Expert Financial Analysis and Reporting

Overview

An FDA advisory panel on April 30 recommended by a vote of 22 to 1 that Amgen’s cancer vaccine talimogene laherparepvec be approved for the treatment of later stages of inoperable metastatic melanoma. The final decision will be made by the FDA, but it would be very surprising for the FDA to go against this overwhelming support from the oncology community.

Oncology Community Acceptance of Cancer Vaccine Approach Is Very Significant

I believe that this validation of the cancer vaccine approach is a major watershed for cancer vaccine developers and particularly Northwest Biotherapeutics. The data supporting the BLA was a bit “iffy” in my opinion, but panel member seemed to focus on the totality of the data. I take this as meaning that the oncology community accepts the concept of cancer vaccines as being a viable therapeutic approach.

This has not always been the case as there long has been skepticism arising from a long stream of cancer vaccine clinical trial failures. However, it looks like the medical community has become convinced of the value of immuno-oncology and appears to be looking at cancer vaccines in the same way that it has looked at checkpoint modulators and CAR-T cell immuno-oncology approaches. If so, this is huge. See my over view of the immuno-oncology space, Immuno-Oncology Promises to be the Next “Big Thing” In Biotechnology, that was published on January 20, 2015.

Stock Market Implications for Northwest Could be Very Significant

I believe that this also has very significant stock market implications for developers of cancer vaccines. I closely follow Northwest Bioteherapeutics and ImmunoCellular (IMUC) and have buys on both stocks. Unfortunately, Wall Street analysts have ignored the potential of the technologies of these companies while suspending disbelief with the CAR-T companies Juno and Kite. Their market valuations are three to six times that of Northwest and ImmunoCellular has been dismissed as a failed company. Please see my report CAR-T Companies-Kite (KITE, $55.09) and Juno (JUNO, $47.30): Is The Bloom Coming Off The Rose? Are Investor Expectations Unrealistic? published on April 29, 2015 for perspective.

There has been little attention to these Northwest and other cancer vaccine companies by Wall Street analysts which has meant that a lot of the consensus opinion on these companies has been created by internet bloggers such as Adam Feuerstein. He has launched a vendetta that has seen him write 23 consecutive negative blogs targeted against the DCVax vaccines of Northwest Biotherapeutics. As noted by the Washington Post, this has been accompanied by a huge shorting bet against the stock. I think that investors in the absence of support from Wall Street analysts and uncertainty about the view of the medical community has given the negative and slanted views of Feuerstein some credence. However, I think his day in shaping opinion on Northwest is ending.

Wall Street analysts are followers and I think that this approval for a cancer vaccine for one of the most prominent companies in biotechnology may give them the impetus to look for other companies with cancer vaccine products. If so, Northwest could finally gain the broad scale analyst coverage and investor interest that its pipeline deserves.

Mechanisms of Action of Talimogene Laherparepvec

Talimogene laherparepvec is injected directly into a tumor and inserts a herpes virus that selectively replicates in tumors but not normal tissue. (This approach is similar to that of DCVax Direct which is also injected directly into a tumor). The replication of the virus in the tumor causes cancer cells to die. This in turn releases tumor-associated cancer antigens that stimulate a system-wide immune response.

DCVax Direct is comprised of dendritic cells that when injected into the tumor capture tumor associated antigens and stimulate a system-wide immune response against not only the tumor in which is injected but also metastases. The mechanism of action is different, but the intent is the same. Because of the prominent role of dendritic cells is initiating an immune response my hypothesis is that DCVax Direct is a better biologic approach. The point is that the oncology community is eagerly looking at cancer vaccine technologies that can stimulate an immune response.

A Look at the Phase 3 Trial; Implications for the Trials of the DCVax Vaccines

The basis for seeking approval of talimogene laherparepvec is the phase 3 OPTiM trial that enrolled 463 patients with advanced melanoma (stage IIIB, IIIC, or IV) that was not surgically resectable The Phase 3 trial of DCVax-L in glioblastoma is about the same size with 348 patients. This suggests that a single trial of this size is sufficient for recommending approval for DCVax-L. Sometimes, the FDA requires two phase 3 trials for approval.

The primary endpoint of the study was based on shrinking the tumor, not median overall survival (OS). Improved overall (CR + PR) response rate was 26.4% talimogene laherparepvec versus 5.7% in the GM-CSF control arm. The CR rate was 10.8% in the talimogene laherparepvec arm versus 0.7% in the GM-CSF arm. The trial did not quite reach statistical significance for median overall survival as the p-value was .051. However, the panel was impressed by the strong trend in favor of talimogene laherparepvec that showed median overall survival was 4.4 months longer than GM-CSF arm (hazard ratio: 0.79; p=0.051).

This recommendation for approval based on tumor shrinkage is important because the endpoint for the phase 3 DCVax-L trial is progression free survival (PFS), not median overall survival. Because OS is considered the FDA gold standard for approval, some investors were concerned that the FDA might reject the PFS endpoint. While the FDA has not yet approved talimogene laherparepvec, this action by the panel suggests that PFS will be an acceptable primary endpoint for the DCVax-L trial. PFS in glioblastoma is a very meaning endpoint because there is a close correlation with OS. This gives me great confidence that if the phase 3 trial of DCVax-L does successfully meet the PFS primary endpoint that the drug will be approved.

Like all clinical studies there were lots of questions and uncertainties. The evidence suggesting a systemic effect was met with some skepticism. Also, there were widely different response rates among different subgroups. It looked like the drug was more effective in less advanced cancers and in patients with smaller tumor masses. (By the way, this is probably the case with all immunotherapies.) And as was just discussed, the panel did not demand statistical significance in OS to recommend approval. This is very important because in the DCVax-L trial, patients on the control arm are allowed to cross over to DCVax-L when their tumors progress. This will confound the analysis of efficacy on the secondary endpoint of median overall survival. This suggests that medical experts don’t consider statistical significance an on median overall survival as absolutely critical for approval.

The most commonly reported treatment-related adverse events were fatigue, chills, pyrexia, nausea, influenza-like illness, and injection-site pain. Most adverse reactions reported were mild or moderate in severity and generally resolved within 72 hours. The most common serious adverse reaction was cellulitis. The panel recommendation for approval is based on a consideration of efficacy versus side effects. This will work very much in favor of DCVax-L and DCVax Direct if they are ultimately considered for approval as they also have benign side effect profiles when compared to chemotherapy or targeted therapies.