Hammer Stock Blog

Developing oncology drugs is getting harder and harder. The rising regulatory hurdles, the constant flow of new agents and competition for trial participants all make getting a drug to market a formidable challenge. This is particularly true in drugs for blood cancers, a field that saw tremendous progress in the past decade and is becoming very crowded. As a result, even highly effective drugs require long and expensive studies with active regimens in the control arm and survival as an endpoint. (more…)

Immunogen becomes a $1B company

Immunogen (IMGN) concluded the week with a market cap of ~$1B, up 200% in less than a year. This valuation is quite unusual for a company that ascribes the vast majority of its value from a 3-5% royalty stake in a single drug - Roche’s T-DM1. T-DM1, which utilizes Immunogen’s antibody-drug conjugate (ADC) technology, comprises of Herceptin conjugated to a drug payload. It is in two phase III trials and multiple phase II studies in breast cancer. If proven effective, many believe T-DM1 will eventually replace Herceptin, at least in certain treatment lines.

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More melanoma breakthroughs

This year’s meeting will probably be remembered as a historical event with regards to melanoma. Last year, it was a phase III trial for BMS’ (BMY) Yervoy (ipilimumab), which was the first in history to show a survival benefit in advanced melanoma patients (discussed in my ASCO 2010 write up). This trial led to Yervoy’s historical approval 3 months ago.

This year, investigators will present studies evaluating Yervoy as well as Plexxikon/Roche’s vemurafenib in pretreated melanoma patients. Yervoy was evaluated in combination with chemotherapy while vemurafenib was compared with chemotherapy. According to BMS’ and Roche’s press releases, both studies were successful and each drug led to a survival benefit.  The extent of this benefit is still unknown and will be revealed only at the conference. (more…)

One of the questions I am frequently asked is whether there are any good oncology drugs out there which are still available for partnering. The past years saw a surge in licensing and M&A deals, however, there are still several high quality assets out there being developed independently by small or mid cap biotechs. Below are ten companies with promising wholly-owned development stage programs, in alphabetical order.  

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Last month, Morphosys (MOR.DE) reported its 2010 earnings, which seems like a good point of revisiting the stock. Last time I wrote about Morphosys (see article) was almost two years ago. Since then, the company has made a lot of progress but still without reaching a real value creation event. Nevertheless, Morphosys’ value proposition is now greater than ever, as it still offers a rare opportunity to invest in the fastest growing segment of the pharma industry with limited downside.

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In its earnings release last week, Seattle Genetics (SGEN) did not surprise anyone with the financial guidance and expected timelines for approval of its lead agent, SGN-35. However, on the business development front, the release did include an intriguing announcement that did not receive the attention it deserved. The company announced that Genentech recently advanced 3 new antibody drug conjugates (ADC) based on Seattle Genetics’ technology to phase I, this is in addition to the CD22 ADC already in clinical testing.

The announcement has several important implications for Seattle Genetics. First, the number of clinical programs in its partnered pipeline instantly jumped 50% from 6 to 9. By definition, this provides Seattle Genetics with more shots on goal and increases chances of substantial milestones and royalties down the road. More importantly, it establishes Seattle Genetics’ technology as Genentech’s preferred ADC platform, an attractive position given Genentech’s dominance in oncology and ADCs in particular. (more…)

Last week, Sanofi-Aventis (SNY) announced disappointing results from a phase III trial evaluating iniparib in breast cancer. The drug failed to improve survival and progression-free survival (PFS) in breast cancer patients and although actual data were not published, approval is unlikely even for a subset of patients. Failed phase III trials are quite common in oncology, a field with one of the highest attrition rates in the pharmaceutical industry. Nevertheless, iniparib’s failure is particularly disturbing, as the phase III was supported by compelling results from a randomized controlled phase II trial as well as strong scientific rationale. Importantly, this trial could have broader implications as it raises questions regarding the role of randomized phase II trials as a go/no go decision point for pivotal trials. 

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Earlier this week, Incyte (INCY) announced positive phase III results for its lead agent, INCB424, in myelofibrosis (MF). Although the full data set was not published, it will almost certainly lead to FDA approval, opening up a $200-$300 market in the US alone. Another similar phase III trial which will be reported in the coming months should support approval in Europe as well.   

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As expected, earlier this month at the annual American Society of Hematology (ASH) meeting, Seattle Genetics (SGEN) reported positive results that will likely lead to the company’s first ever regulatory approval for Brentuximab vedotin (SGN-35). The data will transform Seattle Genetics into a commercial stage company, with an initial market opportunity of ~$250M in the US alone. In addition, the results further validate the company’s ADC (antibody drug conjugate) technology, which has broad utility and huge commercial potential. In particular, Seattle Genetics could become a market leader in hematology by next year’s meeting, with results for two additional ADCs.

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The ESMO meeting is the most important oncology conference in Europe. This year in particular, it included very interesting data that affected the sentiment towards many biotech companies. Here, I intend to focus on what I view as three clear winners from the conference: Seattle Genetics (SGEN), Arqule (ARQL) and Dendreon (DNDN).     

Seattle Genetics

Seattle Genetics is about to conclude the best year in its history, since it was incorporated 13 years ago.  The company’s lead agent, SGN-35 (aka Brentuximab Vedotin), generated astonishing results in two types of blood cancers earlier this year. Based on the results in Hodkin’s Lymphoma, SGN-35’s approval seems inevitable, even though results are not from large randomized studies. Unlike T-DM1’s case, Seattle Genetics negotiated a special protocol assessment (SPA) with the FDA, implying that the trial design and endpoints are acceptable by the FDA.

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