted a sensitivity analysis of potential outcomes to the trial suite. We estimate that the earnings impact in 2009 could range from ($0.56) downside in the event of a failed trial, and $0.60 upside to our $0.07 estimate if ORR is favorable and survival data look compelling.
Sensitivity Analysis of Trial Success
We envision three potential scenarios for the upcoming monotherapy trial of MDX-010 in 2nd line melanoma. In Table 2 below, we have summarized the impact on Medarex's PandL in each of the three scenarios for 2009. We've opted to exclude the impact of subsequent trials in combination with DTIC and MDX-1379 for the purposes of the sensitivity analysis.
Scenario I: Additional Data Required for FDA Approval
We believe that an ORR of less than 7% ORR and no clear impact on PFS or OS would not be sufficient for approval. In this scenario, MDX-010 approval is contingent on the front-line study of DTIC+/- MDX-010, with market entry assumed for 2H09. We have modeled this scenario by moving 2008 assumptions into 2009. Given the available data (see 'Summary of Clinical Data' section, p. 8), we believe this is a low-probability scenario.
Scenario II: The Modeled Scenario
Our model assumes a phase II result showing an ORR of 7-10%, roughly equivalent to existing standards of care (DTIC and IL-2), and PFS or OS show some suggestion of benefit. In this scenario, MDX-010 and CP-675,206 enter the market in 2008.
Scenario III: Upside ORR and Survival Data
An ORR of greater than 10% and clear evidence of a PFS and/or OS benefit would likely result in upside to current estimates based on longer duration of therapy and greater adoption in the clinic. We view this scenario as achievable, and would result in a potential $0.60 EPS upside in 2009. Hence we view the risk/reward in MEDX shares as attractive ahead of the registration trial data 2H07.
Our Melanoma Market Model
According to the NCI/SEER database, malignant melanoma has a prevalence of 600,000 and an incidence of 62,000, growing at a rate of approximately 5% per year. Patients that are candidates for therapy with CTLA-4 antibody compounds will be stage III/IV (estimated at 30% of the total) and are included in the addressable patients calculation below (adjuvant use is excluded from the model). Based on our conversations with physicians (who have not differentiated between MDX-010 and CP-675,206), we are assuming equal MDX-010 market share. However, MDX-010 advantages conferred by a front-loaded dosing strategy, given the limited lifespan of melanoma patients, may drive wider acceptance by the oncology community, hence we see market share upside potential for MDX-010. We are not changing our Medarex estimates.
Significant Upside Potential in Our Model
Although our model may appear aggressive from a penetration standpoint, we would emphasize that our physician calls have suggested that following approval, practically all metastatic melanoma patients would receive CTLA-4 antibodies at some point in treatment (except those with pre-existing colitis, estimated at 5-10%).
The Adjuvant Setting Represents Significant Upside
Encouraging interim phase II data of MDX-010 in the treatment of melanoma in the adjuvant setting was presented at EORTC 2006, where Dr. Jeffrey Weber showed that MDX-010 was well-tolerated in 25 Stage III-IV patients, and notably that 24/25 (96%) had survived at the mean follow up time of 18 months. One investigator with whom we spoke was very enthusiastic about anti-CTLA-4 antibodies in the adjuvant setting, where the drugs could be the most clinically meaningful due to potential reductions in the rate of recurrence. Sales in the adjuvant setting not included in our model and thus represent upside to our estimates.
Longer Duration of Therapy
Given the recent ASCO discussions on the need to treat through progression, we are comfortable with our estimated duration of therapy (6 courses: 3 months, plus 2 follow-up doses). We see upside to our duration assumptions given expectations that MDX-010 will likely be used off-label in the 1st line following initial approval. Further, the anticipated FDA approval for 1st-line use in combination with DTIC in 2009 could drive increased duration of therapy, where OS rates could surpass 10 months. We note that increasing the number of courses in the US from 6 to 7 cycles in 2009 yields $0.16 upside to our $0.07 EPS estimate.
Market Share Gains
We have assumed equal market share for the anti-CTLA-4 antibodies MDX-010 and CP-675,206 based on our discussions with CTLA-4 clinical investigators, who have not differentiated between the two compounds in terms of safety or efficacy. We see upside to our 50% share assumption for MDX-010 based on the potential advantages of its bolus-like dosing schedule, where one can deliver more drug upfront to patients that could benefit patients with a shorter life expectancy. Conversely, earlier stage patients who are in a lower risk setting could benefit from CP-675,206's longer dosing intervals. We note that each market share point gained buys $0.01 upside to our 2009 EPS estimate of $0.07.
Summary of Clinical Data
Data for MDX-010 as Monotherapy
Two early dose-ranging trials in melanoma patients treated with MDX-010 showed a combined ORR of 11%. The first trial is a dose escalation trial where patients were dosed from 3.0 mg/kg up to 9.0 mg/kg. Clinical responses by RECIST were observed in 16% of the 68 patients treated with MDX-010 as monotherapy. A separate open-label PK and safety study of 23 patients evaluated monotherapy at 10 mg/kg once every three weeks for four doses, where clinical responses were seen in 9% of the patients with melanoma. The most commonly seen grade III/IV adverse effects in these trials were colitis and dermatitis, both of which regressed upon cessation of therapy. These are comparable to the severity of side effects seen with DTIC (nausea and vomiting) and more favorable than those seen with IL-2. Notably, a relationship exists where autoimmune breakthrough events (IBEs) are correlated with objective responses. Initially, phase II monotherapy trial of MDX-010 was dose-escalating, where doses were reduced as IBEs were seen as a dose-limiting toxicity. However, IBEs were found to be predictive of response, so the remainder started at 3mg/kg and escalated up to 10mg/kg until an immune breakthrough event (IBE) occurred. Publicly available
clinical data for MDX-010 is summarized in Table 3.
Metastatic Melanoma : CTLA-4 Analysis Leaves us Bullish on M.. (Part 2 of 3)
Data for CP-675,206
Data presented at ASCO 2007 showed ORR ranging from 7-10% but extended OS compared to historical controls (10.2 months - 11.5 months vs. historical OS of ~6.8 months). The toxicities were in line with MDX-010 (see Table 4).
Ongoing Trials
MDX-010 in 2nd-Line Metastatic Melanoma
In addition to the registration-enabling trial already previewed, Medarex/Bristol are conducting a phase III metastatic melanoma trial of MDX-010 in combination with MDX-1379, a tumor vaccine. This trial has 3 arms (MDX-010 alone, MDX-010 in combination with MDX-1379, and MDX-1379 alone), and received SPA designation with ORR as the primary endpoint. In our view, the incrementally higher ORR observed in this combination could provide benefit to 2nd-line patients, although the company has de-emphasized the enrollment of the trial. We further note that this regimen would have a lesser commercial opportunity given that it would be restricted to HLA-A2+ patients, about ~40% of the population.
MDX-010 in 1st-Line Metastatic Melanoma
Medarex and Bristol are also conducting a ph III trial of MDX-010 in combination with DTIC in the 1st-line setting. The trial was initiated in 2006, where patients (n=500) were randomized 1:1 to DTIC or DTIC in combination with MDX-010. The trial has also received an SPA designation, where the primary endpoint is progression-free survival. Data presented at ASCO 2005 indicated that the median PFS of DTIC + MDX-010 in a prior phase II trial was about 14 months, compared to a historical PFS for DTIC alone of about 7-8 months. Phase II results also indicated that 17% of patients (6/35) receiving this combination achieved an objective response. We note that the ORR observed in first-line DTIC monotherapy is historically 3-4%. Thus, the signals of MDX-010 activity in the first line setting are impressive, in our view.
Other key trials underway include a 120 patient phase II open label PK and safety study, a 216 patient phase II monotherapy trial initiated in December 2006, and a phase III combination study with DTIC or temozolomide in 1st line (n=630, primary endpoint OS) where data is expected in 2008 (see Table 7 below).
In addition to a cross licensing deal with Pfizer allowing target development using its proprietary human antibody discovery platform, Medarex also is entitled to double-digit royalties from CP-675,206 should commercialization occur. This allows Medarex a greater share of the melanoma market than would be realized by MDX-010 alone. |
