Follow Us GraphicFacebook IconTwitter IconLinkedIn Icon
Search Graphic

Expert Financial Analysis and Reporting

Immuno-Oncology Promises to be the Next “Big Thing” In Biotechnology

Immuno-Oncology Promises to be the Next “Big Thing” In Biotechnology

Purpose of the Report

Immuno-oncology has been the hottest area in biotechnology in 2014 and this promises to continue in 2015 and the coming decade. This report attempts to provide a basic background to give readers a layman’s view of some of the new technologies and companies in the immuno-oncology space. There are some truly exciting new technologies with numerous companies using them to develop new drugs. There are many fewer cancers to target than there are drugs in development so that often drugs using different technologies are focusing on the same cancer. Investors must be aware of this and avoid being mesmerized by a new drug or technology that may look spectacular in an absolute sense, but less attractive when viewed against other immuno-oncology approaches.

My primary purpose is not to offer opinions on individual companies; this will be left to future reports. However, I am currently recommending three companies in this space: Agenus, Northwest Biotherapeutics and Celldex. I also am extensively researching Neostem, Kite Pharmaceuticals and Juno Therapeutics and I may write on them (as well as others) at some future time. My preliminary view is that Neostem looks interesting while the valuations for Kite and Juno are priced for perfection or better. I write primarily on small emerging biotechnology companies and not big pharma because the latter are so actively researched by Wall Street. However, as a point of interest Bristol-Myers Squibb is one of my biggest holdings in my personal portfolio.

Executive Summary

Checkpoint Modulators

The brightest investor spotlight shines on Bristol-Myers Squibb (BMY) and Merck (MRK) in the checkpoint modulation space. Bristol-Myers Squibb launched the first checkpoint modulator Yervoy for the treatment of metastatic melanoma in 2011 and that product reached sales of $1.3 billion in 2014 and is growing rapidly. Yervoy is an antibody to the CTLA-4 checkpoint modulator. Bristol-Myers Squibb’s Opdivo and Merck’s Keytruda are antibodies against the checkpoint modulator PD-1. In the last few months, both were approved for metastatic melanoma refractory to previous treatment regimens. Approval for both products in refractory non-small cell lung cancer is expected in 2015.

Bristol-Myers and Merck point to these products as being major drivers of their businesses and Wall Street agrees. Some leading Wall Street analysts have projected that sales of Opdivo and Keytruda each could reach $5 billion by 2020. It is difficult to identify how much of the market valuations of $103 billion for Bristol-Myers and $178 billion for Merck is due to their checkpoint modulation research programs. Some inkling can be gained by seeing the market reaction to the announcement of positive clinical trial results for

Opdivo in metastatic non-small cell lung cancer on January 12, 2015; in a sharply down market, Bristol-Myers was up $1.86 to $62.18 which works out to be a $3 billion increase in valuation attributable to clinical success for just this one indication. Obviously, I can only speculate but, as a guess I think that $15 to $30 billion of each company’s market capitalization might be attributable to investor excitement about their positions in checkpoint modulation.

Bristol-Myers Squibb and Merck are the first movers in checkpoint modulators and Yervoy, Opdivo and Keytruda will dominate sales for the indications they are approved in. As importantly, they also will be widely studied as backbones of combination therapies with existing cancer drugs and many cancer drugs in development. Merck has said that Keytruda is currently being studied in 50 clinical studies of which 20 involve a combination with another drug(s) that are addressing over 30 types of cancer. Bristol-Myers Squibb is doing the same with Opdivio. Most important existing and new drugs that may be synergistic with anti-PD1 antibodies will first be studied with Opdivo and Keytruda and may establish new standards of care. Competitive products aimed at PD-1 blockade will have great difficulty in studying their new products in these settings as they will have to show improvements in standard of care. This is an extremely important advantage over drugs aimed at the same PD-1 target that are behind in clinical development, at least in the next few years.

Many biopharm companies, large and small, are rushing to develop products in the checkpoint field and there will be other winners than Bristol-Myers Squibb and Merck. I think that one of the intriguing development efforts in this space is the collaboration between Agenus and Incyte. The key to long term success in checkpoint modulation should be the ability to generate effective monoclonal antibody drugs against different checkpoints and then develop combinations that prove most effective. The 4-Antibody acquisition gave Agenus an industry leading platform for antibody development and Incyte brings money and clinical development expertise that Agenus lacks.

The first drugs of Agenus and Incyte will enter phase 1 in 2016 so some investors may think that this is just too early to get involved. I disagree. I urge investors to think in terms of five years, ten and longer time periods. A lesson can be learned by studying what happened in monoclonal antibodies, the pioneering technology in immuno-oncology. The commercial market effectively started with the launch of Rituxan in 1997 and here 18 years later monoclonals are still the most extensively focused area of immuno-oncology research. As an important side note, many of the large pharmaceutical firms only have embraced the field in the last five or so years.

I am recommending Agenus as a pure play in checkpoint modulation. Part of my recommendation of Celldex is based on their ability to generate antibodies against checkpoints. Their lead product CDX-1127 is a human monoclonal antibody that has a high binding affinity to CD27; this molecule is over-expressed in certain lymphomas and leukemias which makes it a therapeutic target for treating those cancers. However, CD27 is also found on T cells where it has a very different role in activating T cell response. Yervoy, Opdivo and Keytruda figuratively take the brake off immune system activity while CDX-1127 hits the accelerator. CDX-1127 would potentially be used in combination with these drugs.

CAR-T and Other Engineered T-cells

Checkpoint modulators are not the only technology to capture the imagination of Wall Street as to the promise of immuno-oncology. The engineered T-cell programs of Kite Pharmaceuticals and Juno Therapeutics have also excited investors. Their initial public offerings in 2014 were spectacularly successful as Kite now carries a market capitalization of $3.2 billion and Juno $4.7 billion. These huge valuations were placed on these companies even though the only data they have is based on phase 1 trials that were conducted by the National Cancer Institute in the case of Kite and Fred Hutchinson, Memorial Sloane Kettering and Children’s Hospital in the case of Juno. Neither company has yet conducted a human clinical trial nor manufactured its product; both of these critical activities are in planning stages.

I would argue that checkpoint modulation is an evolutionary advance in immuno-oncology as it is based on the use of monoclonal antibodies against checkpoint modulation. These drugs can sometimes overcome immune tolerance of cancers that blunts the T-cell response which helps to unleash the power of T-cells. What Kite and Juno are doing is much more of a paradigm shift. They are engineering T-cells to respond more fiercely to cancers.

The technologies of Kite and Juno are a tour de force of new technology that combines recombinant DNA technology, gene transfer using viral vectors and living cell manufacturing. This is an autologous cell approach that starts with taking T-cells from a cancer patient and selecting and activating certain of these cells. Then using a viral vector, a DNA sequence is incorporated into the T-cell genome which codes for a peptide complex that among other things leads to a human designed receptor (chimeric) being expressed on the surface of the T-cell that is specific to a cancer antigen. The cells are then expanded and returned to the body. This particular technology is called chimeric antigen receptor which uses the acronym CAR-T; there are other approaches to T-cell engineering but this is the most clinically advanced. CAR-T cells can only attack cancers that have antigens on their cell surface which is the case for many hematological tumors. Most solid tumors express their key antigens internally and this requires a different T-cell engineering approach.

The chimeric antigen receptor is specific to an antigen that is expressed on the surface of a cancer cell. This allows the T-cell to hone in on that cancer cell with the specificity of an antibody and the killing power of the T-cell. Importantly, T-cells can penetrate any part of any tissue in the body which is not necessarily true of monoclonals or small molecule drugs. Kite and Juno are two of the three leading companies in the CAR-T space along with Novartis. The leading products of all three companies are based on a chimeric T-cell receptor that targets CD19 that is expressed on the surface of cancerous B-cells as are found in B-cell acute lymphocytic leukemia and non-Hodgkin’s lymphoma.

Striking results have been seen in acute lymphocytic leukemia with CAR-T therapies. They have produced profound responses in patients who had failed virtually all available therapies. For example, Juno has reported that in an ongoing phase 1 trial of 27 evaluable adult patients with relapsed/refractory B cell acute lymphoblastic leukemia that their lead CAR-T product (there are two others) produced an 89% complete remission rate versus an expected 10% rate. Because of the biology of the tumor that makes CD19 easy to reach, ALL is the most responsive of the B-cell tumors. However, 60% complete remission rates have been seen in refractory. relapsed lymphomas which are bulkier and more difficult to treat. Novartis has reported comparable results in ALL and Kite has provided striking data in diffuse large B-cell lymphoma, a form of non-Hodgkin’s lymphoma.

In the engineered T-cell space, the CAR-T products will be the first to market. For reasons that I will touch on later, the primary targets of CAR-T cells will be hematological cancers in which the antigen targets are on the surface of cancer cells. Novartis has begun a potential regulatory trial in adult acute lymphocytic leukemia and their product should be the first to the market with approval probable in 2016 or 2017. Juno Therapeutics is a close follower also targeting ALL; they plan to begin phase 2 trials this year that could be the basis for approval. Kite has selected a different hematological cancer and will begin a potential regulatory phase 2 trial this year in diffuse large B-cell lymphoma. As a cautionary note, Juno and Kite do not have proven manufacturing processes in place. Manufacturing is critically important in developing living cell therapies as the manufacturing process is essentially the product. This may be a more difficult hurdle than investors recognize.

Because of their first mover advantage, Novartis, Juno and Kite are the clear leaders in the CAR-T space. I would pick Novartis as the likely dominant company of the three because of its lead time in clinical development of the first CAR-T product, financial resources, skills in product development and commercial organization. However, Juno and Kite have taken advantage of the market’s enthusiasm to fortify their balance sheets and also should become dominant in the space. They both have great staying power and excellent technology. I favor Juno’s technology over Kite’s.

CAR-T is just the earliest phase of the engineered T-cell technology and as I mentioned will be primarily applicable to hematological tumors. A different approach is known by the acronym TCR. Unlike CAR-T, this technology can be directed against intracellular antigens in cancer cells which allows its use in solid tumors. This technology is less advanced than CAR-T and while Novartis, Juno and Kite are key players in CAR-t there are others who may emerge as the leaders in TCR. For example, Glaxo is partnered with Adaptimmune and Celgene is partnered with bluebird bio. Pfizer is partnered with Cellectis to develop an allogeneic engineered T-cell.

Therapeutic Cancer Vaccines

Until the introduction of Yervoy, much of the research being done in immuno-oncology and investor interest was centered on finding antibodies against cancer antigens such as Rituxan against CD20 and Herceptin against HER-2. Other research projects such as CAR-T were dismissed as science projects. Obviously, this has changed. I have been intrigued with another area of immuno-oncology that has labored under this science project classification. This is the area of therapeutic cancer vaccines which I think has the potential to also capture the interest of big pharma and investors, perhaps to the same extent as the checkpoint modulators and engineered T-cells.

I acknowledge that development efforts in cancer vaccines have produced a long string of failures until Dendreon’s dendritic cell vaccine Provenge was approved in 2010 for metastatic prostate cancer. While Provenge should record sales of $300 million in 2014, it proved disappointing relative to expectations. It has been written off as a failure and indeed Dendreon just filed for bankruptcy. This further discouraged investors about the prospects for cancer vaccines.

Based on data that showed a very meaningful improvement in overall survival of about 4.1 months with a relatively benign side effect profile, initial expectations were that Provenge sales would quickly reach $1 billion. It had the misfortune to be introduced at about the same time as two hormonal therapies, Johnson & Johnson’s Zytiga and Xtandi of Astellas and Medivation. Both of these products targeted the same disease state and their improvement in median overall survival was comparable. However doctors were more comfortable with the mechanisms of action of Zytiga and Xtandi which built on hormone therapies that had been the backbone of treatment for decades while Provenge was a totally different approach. This coupled with the enormously greater promotional power of Johnson & Johnson and Astellas left Provenge struggling in their promotional dust. Had Provenge come to market three years earlier, it might have reached sales of $1 billion.

Dendreon also made the fatal mistake of building an infrastructure to support over $1 billion of sales and financing this structure with debt. Even though, Provenge has reached highly respectable sales of $300 million, the cost structure combined with debt servicing kept it deep in the red and it had to file for bankruptcy in November 2014. Many investors took this as a sign that cancer vaccines requiring autologous cell manufacturing could not be manufactured at sufficiently low cost to lead to profitability. (Note that the CAR-T products of Juno and Kite also use autologous cells manufacturing.) I disagree. The gross margin on Provenge in 2014 reached 53% so that each course of therapy costing about $95,000 produced $50,000 of gross profits. In a well-run company, this should have resulted in substantial profitability.

The Dendreon experience along with the string of product development failures before Provenge has caused investors to dismiss the potential of cancer vaccines. However, their early clinical compares favorably to that of CAR-T cells in terms of improvement in efficacy versus standard of care and they are much, much safer to use. The clinical data supporting the market capitalizations of Kite and Juno are based on phase 1/2 data created at the NCI and academic centers. The dendritic cancer cell vaccine DCVax-L from Northwest Biotherapeutics has produced striking phase 1/2 results at UCLA medical center in newly diagnosed glioblastoma multiforme and DCVax-Direct has shown intriguing initial response in different types of inoperable solid tumors in a phase 1 trial conducted by M.D. Anderson. I would argue that this technology holds considerable promise and yet, Northwest and other development efforts have been largely ignored by investors and Northwest has actually been the target of a concerted shorting attack. Its market capitalization is about one tenth that of Kite and Juno.

Cancer vaccines are designed to induce the body to produce an immune response against cancer. One approach involves the engineering of dendritic cells to express cancer antigens which mobilize the adaptive immune system to attack cancer cells expressing those antigens. The dendritic cell vaccines compare very favorably to the CAR-T products. Both have produced striking results in phase 1. Also, both are based on the use of autologous living cells which represents a whole new challenge to manufacturing.

The much maligned cancer vaccine companies have been the Rodney Dangerfields of drug development, but the next year or two could change this. The phase 3 topline results of Northwest Biotherapeutics’ DCVax-L in newly diagnosed glioblastoma multiforme will be announced in late 2015 or early 2016. The UK and German regulatory agencies have selected this product to make it available to patients before the completion of phase 3 clinicals. These programs are intended to speed patient access to promising new drugs prior to completion of phase 3 trials. That DCVax-L was the first systemic drug selected by Germany and the UK for their early access programs is a powerful validation and raises the hope that this phase 3 trial will be successful.

The early results with Northwest’s second product, DCVax Direct in inoperable solid tumors have produced some very promising indications of efficacy that are potentially as eye opening as results seen with CAR-T. We should see the results for all of the 40 patients enrolled in the phase 1 trial this year (probably at ASCO in May) which will give a clearer insight into the potential for DCVax Direct. Potential regulatory phase 2 trials should begin shortly and topline results might be available in late 2016 which puts DCVax Direct apace with the development timelines for CAR-T products.

DCVax-L and DCVax Direct are dendritic cell based vaccines. I have done the most work on these products and they have been the basis of my buy recommendation on Northwest Biotherapeutics. However, Neostem has just started a phase 3 trial for its dendritic cell vaccine in malignant melanoma and Argos Therapeutics in in phase 3 in renal cell carcinoma. I have done less work on these products, but I am interested in them. Dendreon has gone into bankruptcy and I am watching closely to see what happens with the Provenge asset. Its $300 million of sales should be attractive to a third party or could be the basis of Dendreon emerging from bankruptcy.

Amgen will produce phase 3 results in malignant melanoma for T-Vac (talimogene laherparepvec) in 2015. This is a different technology than dendritic cell based vaccines. It is engineered from the herpes virus that causes cold sores. The virus is attenuated so that it can no longer cause infections, is engineered to be more selective for cancer cells and is engineered to secrete GM-CSF which stimulates an immune response. This dual mechanism of action directly attacks cancer cells as well as generating a broad immune response. It is injected directly into the cancer.

Celldex’s rindopepimut is designed to target cancers that express a mutation of the epidermal growth factor receptor; the mutation is called EGFRvIII. This is a molecular complex that occurs in about 25% to 30% of glioblastoma patients that is not found on normal cells. Rindopepimut is comprised of a peptide sequence that mimics EGFRvIII which is linked to a powerful immune system stimulant called keyhole limpet hemocyanin, or KLH. The goal is to create a powerful immune response against cells that express EGFRvIII.

In December 2014, Celldex released positive results in recurrent glioblastoma that could be the basis for regulatory approval. Topline results from a 700 patient trial in newly diagnosed glioblastoma are expected in 2016 and based on the results already seen in recurrent glioblastoma raise high expectations for success. Enrollment in this trial has been completed and the first interim look is probable for mid-2015. This is an event drive trial based on mortality so that predicting the timing for the first interim look is somewhat uncertain. Some investors think that the first interim look may show efficacy, but it is more likely that the data monitoring committee will just recommend that the trial continue.

Monoclonal Antibodies Is An established Technology That Is Widely Embraced by BioPharma Companies

Monoclonal antibodies are the oldest and most proven area of immuno-oncology. The clear leader in terms of sales is Roche which markets the three most successful products in the world with Rituxan, Avastin and Herceptin. These products were all developed by Genentech which pioneered the use of monoclonal antibodies in cancer and was then acquired by Roche. This technology is ubiquitous within the biopharma industry and is the basis for intensive development.

Rituxan was introduced in 1997 and I believe that this was the beginning of the modern immuno-oncology era. However, it can be argued that it began in 1986 when interferon-alpha became the first cytokine approved for cancer patients. Cytokines are proteins which coordinate activity among immune cells. In 1992, interleukin-2, or IL-2, was the second approved cytokine in cancer treatment, showing efficacy in melanoma and renal cell cancer. IL-2 does not kill cancer cells directly, but instead nonspecifically activates and stimulates the growth of the body’s own T cells which then combat the tumor. Although interferon-alpha, IL-2, and subsequent cytokine therapies represent advances in cancer treatment, they are generally limited by toxicity and can only be used in a limited number of cancers and patients. On the other hand, they are critically important in drugs that treat auto-immune diseases but that is a different story.

Other Immuno-Oncology Technologies

The whole field of immuno-oncology is moving very rapidly and this will lead to improvements in existing technologies such as checkpoint modulators, engineered T-cells and therapeutic cancer vaccines. It will also lead to different approaches. In the following paragraphs, I briefly discuss two such different approaches that are tumor infiltrating lymphocytes and bi-specific antibodies.

Tumor infiltrating lymphocytes is an autologous T-cell approach that is based on capturing T-cells that have infiltrated a patient’s tumor and are attacking it but have not been able to eradicate it. These tumor infiltrating lymphocytes (TILs) are isolated from resected tumor tissue and are expanded outside the body into a much larger number of cells. These are then re-infused into the body. The idea behind this technology is to identify T-cells that have already been trained to attack the tumor, significantly expand their numbers and then re-introduce them into the body. This is also potentially a transforming technology developed by the National Cancer Institute. However, it is not being pursued as aggressively as engineered T-cells. The small company Lion Biotechnologies is pursuing this technology and hopes to be in a phase 3 trial in malignant melanoma in 2015 or 2016.

Amgen’s blinatumomab is a bi-specific antibody. Monoclonal antibodies are designed to bind to a specific antigen on the surface of cancer cells. Amgen’s blinotumomab is a bi-specific antibody that expands on this approach. It has one antibody arm that is specific to an antigen on the surface of cancer cells like monoclonal antibodies, in this case CD19, and a second that is specific to  CD3 molecular complexes on T-cells. Blinotumomab engages both the cancer cell and the T-cell and brings them into close proximity which activates the T-cell to attack the cancer. Blinotumomab was approved in 2014 for the treatment of adult lymphocytic leukemia and Amgen intends to expand its use to other hematological cancers in the future.

Investment Perspective on My Research

I cannot begin to give a truly comprehensive overview of immuno-oncology and the preceding paragraphs and subsequent parts of this report only touch on what is going on. I expect that there will be other exciting technology approaches within and beyond checkpoint modulation, engineered T-cells and cancer vaccines. I don’t think that any one person can truly capture what is going on and I certainly don’t represent that I can. However, I will try to find emerging biotechnology companies in this space.

In order to understand immuno-oncology drugs, it is necessary to have a basic understanding of the how the immune system works. I am not an immunologist or a molecular biologist so that I can only provide a layman’s overview of the immune system. I must emphasize that the following sections are very rudimentary and present the immune system in a fairly simplistic way.

As I was doing my research, I found that in regard to many aspects of the immune system’s functioning, I did not have a clear understanding of some basic concepts. This would cause me to delve deeper into the subject and as I did so I found that the issue was always much more complex than I had originally thought. Moreover, I found that experts in the field could have completely opposite views and that knowledge is evolving so rapidly that today’s solid belief may be regarded as wrong tomorrow.

At times, I became so frustrated that I almost abandoned an effort to put together this overview report. I felt that much of my discussion was superficial. It seems almost impossible to explain the immune system in layman’s terms without making some huge misstatements. Eventually I resigned myself that even if this overview is overly simplistic that we all need a starting point so that I went ahead and the following sections are the end product of a great deal of work. However, I caution the reader to only use this as background and to rely on your own research in reaching decisions.

Introduction To and Overview of Immuno-Oncology

Immuno-oncology is the treatment of cancer using technology that is based on an understanding of how the immune system combats cancer. The immune system evolved to protect humans from pathogens such as bacteria, viruses and fungi. However, the mechanisms used against pathogens can also rid the body of abnormal cells like cancer. The immune system is incredibly complex and is comprised of many types of cells all of which spring from adult stem cells in the bone marrow which circulate in the blood and lymph. These cells interact directly with each other through direct contact and indirectly through the use of protein signals (cytokines).

Two types of cells that play pre-eminent roles in the immune system’s response to cancer which are the focus of much drug development efforts are B-cells and T-cells. B-cells produce antibodies against cancer antigens (literally means antibody generating) and T-cells directly engage cancer cells. Their mechanisms of action are the focus of much of the biopharmaceutical industry’s research focus and drug development efforts in immuno-oncology.

Immuno-oncology can be traced to the development of Coley’s toxins in the late 1800s. This involved injecting killed bacterial cells directly into the tumor or bloodstream to create an immune response. Daily doses were gradually increased until a state of fever was reached which signaled an immune response that would hopefully target cancers. This therapy was used in the first half of the twentieth century although its effectiveness was never confirmed in a clinical trial.

Beginning in the late 1940s, chemotherapy emerged as the primary treatment for most cancers; it remains an integral part of many standard of care treatments for cancers. However, astonishing progress in molecular biology and with it a much better understanding of how immune cells function and work together is now pushing immuno-oncology to the forefront of cancer treatment. It is on its way to greatly diminishing or even eliminating the role of chemotherapy.

The first major breakthrough in immuno-oncology from both a commercial and medical standpoint was the introduction of the monoclonal antibody Rituxan in the US in 1997. This mimicked the action of antibodies which are produced by B-cells; they target specific molecules (antigens) that mark a cell as being abnormal or cancerous. Rituxan was based on an antibody developed in a mouse that was specific to an antigen (CD20) found on the cell surfaces of some types of cancers of the B-cells. The binding of Rituxan to the antigen triggers an immune response that can destroy the cancer cell. One of the great breakthroughs with Rituxan was humanizing the antibody to prevent the immune system from identifying the antibody itself as being a foreign (mouse) protein and rejecting it.

Since the introduction of Rituxan, the development of monoclonal antibodies against cancer targets has been an area of intensive research and development focus and has led to major medical can commercial successes. Rituxan now has sales of about $6.9 billion and other monoclonal antibodies have also had great success such as Avastin ($6.3 billion) and Herceptin ($6.1 billion). There are many other monoclonal antibodies that have been commercialized and the cancer research pipeline is loaded with new monoclonal drugs in development.

While the industry has enthusiastically embraced monoclonal antibody technology and has been rewarded, it was less successful in creating products based on T-cells or cytokines. There was some product development in this area but it paled in comparison to monoclonal antibodies and commercial success was limited. Recombinant versions of the cytokines interferon alpha and IL-2 were approved for some cancers but produced only modest results. The large biopharma companies were uninterested in most areas other than monoclonal antibodies leaving development efforts in the hands of smaller, entrepreneurial biotech companies. This has changed dramatically with the 2009 acquisition of Medarex by Bristol-Myers Squibb.

Medarex was the leading company in the development of checkpoint inhibitors. Its technology was based on an understanding of how the immune system can activate or restrain T-cells in attacking cancer cells. There are certain receptors on T-cells called checkpoints which affect the activation or deactivation of T-cells when cytokines bind to them. Cancer cells can develop mechanisms that inactivate checkpoints and in doing so take T-cells out of the battle against cancer. By using monoclonal antibodies to activate some receptors or block others, T-cell efficacy against cancer cells can be restored or greatly enhanced.

Research on checkpoint modulation has now emerged as probably the hottest area for cancer research on the planet. In 2011, Bristol-Myers introduced the first checkpoint inhibitor, Yervoy. This drug quickly achieved blockbuster status reaching worldwide sales on $1.3 billion in 2014. Yervoy targeted a checkpoint called CTLA-4. In 2015, Bristol-Myers introduced Opdivo and Merck introduced Keytruda, both of these are monoclonal antibodies were targeted against the PD-1 checkpoint. Results in clinical trials have been promising and have led Wall Street analysts to project that each drug could have sales of over $5 billion by 2020.

There may be tens or even hundreds of checkpoints on T-cells that play a role in immune response and the industry is now investing huge amounts of dollars in research and development efforts. The checkpoint inhibition breakthrough was based on the use of monoclonal antibodies so that in some ways it might be considered just an evolutionary advance over monoclonal antibodies, but it was more than that. The difference is that this was the first truly successful research and development effort that focused on mobilizing a T-cell response. Prior to the checkpoint inhibitors success, there was general skepticism on the part on large biopharm companies and investors about any drugs other than monoclonal antibodies.

I think that we are now witnessing an explosion of interest in new immuno-oncology approaches that until recently have been regarded as science projects by many investors. This was made apparent by the initial public offerings of Kite Pharmaceuticals and June Pharmaceuticals in 2014. Both of these companies are very young companies and in fact neither company has conducted any trial in human beings. Their technology is based on engineering T-cells to be active against cancer and was in-licensed from the National Cancer Institute in the case of Kite and major academic centers like Fred Hutchinson and Sloan Kettering in the case of Juno. The NCI and these academic centers have used a type of T-cell engineering based on chimeric antigen receptors or CAR-T. In cancer patients suffering from acute lymphocytic leukemia (ALL) and types of non-Hodgkin’s lymphoma (NHL) who had exhausted all other therapeutic options and were near death, staggering responses were seen with CAR-T therapy.

Kite Pharmaceuticals has a market capitalization of $3.1 billion and Juno’s is $4.7 billion even though they only have phase 1 data. Each of these companies is planning for phase 2 trial that will start in 2015, which may or may not be the basis for registrational filing. If results mirror those seen in phase 1 trials, approvals in 2017 are possible. I think that these market valuations are recognition that other approaches to immuno-oncology have the potential to provide a major step forward in the treatment of cancer. Investors are now willing to look beyond monoclonal antibodies.

Here are the implications that I see for investors. There are some other very exciting areas of research relating to immunology, not just in cancer, but in other diseases. Prior to Kite and Juno, most investors dismissed these as science projects. Indeed, investors have been much more interested in buying the larger biotechnology and pharmaceutical firms to the extent that the latter have enjoyed a bull market while many of the emerging biotechnology firms have been in a bear market for the past year. The enormous gains seen with Kite and Juno should make investors somewhat more receptive to other immuno-oncology companies.

Background on Cancer Treatment

The paradigm for treating cancer starts with the surgical removal of the tumor mass and in cases in which this is possible, the patient is effectively cured. However, if the tumor cannot be entirely removed or if it has metastasized, physicians use drugs and radiation to attack the remaining tumor. This rarely eradicates the cancer mass although it may shrink the tumor and in doing so prolong the life of the patient.

Since the late 1940s, chemotherapy drugs have been the mainstays of cancer therapy. These drugs are divided into several groups:

(1)        alkylating agents directly damage DNA and prevent cell division,

(2)        anti-metabolites interfere with DNA and RNA growth by substituting molecules for the nucleotides that are normal building blocks of RNA and DNA, again preventing cell division

(3)        anti-tumor antibiotics that interfere with enzymes involved in DNA replication.

(4)        topoisomerase inhibitors interfere with topoisomerase enzymes that are essential to separating strands of DNA so they can be copied.

(5)        mitotic inhibitors are plant alkaloids and other compounds derived from natural sources can stop cell division or inhibit enzymes needed for cell division.

(6)        corticosteroids are derivatives of naturally occurring human hormones that work through complex mechanisms to control cancer.


There are literally hundreds of drugs that fall into these classes as well as some other miscellaneous classifications. In general, these drugs interfere with DNA replication in rapidly dividing cells like cancer. In doing so, they attack normal cells that divide frequently such as those in the bone marrow, hair follicles and gastrointestinal tract as well as other parts of the body. These drugs are almost always very toxic so that their use involves a careful weighing of the value of killing tumor cells versus the damage done to normal cells and the resultant side effects which are often life threatening. As an illustration, one of the first chemotherapy drugs used was nitrogen mustard alkylating agent which was used as poison gas in World War I.

Hormone therapies are cancer drugs that change the action or production of female or male hormones such as testosterone and estrogen, which are important in stimulating the growth of breast, prostate, and endometrial (uterine) cancers. Unlike the chemotherapy drugs that directly attack cancer cells, these drugs block the cancer cells from receiving the hormonal signals that are essential to growth.

Chemotherapies and hormone therapies have been used for over 60 years and throughout this time were the cornerstones of drug therapy. In the last 15 or so years, new drugs that have been developed that are more specific in their attacks on cancer cells than chemotherapy drugs. These are targeted therapies which are small molecule drugs that attack mutant genes in cancer cells or their protein products which are the cause of cancer cell proliferation. Among the first best known of such drugs is Gleevec (gefitinib) which was introduced in the US in 2001 for Philadelphia chromosome-positive chronic myelogenous leukemia (CML). It nearly doubled the five year survival rate in CML with a side effect profile that was benign in comparison to chemotherapy. Examples of targeted therapy drugs that followed were Sutent (sunitinib) and Velcade (bortezomib). This is also an area of active research and development.

The chemotherapy drugs and radiation carry a dangerous side effect profile. Targeted therapy drugs generally are less toxic but still produce troubling side effects. This has led to the practice of giving combinations of chemotherapy and targeted therapy drugs at low levels which have different mechanisms of action. This can produce synergy in terms of efficacy while reducing the severity of side effects.

Different drugs or combinations of drugs may also be used in sequential treatment regimens. Cancer treatment is characterized by a response and then as the cancer mutates and begins to regrow, a new treatment regimen using different drug combinations is employed. It is not uncommon to use four or five more courses of therapy during the treatment life of a cancer patient.

With a few exceptions such as Gleevec, the advances in therapeutic effect with new chemotherapies, hormonal agents or targeted therapy have been small. This is partially because these drugs in order to gain approval must be shown to improve results over standard of care. This means that they must be added to standard of care regimens that already providing benefit. Because of uncertainties about side effects, new drugs must usually prove themselves in the more advanced cancer patients; it may take many years before they can be used on early stages of cancer. As a result of this, the benefits of new drugs often seem and indeed they are modest. Oncologists generally consider that a drug used to treat metastatic cancer that extends median overall survival by four and one-half months to be a significant advance.

Overview of the Immune System

The first thought that comes to mind for most people when the immune system is mentioned is fighting infectious disease. However, it is also designed to rid the body of abnormal cells like cancer. We all develop precancerous cells during our life, but most are eradicated by the immune system or walled off from the rest of the body rendering them harmless. It is when the immune system fails that recognizable cancers occur.

The function of the immune system is to recognize and rid the body of both abnormal cells (like cancer) and infectious organisms (pathogens) such as bacteria, viruses, fungi and parasites. This is based on the ability to recognize markers that identify abnormal cells or pathogens as being different (non-self) from a human’s own cells (self) and launching an immune attack that tries to destroy them. The non-self-markers are specific molecules called antigens (short for antibody generating) that appear on pathogens and abnormal cells.

Each individual’s immune system is based on cells that arise from hematopoietic stem cells that are found in the bone marrow. These cells can differentiate into all of the cells found in the blood; these are the white blood cells that make up the immune system as well as red blood cells that carry oxygen and platelets that are integral in forming clots to stop bleeding. There are many different immune (white blood) cells which circulate through the blood and lymphatic systems.

The immune system is comprised of millions and millions of cells that are organized into specialized sets and subsets which work in concert. When launching and coordinating an immune response, they pass information back and forth that coordinates their activity like bees swarming around a hive. Immune cells interact directly with each other and also pass information through numerous protein messengers called cytokines.

Cytokines are released by many different types of immune cells and serve to influence and direct other immune cells. Through following a signal of increasing chemokine (a type of cytokine) concentration, immune cells can be guided toward the source of the chemokine resulting in migration of an immune cell though tissue and the lymphatic and blood systems toward a pathogen or cancer cell. Different types of cytokines provide signals that are essential for immune cells to differentiate and mature. Others can promote development of new tissues such as angiogenesis (forming new blood vessels). Still others release signals in response to events that cause physical damage and initiate an immune response.

The Innate Immune System

There are two elements to the immune response which are referred to as the innate and the adaptive immune systems. The innate system is non-specific and always on duty; it is the first line of defense reacting to an antigen within hours or days. Cells that comprise the innate system lurk in tissues or the blood and lymph systems and are continually on the alert for damaged cells arising from infection or cancer. Prominent innate immune system cell types are natural killer cells and granulocytes (predominantly neutrophils) which can recognize cells or parasites displaying antigens and launch an attack through engulfing them and/or releasing toxic chemicals.

Neutrophils and natural killer cells are complemented by phagocytic (literally cell eating) cells called monocytes of the innate immune system. Phagocytic cells engulf and digest abnormal cells from their surroundings. They internally break down cells and process the fragments which are then presented as antigens on the cell surface; this brings the adaptive immune system into play.

The innate immune system attacks anything it senses as foreign or abnormal while the adaptive response is specifically triggered by antigens. Macrophages and dendritic cells are the primary antigen presenting cells which arise from the differentiation of monocytes. The dendritic cell is considered to be the most important (professional) antigen presenting cell. It is the presentation of antigens primarily by these cells that triggers an active immune response.

The Adaptive Immune System

The adaptive immune system is importantly based on two kinds of cell groups called T cells and B cells. Certain subsets of T cells (killer T cells, aka CD8+ cells) are programed to seek out and attach to cells displaying a particular antigen. This activation of the adaptive immune system mobilizes those killer T cells with receptors that recognize and can bind to an antigen present on the surface of targeted cells. They bind with that cell and release proteins which punch a hole in the cell surface causing it to leak cellular contents and die. Importantly, activated T-cells are serial killers that can go on to destroy other abnormal cells. They also rapidly differentiate to create a vast number of clones.

Helper T cells (aka CD4+ cells) are another sub-set of T cells that are not directly involved in the killing process, but play a major role in activating and directing both killer T cells and B cells through cytokine signaling. They are essential to the process that activates antigen specific killer T cells and antigen specific antibodies produced by B cells. Killer T cells, helper T-cells and B-cells when activated differentiate into cells (effector cells) that are directly involved in the immune response

Memory T cells can be either helper or killer T cells that have become experienced through a previous encounter with an antigen. It is this component of the immune system that gives rise to preventive vaccines. At a repeat encounter with an antigen, memory T cells can quickly differentiate to mount a faster and stronger immune response than the first time the immune system was exposed to an antigen. This is the biological basis for preventive vaccines.

Regulatory T cells (aka suppressor cells) are a third sub-set. They dampen the responses of immune cells actively involved in killing. They settle the immune response after it has done its work because an overly activated immune system can do damage to the body causing autoimmune disease such as rheumatoid arthritis, asthma and psoriasis.

B cells can be activated by direct contact with an antigen, but they usually require the aid of helper T-cells to be activated. They produce specific antibodies that recognize, bind to and attack an antigen expressed on targeted cells. They can sometimes act directly to destroy the targeted cell on their own or trigger further complementary responses from other components of the immune system which work in concert to destroy the targeted cell. Like T-cells there are effector and memory cells.

The basic adult immune stem cell differentiates into lymphocytes and granulocytes. Lymphocytes are the basis for and differentiate into cells of the adaptive immune system and granulocytes differentiate into cells of the innate immune system. This is shown in the following schematic.

Distinguishing Self from Non-Self; The Major Histocompatibility Complex

The essence of both the innate and adaptive immunity systems is their ability to distinguish between self and non-self-molecules. Both recognize antigens that mark cells or pathogens as non-self and launch a powerful attack to destroy them while ignoring normal cells that do not express the antigen. The biological process for distinguishing between self-molecules and antigens is based on proteins called major histocompatibility complex or MHC molecules that are found in every cell in the body that contains a nucleus.

It is the job of macrophages, dendritic cells and other phagocytic cells to engulf cancer cells and pathogens. Their MHC molecules are integrally involved with proteasomes which are very large protein complexes located in the nucleus and the cytoplasm of cells. The main function of the proteasome is to degrade pathogens as well as unneeded, damaged or abnormal cells like cancer. The proteins are degraded in the proteasome into smaller peptides. They are then complexed with MHC molecules. This is a process by which cells regulate the concentration of normal proteins in the cell and get rid of foreign or dysfunctional proteins.

MHC class I molecules that are present in all nucleated cells (normal and abnormal) in the body bind to peptides that are created when proteins are degraded in the proteasome. A peptide component resulting from proteasome degradation is joined with an MHC I molecule and the complex is transported to the cell surface. In this way, the internally processed proteins of a cell can be displayed to cells of the immune system.

A normal cell that is degraded in the proteasome will display peptides from normal cellular protein which immune cells recognize as normal and ignore. However, the display of antigens that arise in virally infected cells, cells infected with intracellular pathogens or cancer cells help to trigger an attack by killer T-cells that have been trained to seek out and destroy cells displaying these antigens.

MHC class II molecules are found only on a subset of immune cells involved in antigen processing. They function like MHC Class I molecules in displaying peptides resulting from degradation of substances in the proteasome. However, there is an important difference in that they only present proteins that are brought to the cell by ingesting bacteria or other extracellular organisms, another cell or cellular debris. These MHC II peptide complexes play an important role in activating helper T cells to spur antibody production and T-cell and B-cell activity against antigens.

MHC class I peptide complexes play a direct and well understood role in activating killer T-cells. The MHC class II MHC peptide complex is only involved with activating helper T cells which are important in activating both killer T-cells and B-cells. The role of the activated helper T cells is very complex and not as well understood.

A Closer Look at Dendritic Cells; the Key Messenger between the Innate and Adaptive Immune Systems

Dendritic cells are derived from monocytes, the phagocytic (cell eating) type of white blood cell. They are the basis of the cancer vaccines of Northwest Biotherapeutics that I have extensively written on. Monocytes leave the bone marrow and circulate through the blood and lymph. Depending on cytokine signals, they may further differentiate into macrophages and immature dendritic cells. Both of these cell sub-types phagocytose (engulf and then digest) foreign substances such as cellular debris, infectious microbes and abnormal, damaged cells like cancer. Both play a role in activating the adaptive immune system, but dendritic cells are more specialized and play a much more important role. They are referred to as the professional antigen presenting cell and can be considered the starting engine of any immune response.

Immature dendritic cells circulate through the blood to take up residence in tissue at potential sites where they may encounter cells displaying antigens. They are present in the blood, tissues in the inner lining of the nose, lungs, stomach and intestines. Immature dendritic cells are geared for antigen capture. They then migrate through tissues following a chemokine gradient into the lymphatic system and ultimately into lymph nodes where they develop into mature dendritic cells. As T cells in the lymph flow past the dendritic cells, there is an interaction that initiates and shapes the adaptive immune response.

Mature dendritic cells process digested antigen fragments and present them on their surface though MHC peptide complexes to other cells of the immune system. The killer T cell becomes sensitized to a cancer antigen by first encountering it on the complex of MHC class I molecules and the cancer antigen on the surface of antigen presenting cells. This recognition of the antigen present on the MHC class I peptide complex is generally not enough to activate killer T cells and turn them into cancer cell killers. They need the support of helper T cells. Helper T cells recognize a different collection of peptides displayed as MHC class II molecules. When helper T cells come in contact with these MHC class II molecules containing antigen, they become activated and secrete cytokines that promote the expansion and maturation of killer T cells and B cells that produce antigen specific antibodies.

In addition to antigen presentation, mature dendritic cells also express on their surfaces co-stimulatory molecules such as CD 80, CD 86 and CD 40. These bind to the T-cell, keeping them in close proximity and producing a confirmatory signals needed for activation. In the absence of these signals, T cells do not respond to the antigen signal, a condition referred to as T cell tolerance.

The most important elements for the dendritic cells role in activating the adaptive immune system’s response to cancer can be generally characterized by the following sequence:

Step 1:  Immature dendritic cells ingest cancer antigens.

Step 2: The immature dendritic cells follow chemokine gradients that enable them to migrate through tissue into the lymphatic system which carries them to lymph nodes where they differentiate into mature dendritic cells.

Step 3:  Mature dendritic cells in the lymph nodes present cancer antigen fragments in order to activate naive killer and helper T cells that are flowing past in lymph and which then become activated against that particular antigen.

Step 4: Activated helper T cells produce cytokines that greatly enhance the cell division of killer T cells and enhance their cancer killing properties. Helper T cells also help to activate B-cells which produce antibodies specific to an antigen to attack that antigen and also cause them to proliferate.

Step 5: Cancer cells presenting antigens on their MHC class I MHC peptide complexes are recognized by killer T cells and antibodies specific for that antigen which attack and try to destroy the cell.

Further Discussion of Emerging Immuno-Technologies

These next sections are brief overviews of immuno-oncology technologies that I am interested in and have done work on.

Checkpoint Modulators Role in Immune-Oncology

The adaptive component of the immune system is trained to recognize and to attack dangerous pathogens and abnormal cells. Checkpoint processes are the internal machinery for tailoring immune activity, either boosting the immune activity when needed and then dampening it when the challenge has been met; they are the thermostat of the immune system response. An overly active immune response carries the danger that it may attack normal cells as well as foreign or abnormal.

Checkpoints usually involve a range of receptors that are located on T-cells and the ligands (proteins made by other cells) that activate these receptors. These ligands are often produced by antigen presenting cells or other immune cells types. There are two broad checkpoint processes that are characterized as being able to increase the activity of the immune system or to dampen it down. Checkpoints like GITR and OX-40 turn up the immune system and activation of them is often likened to putting a foot on the accelerator. In contrast, checkpoints like CTLA-4, PD-1, TIM-3 and LAG-3 dampen the immune response so that blocking their activity is like taking the foot off the break. Either approach can lead to greater immune system activity against a cancer. The discovery of these checkpoint processes has encouraged the generation of antibodies to modulate them.

In the case of cancer cells, they can sometimes hijack inhibitory checkpoint processes and in doing so can block or blunt an immune response. This protects them against immune attack by inhibiting lymphocytes and other cells from recognizing them as abnormal. In the case of Yervoy, it is a monoclonal antibody that blocks the CTLA-4 receptor and prevents cancer producing ligands from activating the CTLA-4 receptor and in doing so, putting a break on the immune system. Opdivo and Keytruda are antibodies that block the PD-1 checkpoint receptor which have a comparable biological roll to CTLA-4.

These drugs have been primarily tested in third line treatment of metastatic melanoma and metastatic non-small cell lung cancer. They have generally produced a 30% response rates in these tumors in which other therapeutic options have been exhausted. In the case of Yervoy in metastatic melanoma about 15% of patients have experienced very durable effects and this also seems to be the case for Opdivo and Keytruda. Results in earlier stage cancers are expected to be better.

While single agent activity has been very encouraging, there is even more interest in combining checkpoint modulating drugs. Early studies have led to an even more powerful activation of the immune system. These drugs are also being studied extensively in combinations with chemotherapies and targeted therapies and will also likely be combined with other immunotherapies. Merck reports that Keytruda is being studied in 50 clinical trials in 20 combinations in 30 tumor types and Opdivo development activity is comparable.

As important as developing drugs will be the need for to develop biomarkers and approaches that allow physicians to better characterize individual patients with respect to their immune system and their cancer. This is very important because immuno-oncology therapeutic responses brought about by checkpoint modulators don’t manifest themselves quickly and may take months to even a year to unfold. It’s important to understand how to initially select and then modify the treatments over time. Physicians need tools that allow them to select the right drugs, directed against the right targets with appropriate clinical strategies to make the best use of them.

In many cases, the tumor has evolved mechanisms to evade recognition by the immune system. The interaction between the tumor and the immune system is a Darwinian struggle for survival. The tumor cell is selected and prospers because it has many mutations that can make it grow more rapidly. It uses mechanisms such as being more receptive to growth factors or forming new blood vessels for nourishment. Tumors are also selected for mutations that allow them to evade the onslaught of the immune system through reducing the ability of the immune system to recognize them or once they have been recognized to evolve a strategy of preventing the attack of the immune system from eradicating them.

The tumor may be able to produce ligands (proteins) that bind to checkpoint receptors and interfere with their function and block the activation of regulatory and effector T-cells that would normally build an attack the tumor. This can also interfere with other immune system responses such as the secretion of inhibitory cytokines, down regulation of MHC class I surface molecules which make them less visible to the adaptive immune system and other immune system processes. There is an ongoing struggle between the tumor and the immune system and if the immune system wins the tumor is controlled. However, if the tumor can develop effective strategies to evade immune attack, it can prosper, metastasize and overwhelm the patient.

A significant issue with checkpoint modulators, particularly when combined, is that are now an awful lot of side effects. These can lead to severe auto-immune reactions like colitis or lung damage or liver damage. It is important to figure out which checkpoint inhibitors to employ but also to understand how to target most of the immune attack against the tumors so that the right amount of efficacy is achieved without serious damage to other tissues.

The time at which a tumor is recognized and the degree to which the immune system has been activated or blocked can be crucial. This means that staging a tumor by the classical means that doesn’t take into account the degree to which the immune system has recognized its antigens can seriously affect outcomes.  The immune system has quite the ability to shape the clinical outcome and control it. There is a time course from when the tumor first starts to evolve in the body. Initially, there is an immunomodulator phase at which the body begins to recognize the tumor as being foreign. Successful tumors evolve a series of immuno evasive mechanisms which allows them to avoid being destroyed by the immune cells directed against the tumor.

Research over the last five years has shown that cancers often hijack the checkpoint systems to evade destruction by the immune system. This has led to the creation of antibodies that are checkpoint modulators that can restore immune balance and lead to destruction of cancerous tissue. Yervoy was the first modulator of a checkpoint process which gained regulatory approval. This was an antibody against CTLA-4. It was followed by the PD-1 inhibitors.

The tumors showing the best results from CTLA-4 and PD-1 blockage are those with significant mutations as compared to most cancers. These are melanoma and lung cancer which are caused by exposure to UV light in the case of melanoma or cigarette smoke as in the case of lung cancer. Checkpoint modulators have generated impressive results in the treatment of these cancers and are now considered to be a foundation in their treatment. In the case of melanoma, CTLA-4 and PD-1 blockers have effectively achieved cures in some patients. In some tumors such as colorectal and prostate cancer, responses haven’t been that good. In cancers, there are a broad range of tumor mutations that determine how the tumor will react to checkpoint modulation. For example, about 20% of melanoma patients don’t respond to the combination of CTLA-4 blockade plus PD-1 blockade.

One of the critical aspects of clinical development of new checkpoint modulators will be to characterize patients at the time they are diagnosed. This will involve determining whether the immune system has already recognized the tumor as non-self and the degree to which the tumor may be suppressing immune recognition and response. This will inform on interventions that make the most sense in individual patients. Targeting the immune response to the tumor and away from normal tissues that otherwise suffer collateral damage is also important. The immuno-education piece that could be provided through therapeutic cancer vaccines and other strategies may also prove to be synergistic.

Companies are trying to determine approaches that will allow them to design better approaches to combinations without waiting for traditional endpoints such as survival to know if they are on the right track. Instead, they will use intensive translational monitoring to detect signals for either being on the right path or being on the wrong path earlier and it points where less time and money has been expended and better decisions could be made.

Dendritic Cell Vaccines

There is a tremendous amount of interest and clinical activity using living immune cells to treat cancer. I have written extensively on the use of autologous (cells from one’s own body) dendritic cells being used by Northwest Biotherapeutics and ImmunoCellular to develop cancer vaccines against glioblastoma. In this case, monocytes are obtained from a patient through a blood draw. They are then differentiated outside of the body into dendritic cells and pulsed (loaded) with antigens obtained from that patient's tumor. The resultant living cell products are then re-introduced into the patient using a subcutaneous injection with the objective of significantly boosting the natural immune response against the cancer.

Each company’s cancer vaccines showed very promising phase 1/2 results in the treatment of newly diagnosed glioblastoma. While these were small unblinded trials and should be interpreted with caution, they showed that median overall survival was about 36 to 38 months versus 15 to 16 months that can be expected with standard of care. In a small phase 2 study, ImmunoCellular’s product ICT-107 failed to reach statistical significance in median overall survival. However, subset analysis has resulted in a plan to do a phase 3 trial in HLA-A2 patients. Northwest will complete a phase 3 trial of DCVax-L in glioblastoma and report topline data in 2H, 2015.

There has only been one phase 3 trial with a dendritic cell vaccine; this was with Provenge. The phase 3 trial showed that Provenge extended median overall survival metastatic prostate cancer by 4.1 months and that 3-year survival rates were 31.7% in Provenge treated patients vs. 23.0% in the control arm. Both Northwest and ImmunoCellular are developing vaccines, DCVax-L and ICT-107, in which monocytes are taken from a patient differentiated into dendritic cells which are loaded with antigens specific to that patient’s cancer. The initial indication is for glioblastoma, but this technology can be applied to many other tumor types. Northwest also has another cancer vaccine in which an immature dendritic cell is injected directly into a tumor and captures antigens directly from the tumor; this is DCVax Direct.

In addition to Northwest and ImmunoCellular there are two other companies in phase 3 trials with dendritic cell cancer vaccines. Neostem is starting a phase 3 trial in patients with either stage 4 or recurrent stage 3 metastatic melanoma and Argos Therapeutics is in a phase 3 trial in metastatic renal cell carcinoma.

Engineered Autologous T-Cell Therapies: CAR-T and TCR Therapies

For the last two decades, there has been extensive work going on at the NCI and academic centers on engineering T-cells to combine their killing power with the specificity of antibodies. This has the promise to be a transformative therapy. This technology engineers an artificial receptor onto a T-cell that is specific to a cancer antigen.

The manufacturing process requires T-cells to be removed from the body and a viral vector is used to insert genes into the genome of the T-cell that expresses a surface receptor on that T-cell that recognizes a cancer antigen. These receptors give T-cells additional specificity to recognize and kill cancer cells which express that antigen. This is referred to as engineered Autologous T-Cell Therapy or eACTs. There are two broad platforms of eACTs of which the most clinically advanced is chimeric antigen receptor (CAR-T) therapy and the second is T cell receptor (TCR) therapy.

CAR-T cells have produced some amazing early results in blood cancers such as non-Hodgkin’s lymphoma (NHL), acute lymphocytic leukemia (ALL) and chronic lymphocytic leukemia (CLL). These were in very small numbers of patients in experiments conducted at the National Cancer Institute and academic centers. There were dramatic responses that appear to be close to cures for these hematological cancers in which patients had failed all other treatment options.

CAR-T cells, as you might imagine can cause cytokine storms that can result in severe auto-immune like disease. Their mode of action in the case of NHL, ALL and CHL is to attack all B cells that express CD19. Both healthy and normal B-cells that express CD19 are destroyed. The loss of antibody producing B cell means that patients are susceptible to infections which may necessitate prophylactic antibiotic and gamma globulin treatment to guard against infections. While there is excitement about efficacy, this approach has worrisome side effect potential.

Kite Pharmaceuticals plans to start a trial with a CAR-T product in third line diffuse large B cell lymphoma (aggressive non-Hodgkin’s lymphoma) in 2015 and hopes for approval in 2017. Novartis has been awarded breakthrough status for a CAR-T product that is being developed for the treatment of refractory ALL and is hoping for approval in 2016 or 2017 if the trial is successful. The private company Juno Therapeutics may be on a similar timeline to Novartis for a treatment for ALL. There are wide spread development efforts going on at other companies in numerous types of cancers.

Tumor Infiltrating Lymphocytes (TILs)

There is another T-cell therapy that captures autologous T-cells that have infiltrated a tumor and are attacking it but have not been able to eradicate it. These tumor infiltrating lymphocytes (TILs) are isolated from resected tumor tissue and are expanded outside the body into a much larger number of cells. These are then re-infused into the body. The idea behind this technology is to identify T-cells that have already been trained to attack the tumor, significantly expand their numbers and then re-introduce them into the body.

This is also potentially a transforming technology. However, it is not being pursued as aggressively as eACTs. The small company Lion Biotechnologies is pursuing this technology and hopes to be in a phase 3 trial in malignant melanoma in 2015 or 2016.




Tagged as , , , , , , , + Categorized as Smith On Stocks Blog


  1. Holy crow, that’s a big report! I know what you’re been doing and what I’ll be doing. We’re sure getting our money’s worth with this one. Thanks!

    I’m in a happy mood today with what NWBO has been doing and also the surprise that CTIX sprang on us today, something I picked up separately on a hunch two years ago and have held on to. Sometimes it pays to be lucky.

    In scanning your report I see you have BMY, a name I avoided because of its rich price. Should I rethink?

    Once again, thanks. Please excuse me while I print off the report, make a cup of tea, and find my couch.

  2. Larry,

    I am NWBO Long.
    You said that Merck or BMY most likely will be the ones teaming up with NWBO to test their check point inhibitors with Direct in a trial. My question is how do you view this team up?

    The reason I asked is because at first when I heard it. I got excited about the idea, but the more I thought about it the less I think it is a good idea. Here is why: It will cost more money for NWBO to run another trial with the phase 2 trials for Direct and DC Vax L in phase 3 going. Meaning more dilution for share holders. This trial should be done after we proven the efficacy of our own two vaccines and making money from our drugs. I have heard people talk about bringing publicity and possible future buy out, which Linda has showed little interest. However I feel this would all happen anyways if Direct and L gets FDA approval and the results are as good as what we have heard so far. Also if Direct and L does well in our trials Big Pharma would bend over backwards anyways to test their products with ours and probably give NWBO better deals in teaming up with them in a trial.

  3. Surprised to not see Provectus Biopharmaceuticals included in the summary with a pivotal P3 trial for melanoma about to start enrollment, pending overseas (China) licensing deals, combination (PV-10 and a few options) and liver trials imminent. Not to mention 3 high ranking Pfizer advisory board members among other notables in Big Pharma. At an outrageously discounted stock price (.77+-) it remains one of the greatest reward to risk plays out there. Worth checking into. Disclosure: I am long PVCT

  4. The omission of Provectus was not overt. There may be 250 or more biotech firms that investors are looking at. I have done no work on the Company. It takes me several weeks of work before I write on a Company. No single person could give a comprehensive overview of immuno-oncology.

  5. sentiment stocks says:

    Hi Larry –

    I’ve been posting links to your articles on the NWBO i-hub information section for quite some time now. Is it okay if I post the link to this article too? There were a few on the board that were concerned for you – since you have to be a “subscriber” to view it. If you prefer that I remove the other links, let me know as well.

    Thanks! 🙂

  6. Great in-depth article, don’t for a minute apologize, you are a master at this! I saw a mention on NeoStem, was hoping for more than a mention. This is a very interesting company, with all they have going, it is bargain basement priced and I am going to open a position. I am long NWBO and very glad to have recently increased my position. Have always enjoyed your articles, have just subscribed and very glad I did. Looking forward to more of your excellent views!

  7. There are just so many hours in the day. I am interested in Neostem and have met with them several times.

Trackbacks & Pingbacks

  1. Northwest Biotherapeutics: Promising New Data Was Just Presented on DCVax-L in Recurrent Glioblastoma Multiforme (NWBO, Buy, $7.29) | Expert Financial Analysis and Reporting | Smith on Stocks
  2. Northwest Biotherapeutics: FDA Panel Recommendation to Approve Amgen’s Cancer Vaccine is Hugely Significant In Regard to Possible Approval of DCVax-L and DCVax Direct. (NWBO, $7.86, Buy) | Expert Financial Analysis and Reporting | Smith on Stocks

    […] 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, […]

  3. Observations from ASCO on Immuno-oncology with a Focus on Northwest Biotherapeutics’ (NWBO, Buy, $9.43) DC-Vax-Direct© and the Checkpoint Inhibitors of Bristol-Myers Squibb and Merck | Expert Financial Analysis and Reporting | Smith on Stocks

    […] There was a presentation at ASCO on DCVax-Direct© by Dr. Marnix Bosch, the Chief Technical Officer of Northwest. Dr. Bosch worked at the Dutch National Institutes of Health (RIVM) as head of the Department of Molecular Biology, as well as in academia as a professor of Pathobiology. He has authored more than 40 peer-reviewed research publications in immunology and virology, and is an inventor on several patent applications on dendritic cell product manufacturing. Dr. Bosch presented the first extensive look at data coming from the phase 1 trial of DCVax- Direct© and this report puts a major focus on his presentation. I also have been listening to wrap-up presentations held for analysts by some of the large pharmaceutical and biotechnology companies at ASCO, in particular those of companies leading the research into checkpoint inhibition: Bristol-Myers Squibb, Merck and Roche. I have previously written extensively on immuno-oncology and the role of checkpoint inhibition and cancer vaccines in my January 20, 2015 report “Immuno-Oncology Promises to be the Next Big Thing in Biotechnology”. […]

  4. Celldex Pipeline Update and Investment Thesis (CLDX, Moving from Buy to Hold, $28.56) | Expert Financial Analysis and Reporting | Smith on Stocks

    […] reports knows that I am optimistic about immuno-oncology; this was the subject of my recent report Immuno-Oncology Promises to be the Next “Big Thing” In Biotechnology, Hence a quick view of Celldex’s positioning in immuno-oncology is the starting point for my […]


You must be logged in, or you must subscribe to post a comment.