Expert Financial Analysis and Reporting

Introduction

On July 1, Agenus announced results from a non-randomized, phase 2 study of its therapeutic cancer vaccine Prophage in newly diagnosed glioblastoma multiforme patients. This was a 46 patient trial conducted at eight centers. All patients received Prophage plus standard of care (SOC) which is gross total resection to surgically remove as much of the cancer as possible followed by radiation and the chemotherapy drug temozolomide. The median overall survival in this trial was 23.8 months and median progression free survival was 17.8 months. Fifty percent of patients remained alive at 2 years and 33% at three years. Twenty two percent or 10 patients were alive and without progression at 24 months and continue to be followed for survival. This report attempts to put this data in perspective.

Just How Good Is This Data?

Non-randomized studies are always subject to criticism because there is no control arm that was given SOC that would allow us to compare how patients given Prophage plus SOC did against those just receiving SOC. So how good is this data? I have taken a look at some other randomized studies in which Prophage was not involved to get a sense of how patients fare when receiving just SOC.  I have compared results obtained in other unrelated studies to see how 23.8 months median overall survival, 17.8 months median progression free survival and length of time for patients to survive stacks up against SOC results from other studies?

Overall Survival (OS)

As I previously mentioned, the standard of care in glioblastoma is surgical resection followed by a regimen of radiation and temozolomide. This was first defined in the Stupp trial whose results were published in the March 10, 2005 issue of the New England Journal of Medicine. The data from that trial showed that median overall survival for surgery followed by radiation and temozolomide was 14.6 months. It was accepted for a while that with SOC median overall survival was 14.6 months, but this has since been revised upward. The difference between Prophage median overall survival of 23.8 shown for Prophage months and the 14.6 months in Stupp is 9.2 months.

In a May 9, 2009 issue of the Lancet, data on a sub-group of patients in the Stupp trial was presented. These were patients who underwent gross total resection that was enhanced by gadolinium imaging followed by radiation and temozolomide. In this group, OS was 18.8 months and this became accepted by some as the expected result for SOC. Not all patients can be resected in this manner so that 18.8 months for OS might not be the actual median result in a broad population. The difference between Prophage median overall survival of 23.8 months and the 18.8 months is 5.0 months.

Roche recently reported results in two large phase III trials of Avastin in newly diagnosed glioblastoma which enrolled 978 and 637 randomized patients. These trials compared Avastin plus SOC versus SOC alone. The median overall survival results for SOC patients in these trials were 15.7 months and 16.7 months respectively. This may be more indicative of the results that can be expected for OS in a broad patient population. As a side note, Avastin plus SOC did not differ from SOC in these trials.

The problem with an uncontrolled study is that we don’t have confidence as to whether the patients in this phase 2 were more like those in the May 9, 2009 Lancet article or those in Roche studies. Bears will argue (without evidence) that the Prophage patients were handpicked and would be expected to have median overall survival of much greater than 18.8 months. This seems unlikely, but it cannot be refuted with objective evidence. However, if the median overall survival advantage over standard of care is anywhere between 5.0 months and 8.1 months, it is very impressive. In an aggressive tumor like glioblastoma multiforme, a 4.5 month improvement in overall survival would be considered a significant advance.

What About Progression Free Survival (PFS)

There has been a lot of discussion about progression free survival and how meaningful it is as a clinical trial endpoint.  (This is a central focus of the phase 3 trial of Northwest Biotherapeutics’ DCVax-L phase 3 trial in glioblastoma multiforme). The gold standard established by the FDA for a primary endpoint in a phase 3 cancer trial is overall survival. However, each cancer has to be looked at on its own when judging the significance of progression free survival.

Of all of the cancers, PFS may be of most significance for glioblastoma. This is a rapidly growing cancer in the confined area of the skull. As the cancer grows it squashes other areas of the brain and interferes with their functioning and causes all sorts of problems with seizures being a frequent complication. The tumor growing rapidly in the confined area of the skull may actually push part of the brain into the brain stem. Hence, delaying progression or growth of glioblastoma multiforme has very significant medical benefit in glioblastoma.

In the Stupp trial, median progression free survival was 6.9 months. Progression free survival for SOC patients in the previously cited Roche sponsored trials of Avastin were 6.1 months and 7.3 months. The 17.8 months of progression free survival shown with Prophage would provide major clinical benefit by improving progression free survival by 10.5 months to 11.7 months as measured against the Stupp or the Avastin trials.

Length of Survival from Prophage Phase 2 Trial compared with Stupp

In the March 9, 2009 issue of Lancet, results from a five year follow-up of the Stupp trial were reported. The Stupp trial enrolled 278 patients on radiation alone and 287 on radiation and temozolomide which after this trial became SOC. Overall survival for radiation plus temozolomide (now SOC) was 27% of patients alive at two years, 16% at three years, 12% at 4 years and 10% at five years. In the Prophage phase 2 trial, the survival was 50% at two years and 33% at three years. This comparison is very favorable for Prophage.

Synergy of Prophage with Checkpoint Inhibitors Could Become a Key Factor

There has been renewed interest in cancer vaccines because of the hypothesis that the combination of the new checkpoint inhibitors-BMY’s Yervoy, BMY’s nivolumab and Merck’s (MRK) pembrolizumab could be highly synergistic. They prevent a cancer from blunting a patient’s immune response. The point of cancer vaccines is to enhance the immune response. Hence, it appears that the action of checkpoint inhibitors and cancer vaccines could be synergistic.

Cancers can blunt an immune response by upregulating the PD-1 receptor on the surface of T-cells through antagonizing it with the PD-1 ligand. Nivolumab and pembrolizumab are antibodies that block the PD-1 receptor, not allowing the PD-1 ligand to bind and upregulate the receptor. This prevents the cancer from blunting the immune response to cancer. Agenus stated without quantification that in the Prophage trial that patients with less inherent expression of PD-1 fared better. This observation supports the hypothesis that patients who have less PD-1 activation fare better.

Where Do We Go From Here with Prophage in Newly Diagnosed Glioblastoma?

With all of the caveats that this was a small non-randomized study, the results from this Prophage phase 2 study are impressive when you compare them to results from other studies. If a subsequent randomized phase 3 trial were to show a 5.0 to 8.1 months in median overall survival as suggested by this study, it would be a major advance in the treatment of glioblastoma.

Agenus has a quandary in developing Prophage. I believe that the Company is committing most of its current resources to its checkpoint inhibitor program; it doesn’t have the resources to develop Prophage at the same time. It may have to look for other options.

While I find the results from this Prophage phase 2 trial to be very compelling, I am not sure that it will be easy to find a pharmaceutical partner. The checkered history of therapeutic cancer vaccines makes potential pharma partners cautious. They also look for larger and randomized phase 2 trials before making a partnering decision. It is not a slam dunk that Agenus can find a partner for Prophage in newly diagnosed glioblastoma.

Another option might be an investigator sponsored study. Indeed this study was investigator sponsored. Also, a now enrolling phase 2 study in recurrent glioblastoma is investigator sponsored and funded. Agenus just performs manufacturing support.

Another possibility is that Prophage might be studied in combination with Yervoy, nivolumab or pembrolizumab and nivolimumab when they are approved. In this case, a deep pocketed partner like Merck or Bristol-Myers might pick up a lot of the expenses. This might also be a promising pathway for an investigator sponsored study.

What About the Now Enrolling Study in Recurrent Glioblastoma?

A new phase II trial called ALLIANCE is now underway in recurrent glioblastoma; it is a randomized phase II trial. This is a three-arm study that will enroll approximately 222 patients with surgically resectable recurrent glioblastoma. One arm of the trial will be Prophage combined with Avastin; the second arm will be Prophage plus Avastin in patients who have progressed after Avastin; and the third arm will be just Avastin. This study design reflects the view that Prophage and Avastin will be synergistic even in patients who have failed Avastin. The primary endpoint is overall survival.

This study is being sponsored by the Alliance for Clinical Trials in Oncology (ALLIANCE), a cooperative group of the NCI. The NCI is funding the costs of the trial which based on an estimated cost per patient of $100,000 could cost $22 million. Agenus is not providing any of the funding, but will manufacture the product. The NCI made the decision to fund this study based on the phase II interim results.

There appears to be a problem with enrollment in this study. In its 1Q, 2014 conference call, Agenus noted that physicians are questioning the therapeutic value of Avastin in recurrent glioblastoma. Even though it is approved for recurrent glioblastoma, physicians are reluctant to use it. This creates a quandary for Agenus and I am waiting to see how they address it.

Investment Discussion

Over the year that I have been writing on Agenus, there have been enormous changes. The failure of the MAGE-A3 vaccine of Glaxo in melanoma and non-small cell lung cancer was a setback as the use of AGEN’s Stimulon adjuvant in this vaccine could have produced a strong royalty stream.

When I first wrote, there were still other vaccines that Glaxo is working on that could give rise to royalties, there was the herpes vaccine and most importantly there was Prophage. Also, Agenus was in a very precarious financial position. Earlier this year, Agenus made an acquisition that transformed the company into a meaningful participant in the development of checkpoint inhibitors. It also was successful in raising significant amounts of cash through an equity offering

The checkpoint inhibitor program is difficult to value because the products are all pre-clinical. However, it is a major asset for Agenus and in fact it is the reason that institutional investors were eager to invest in Agenus earlier in the year. Immunotherapy is the hottest area in cancer research and promises to produce a paradigm shift in cancer treatment. The checkpoint inhibitors are the focal point of interest, but I think that cancer vaccines also have a prominent role to play in immunotherapy cancer research.

So here we have tiny Agenus with a market capitalization of about $200 million with heavy involvement in both areas. I see the great potential for Agenus as an acquisition by a large company looking to become an immunotherapy participant. I think that Agenus could be to some large company what the Medarex acquisition was to Bristol-Myers (BMY) in propelling BMY into the role of industry leader in the development of checkpoint inhibitors. Agenus has the added value of having a cancer vaccine technology. This is what causes me to have a Buy on the stock.