ASCO, aka The Oncology Super Bowl for Biotechs, sends stocks in every direction

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Steve’s Take:

As another jam-packed annual meeting of the American Society of Clinical Oncology in Chicago wrapped up on Tuesday (June 6, 2017), with some 38,000 oncologists gathering together at McCormick Place, stocks were on the move. But with more presenting companies seeing their shares slip over the five day session and far fewer rocket skyward, the takeaway was muted enthusiasm, at best.

38,000 #oncologists gathered for annual @ASCO conference in #Chicago Click To Tweet

Highlighting the hundreds of sessions and poster presentations were efforts to harness the immune system to fight cancer, which although marking some immense achievements, mostly were helpful in just a minority of patients.

As pointed out by Laurie McGinley at the Washington Post, a consensus is emerging that the way to get therapies to succeed in more people is to employ them in combination with another immunotherapy or using them with other therapies or traditional treatments such as chemotherapy and radiation.

A recent report by EP Vantage concludes that there are 765 combination studies concerning the leading type of immunotherapy listed on the federal database ClinicalTrials.gov. That’s more than 300% greater than the number of studies just 18 months ago. To no one’s surprise, Merck & Co.’s Keytruda is out in front with an eye-popping 268 such combination studies.

The following is an attempt to summarize some of the key findings from the plethora of studies presented at ASCO. As you’ll note, since Friday, nearly 75% of the companies’ shares have actually declined but among those few gaining ground, several came back from the Windy City with their shareholders in a cheerful, thankful mood.

Loxo Oncology Inc. soared 47% to $71.97 at close Wednesday (June 7, 2017) after announcing interim clinical data from all three continuing clinical trials of larotrectinib in patients whose tumors conceal tropomyosin receptor kinase fusions. These data demonstrated a 76% confirmed objective response rate (ORR) across tumor types. The patients in these trials will serve as the basis for the larotrectinib New Drug Application (NDA), which the company expects to submit in late 2017 or early 2018.

“What used to be a sideshow has moved on to the main stage,” said Nick Leschly, CEO at Bluebird Bio Inc.

The company, which is developing a therapy with Celgene Corp., gave an update on its clinical trial of multiple myeloma patients who had exhausted other options. All 15 patients evaluated so far have responded to the treatment, and 27% had a complete remission, Bluebird said. The company’s shares have jumped 30% to $109.15 since Friday. BMO Capital Markets estimated sales of the therapy, bb2121, could reach $3.6 billion annually.

Dynavax Technologies Inc. shot up 19% to $7.00. In another combo trial, the company presented its findings in patients with metastatic melanoma in the dose escalation phase of an ongoing Phase 1b/2 study investigating SD-101, Dynavax’s intratumoral TLR9 agonist. Its drug is being tested in combination with Merck & Co.’s much heralded immuno-oncology drug Keytruda (pembrolizumab), an anti-PD-1 therapy, known as MSD outside the US and Canada. Merck closed the week off 2% at $64.06.

And largely unheard of Chinese firm Nanjing Legend Biotech shocked attendees with mind-boggling results involving an experimental immunotherapy for multiple myeloma. In an early-stage study at Xi’an Jiaotong University, all 35 patients responded to some extent to company’s CAR T-cell therapy. And of 19 patients who have been followed for more than four months, 14 are still in complete remission, and five have had at least a partial remission.

“While it’s still early, these data are a strong sign that CAR T-cell therapy can send multiple myeloma into remission,” noted Michael S. Sabel, a cancer surgeon at the University of Michigan who wasn’t involved in the study. “It’s rare to see such high response rates, especially for a hard-to-treat cancer.”

But among the not so exultant was Celldex Inc., plummeting 22% to $2.25. Celldex reported data from its Phase 1 portion of a Phase 1/2 dose escalation and cohort expansion study examining the combination of varlilumab, Celldex’s CD27, and Bristol-Myers Squibb Co.’s anti-PD-1 immunotherapy Opdivo (nivolumab) for the treatment of ovarian and colorectal cancer.

In the first part of this two-stage trial with a total of 21 patients, just three patients showed partial tumor shrinkage. A separate presentation from a study of the company’s lead candidate, glemba, in heavily pretreated melanoma patients was fairly positive, which likely helped temper the market slaughter.

Then there was the matter of Incyte Corp.’s presentation. Data seemed to support the potential for combining Incyte’s cutting edge cancer drug epacadostat with Merck’s Keytruda as a therapy for lung cancer patients. Yet Incyte’s stock price fell 9% to $119.15. A question about the data was raised by Adam Feuerstein of TheStreet, namely that Incyte excluded data from three lung cancer patients who became eligible for evaluation after the study’s abstract was posted, and who might have altered the response rate figure.

Finally, in the oncology drug space, being basically “good” often doesn’t cut it. That’s one lesson from pharma colossus Roche Holding AG’s crash. Shares of the company, which is valued at more than $225 billion, fell a sickening 7% to $32.09. Why?

The Swiss firm unveiled new clinical trial data for a combination of its cancer drugs that showed just a modest benefit in patients. Roche has been evaluating a combination of its flagship breast cancer drug Herceptin, which tallies about $6.8 billion in yearly sales, with a newer treatment called Perjeta.

The company was hoping that the blend would be powerful enough that doctors would switch patients taking Herceptin alone to the combo. That would be a blessing to Roche because Herceptin has lost patent protection.

Bottom Line:

Several of the biggest headlines to come out of ASCO 2017 involved relatively small companies like Stamford, CT-based Loxo Oncology and China’s invisible Nanjing Legend Biotech. The former saw its stock price soar nearly 50% after unveiling its lead experimental drug, larotrectinib, which produced a response in 76% of patients with a specific kind of genetic marker in a mid-stage trial.

Nanjing Legend, meanwhile, presented early data on a new kind of cancer treatment (CAR-T, which involves re-engineering patients’ immune cells to fight blood cancers) that could help pit the company against drug giants like Novartis and biotechs like Kite Pharma and Juno Therapeutics which are also working in the field.

As mentioned at the outset, one of the biggest trends in oncology R&D is testing out combinations of next-generation cancer immunotherapies called “checkpoint inhibitors.” There are mountains of clinical studies testing these kinds of drug cocktails, often featuring a backbone checkpoint inhibitor drug in addition to a different type of therapy from a cancer-focused biotech.

All of which could possibly lead to even more consolidation in the oncology space, biotech investor and immuno-oncology fund manager Brad Loncar tells Fortune. “That seems like a logical trend to me,” he said, since bigger drug companies will likely feel obliged to snatch up assets that could make their existing medicines more effective (and, oh yes, jack up the top line).

Steve's Take: Some truly promising and downright flops were presented at @ASCO Click To Tweet

A word for the wise to investors: There were some truly promising, even potentially breakthrough, presentations at ASCO and some downright flops. The ballyhoo is deserved because the promise is immense, but first, patience. And then, more patience.

Steve Walker has no position in any stocks mentioned. MedContent Inc. has no position in any stocks mentioned. MondayMorning.com has a disclosure policy.