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Scancell And OncoSec looking good with melanoma immunotherapies

By Alberto SavrienoStock MarketsAug 15, 2013 02:44AM ET
www.investing.com/analysis/scancell-and-oncosec-looking-good-with-melanoma-immunotherapies-179655
Scancell And OncoSec looking good with melanoma immunotherapies
By Alberto Savrieno   |  Aug 15, 2013 02:44AM ET
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Multiple Discoveries Throughout History

It often happens that paradigm-shifting breakthroughs in science are stumbled upon by different independent sources arriving at their breakthroughs nearly simultaneously. It happens often enough that there’s even a term for it: multiple discovery. One famous example is the race between Newton and Leibniz, who were both independently developing the mathematical methods behind calculus in the 17th century, Newton in Great Britain, Leibniz in Germany. Another is Darwin and Wallace, who both independently came upon the theory of natural selection and the evolution of species in the mid 19th century. There’s also Mendeleev and Meyer, who independently discovered the structure and layout of the periodic table in 1869.

People have their beliefs and theories as to why these coincidences happen – fate, cosmic forces, collective maturation of the human spirit or what have you. Nothing can ever be proven in that sphere, but we can assert that when a breakthrough is coming from multiple independent sources simultaneously, chances are there’s something to it, and a paradigm shift may be occurring.

Melanoma trials – nibs and mabs


Do an active clinical trials search for melanoma, narrow it down to industry-sponsored phase II and above, and you’ll find about 150 active melanoma trials in progress right now. Organize it by company and you’ll find some familiar names. The leader in terms of number of trials sponsored is GlaxoSmithKline (GSK) with 20 ongoing, 6 in phase III. Bristol Myers Squibb (BMY) is right behind with 18, also 6 in phase III. Novartis (NVS) is third, with 17 and 3 in phase III and IV. Roche (RHHBY) has an honorable mention with 10, 5 in phase III and IV.

The importance of these 4 large clusters of clinical trials, accounting for 65 of the 150 or 43%, is not to show a new revolutionary bent, but to show the aftereffects of a revolution that has already occurred. Focus in a little more on each of these companies’ trial groups and you’ll find that most of them are testing out the same medications in different combinations that end with either mab or nib. Both are targeted cancer specific drugs. Mabs are monocloncal antibodies, engineered to bind to cancer cell receptors called antigens to either directly destroy or else carry some sort of cancer toxin on their tails to release once they lock on. Nibs are tyrosine-kinase inhibitors or TKI’s, which act to shut down cancer growth signals thereby inducing cancer cell suicide.

Of Bristol Myers’ 18 trials, nearly all of them involve the drug ipilimumab, branded Yervoy, combined with other TKI drugs. Approved for late-stage melanoma in 2011, Yervoy had sales of $360M in 2011 and $706M (page 3) in 2012. It was approved after results showed that Yervoy taken together with another experimental drug extended median overall survival 4 months beyond just the experimental drug alone. Patients who took the experimental drug alone in phase III showed a median overall survival of 6 months vs 10 for Yervoy. That four month difference may not be the herald of an oncological revolution, but it has been worth over $1B in revenue for Bristol over the last two years.

Of Glaxo’s 20 different active melanoma trials, 12 of them are testing different combinations of the TKI’s dabrafenib and trametinib, branded Mekinist and Taflinar. Both gained FDA approval in May 2013. To give an idea of the effectiveness of these drugs, Mekinist extended progression free survival, the period of time in which cancer does not progress in the patient, by 2.5 months compared to the other arm of the phase III trial. 2.5 months may not seem like much, but sales are still estimated at $800M for the two combined by 2017.

As for Novartis, it started this whole TKI trend among its peers. Novartis’ 18 melanoma trials are likewise primarily focused on TKI’s. Why the TKI tunnel vision? Novartis hit it big with imatinib, what most people know as the “miracle drug” Gleevec, approved in 2001. This TKI pushed up the 5 year survival rate for chronic myelogenous leukemia or CML to 89% from 30%, and the complete response rate (the word “cure” is taboo with cancer) after 60 months treatment to a spectacular 98%. How much is that worth? Gleevec is Novartis’ top blockbuster at $4.675B (page 114) just in 2012.

Big Pharma has hit a TKI snag


Clearly, Gleevec set off a revolution in cancer treatment back in 2001 that has inspired over a decade of mega-investment across the spectrum in nibs and mabs and different combinations of the two. With close to 65 of 150 active melanoma trials alone involving these drugs (I didn’t even try to count how many nibs and mabs are being developed across all cancers), the amount of investment here is enormous as everyone tries to replicate the Novartian magic of Gleevec.

The biggest companies want to stick with what works, with what makes money, and TKI’s have been shown to work, some to a greater and some to a lesser extent. For the big players, developing a drug that extends survival by even 2.5 months is worth the investment. But when everyone tries to follow the leader and stick with what’s safe instead of chart a new path, research and progress tends to hit a snag.

Something much bigger is happening in oncology than Big Pharma’s next TKI, and it’s happening actively with melanoma in two fringe companies, with a third also pursuing the same strategy though trials are currently inactive. Several smaller companies are converging on multiple discoveries with melanoma that bring the Newton/Leibniz and Darwin/Wallace independent discoveries to mind. The common thread in these companies is targeted immunotherapies using plasmid DNA that is injected directly into melanoma lesions and soaked up by the cancer cells, inducing the immune system to attack. Plasmids are DNA chains that are separate from the main DNA strand and can encode specific genes once injected into a cell. These genes are designed to produce an immune response.

Scancell (SCLP) and SCIB1


Melanoma is fertile ground for testing what plasmid DNA based immunotherapies can do because melanoma lends itself to direct injection by easy topical access, and immune responses are easily visible right on the surface of the skin. There may be something specific about the nature of melanoma that makes it responsive to plasmid DNA-based immunotherapies in particular, but we won’t know that until these therapies are tested on other cancers. As we discuss these immunotherapies, it is important not to be sucked into a Gleevec-type panacea fantasy where just because one drug has amazing results on one type of cancer, we make a hasty assumption that all cancer is now cured.

Generally speaking, the beauty of plasmid DNA immunotherapy is in its indirect approach to immune activation. Instead of injecting an immune system protein, called a cytokine, directly into the tumor, the injected plasmid instructs the cells to produce the protein encoded by it. Before this method was devised, it was impossible to use cytokines to treat cancer because toxic doses were required to achieve a response, as direct injection of the straight cytokine is not targeted enough to be effective at low doses.

I include three companies here not because I think all three of them will succeed (two I believe will), but because it is important to demonstrate the multiple discovery nature of these advances. Each of these three treatments is different and nuanced in that each plasmid expresses different genes, and the fact that melanoma patients have been responding to two of three treatments that we know of in these trials shows that there may be something about the general plasmid DNA approach that exposes a vulnerability here, and hopefully other cancers as well. Well beyond extension of overall or progression free survival, a significant portion of patients treated with these plasmid DNA therapies have shown a partial response and even a complete response, which is the closest thing to “cured” that a cancer patient can be.

To complete the analogy of multiple discoveries, history generally awards one man the credit. Newton won out over Leibniz. Darwin over Wallace. Mendeleev over Meyer. My contention is that one of these three will outshine the other two, and while all may be approved and lead to major stock gains, I believe that the key factor in deciding the runaway winner, all other things being equal, will be the overall objective and complete response rates.

The first candidate is Scancell, a company on the London Exchange. Scancell’s plasmid immunotherapy SCIB1 expresses a protein called TRP2 to the immune system, a melanoma-specific protein that teaches the immune system to lock on to the cancer cells. It is a long way from approval, but the interim results are impressive. Enrollment for its phase I/II trial was completed in late January, and data for part I of that trial are available. Extrapolation is difficult from any phase I trial being that the numbers are so small, but the numbers so far are as follows. A total of 11 patients, 10 of which came in with stage IV metastatic melanoma, were treated in progressive doses of .4, 2, 4, and 8mg. 4 of them are now disease free, a complete response rate of 36% so far, though again the sampling is tiny. The preliminary results were so successful, in fact, that the FDA gave Scancell permission to continue treating patients with SCIB1 through 2015.

As impressive as the numbers are, there are roadblocks ahead. I suspect some logistical/financial problems with Scancell being that it is openly seeking to be bought out with these results as bait for a potential buyer rather than proceed on to phase III and keeping its hand to itself. On the one hand this could be a show of confidence from a management that believes in its product and is just seeking to cash out. On the other hand there may be something more complicated going on. Scancell has $2.3M (£1.4) in cash as of May 2013 (page 13) and a burn rate last year of over £2M last year. It’s hard to tell what’s going on given the early stage SCIB1 is still in, but it is still something to watch very closely, especially towards the end of the year when phase II results are expected to be published.

Mannkind (MNKD) and MKC1106-MT


Mannkind has been around since 1991 and has lost $2.2B (page 16) so far. It has been pummeled by the FDA for years yet continues to hang on with a $2B market cap. Mannkind is also going after a plasmid immunotherapy for melanoma called MKC1106-MT. It is a similar concept to Scancell’s SCIB1 in that the plasmids encode specific tumor antigens. MKC1106 is slightly different in that it is injected into the lymph nodes where a concentration of immune cells are present. The immune cells then go off and attack the cancer that presents those antigens encoded by the plasmids.

Mannkind started phase II trials for MKC1106 back in 2010 but has since suspended them for business reasons. This is quite understandable, given that the company is in a do-or-die faceoff with the FDA right now regarding AFREZZA, its flagship pipeline diabetes candidate. After being rejected by the FDA twice and recently completing two additional phase 3 trials last quarter, it needs AFREZZA to succeed in order to justify its huge deficit and right now does not have the resources to go after more experimental treatments like MKC1106. But if and when AFREZZA is finally approved—Mannkind plans to submit a renewed NDA to the FDA in Q4 of this year (page 16)—the melanoma program may quickly reboot.

OncoSec (ONCS) could be on the historical side of Newton, Darwin, and Mendeleev


We will never know exactly why Newton won over Leibniz, why we all know who Darwin was and Wallace is just a footnote, why they teach Mendeleev in high school and Meyer is an unknown. I don’t think the exact same thing will happen here as I believe all three of these companies will succeed in varying degrees, but there will probably nonetheless be a historical winner that outstrips the other two. OncoSec looks to be the strongest candidate for that spot for two reasons. Its ImmunoPulse IL-12 treatment has the highest complete response rate of 39%, and its cash burn rate is remarkably miniscule.

OncoSec just came out with interim news concerning its ongoing phase II trial of ImmunoPulse, with evidence showing that the treatment led to a decrease in exhausted T-Cells and an increase in natural killer cells, meaning the immune system had been primed to produce more new T-Cells in response to immune stimulation by IL-12 plasmid DNA. This interim analysis was conducted with a sampling of 13 of 25 total patients, all of which have been fully enrolled already.

Full completion of OncoSec’s phase II melanoma trial is estimated for January 2014, and if phase II can even get close to the 39% complete response rate of phase I, the chances look good. Taking a deeper look at OncoSec’s cash position, we find that quarterly cash burn is miniscule at $1.7M a quarter, accumulated deficit a mere $11.6M since 2010, enough cash to last 6 quarters at current burn rate, and zero debt.

Safety is the key to FDA approval


When it comes to cancer treatments, the FDA approval pattern seems to be safety first, efficacy second. That is why I believe that even if phase III trials for SCIB1 and ImmunoPulse show lower efficacy profiles than their respective phase II studies, a considerable possibility, if phase III studies for these drugs show a consistently positive safety profile, they will both eventually be approved.

The biggest advantage plasmid immunotherapy has over TKI’s and monoclonal antibodies is safety. Plasmids don’t have the same life-threatening dangers as drugs like Yervoy and Taflinar. This is the case with the phase I/II trial for SCIB1 as well as OncoSec’s ImmunoPulse which both showed minor side effects including fatigue, fever, chills, minor injection site reactions, erythema and rash and were classified as stage 1 or 2, with no patient dropouts due to side effects.

By comparison, the other drugs discussed above had much shakier safety profiles and were still approved. Yervoy, for example, had 10% of its 511 phase III patients drop out due to serious side effects. 34 patients out of 511 experienced severe immune mediated side-effects in grades 3 to 5, 4 died from complications, and 26 were hospitalized. According to the FDA, Taflinar can in some cases (page 21) actually cause new skin cancers to develop. Mekinist can cause heart failure (page 20).

While we can’t expect any one treatment to eradicate melanoma, strong phase III safety profiles will provide compelling evidence that the plasmid DNA approach is the right one. With only minor side effects, physicians will have an easier time trying out different plasmid DNA treatments on different patients without agonizing over potentially life threatening complications. The sales competition will then come down to which one is the most effective for the greatest number of people.

OncoSec Risk Analysis – Vical’s (VICL) Allovectin and the
NeoPulse Factor


OncoSec has the smallest market cap of the three companies here, though so far has the best complete response rates for its plasmid immunotherapy. On one hand this makes it riskier than Scancell with a potential for total loss. On the other hand it has the biggest upside potential. Currently at 31 cents and a $36M market cap, ONCS would see capital growth in the hundreds of percent if and when ImmunoPulse is approved, given that the US and European melanoma market is predicted to grow to $2.8B by 2021.

There are two ominous factors though that should give one pause. The first is Allovectin, a much hyped plasmid immunotherapy for melanoma which failed to meet its primary phase III endpoints despite an 11.8% objective response rate in phase II trials. However, Allovectin only showed a 3.15% complete response rate in those trials, a rate 12x lower than ImmunoPulse’s phase 2 results.

The second factor is OncoSec’s other product candidate NeoPulse, which electroporates the chemotherapy agent Bleomycin into easily accessible head and neck tumors. Despite OncoSec’s analysis of the data showing that NeoPulse is statistically just as effective as invasive surgery in these cancers, the phase III trials were terminated by the Data Monitoring Committee [DMC] back in 2007 due to safety issues and have not since restarted. Though there were no serious adverse side effects to NeoPulse itself, the DMC was concerned that there was too much risk in testing out whether NeoPulse was just as effective as surgery and have groups of patients forgo surgery that could prolong or perhaps even save their lives just to see if NeoPulse could fill that role instead.

That was over 6 years ago and OncoSec was not the sponsor of those trials back then. Nevertheless, the status of NeoPulse is in limbo and OncoSec has all its eggs in the ImmunoPulse basket, for now. Unlike other companies, it has less of an ability to regroup and try something else if ImmunoPulse fails. Vical has TransVax, a CMV vaccine with a great deal of potential value which is why the stock didn’t go to zero after Allovectin failed and my yet recover and then some. Scancell will be picked up by some company at some point considering its SCIB1 results so far. As for OncoSec, it either wins or loses on ImmunoPulse. I don’t see any middle ground.

Still, the risk of the DMC shutting down ImmunoPulse for the same reason they shut down NeoPulse is remote, as one of the inclusion criteria for ImmunoPulse patients is a less than 6-month life expectancy. These patients are at the end of their rope, and it is very doubtful that any data monitoring committee would deny them due to “safety concerns”. But you never know with bureaucrats. Perhaps this is the very reason OncoSec decided to treat only late stage cancer patients with ImmunoPulse.

Conclusion


Bottom line, if phase II results show a complete response rate similar to the phase I, OncoSec will clearly be in the running for leader of the plasmid DNA immunotherapy paradigm shift. These patients have similar stage disease to Scancell’s pool of patients and a much clearer picture than Mannkind.

While in the end I believe plasmid DNA immunotherapy will succeed as a treatment class given its safety profile notwithstanding the Allovectin failure, OncoSec’s ImmunoPulse has the most upside. To what extent, that all depends on ImmunoPulse’s and SCIB1’s success rates with other less accessible cancers. TKI’s began with Gleevec’s incredible success in all but curing CML and then fizzled out in terms of complete response rates with other cancers. Whether DNA plasmids are the oncology revolution we’ve all been waiting for…we’ll all have to wait a little bit longer for that. For now, let’s see how we do with melanoma.
Scancell And OncoSec looking good with melanoma immunotherapies
 
Scancell And OncoSec looking good with melanoma immunotherapies

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