Biotech Insight Model Portfolio
Inception Date June, 1999
Initial Investment $100,000.00
Total Value as of 02/20/17 $1,652,061.00
Performance, Incept to Date +165206109999900.00%
Performance, Year to Date +165206000.00%
Number of Stocks Held 17

Sample One | Sample Two

Biotech Insight Alert     6/4/2015

Celldex (CLDX)

Post-ASCO readers inquired why Celldex (CLDX) sold off on what seemed like good news from the ReACT study. I would have thought CLDX would be in the low $30s at least.

ReACT was a randomized small study of 75 patients with recurrent GBM and the EGFRvIII mutation who had all just had first-line therapy. All patients had upfront SOC (standard of care) which included surgery, radiation and Temodar before relapsing. Patients were randomized to Avastin (SOC for second-line GBM therapy—offers no survival advantage but approved on a small increase in progression free survival) vs Avastin plus Rintega. I did like the fact they used the KLH “adjuvant” as the placebo in the Avastin only arm. In general this group of patients is incredibly hard to treat and nothing in the last 10 years has helped—especially with overall survival. The study hit the primary endpoint of PFS at 6 months; however this was set at a low P value bar because of the study size. More importantly OS continues to favor the Rintega cohort with a hazard ratio (HR) of .57 with a long tail (25% alive a few years out). In the Rintega cohort 6 patients haven’t progressed with 4 being followed, in the placebo arm 2 haven’t progressed with 2 being followed. We will see further follow-up at the Neuro-oncology meeting in November. In summary the combination arm did much better than could be expected for patients with recurrent EGFRvIII mutant GBM (they general are very bad actors). However it is a small study, and there was an imbalance in the number of patients who had second surgeries favoring the Rintega arm. It could be argued that these resections created a more favorable outcome for that arm. Management took some time to point out that they did some analysis to confirm that wasn’t true but still it is suspect.

So will the FDA give accelerated approval in the second-line setting for this indication—that is the question. Given the totality of data over multiple studies I think the FDA would be hard-pressed not to approve especially with a benign side-effect profile and a fully enrolled Phase III with data due next year.

Importantly the DSMB (data safety monitoring board) will being doing an interim look this summer (at 50 events) for both futility and efficacy on the Phase III ACT IV study. The bar is set very high to stop the trial for efficacy (HR of .55). However this will be an important inflection point—my guess is the FDA says continue the trial—the 2nd interim look has a HR bar of .65 and the final look is at .75 for a successful trial (sometime in 2016).

My off-hand calculation is that if Rintega is approved for first-line therapy the market size will be about 2500 patients in the US and another 2500 in the EU. I don’t quite believe the 30% statistic for EGFRvIII mutant GBM (my guess is somewhere between 20-30%). If the drug is priced at about $8000/month, sales would total $480 million if patients remained on for one year. The current market cap of Celldex is $2.6 billion, which would be 5.4 X valuation (market cap as a multiple of sales). This would be conservative for a growing biotech company. Furthermore as patients stay on drug longer than a year sales will increase. Also of course it doesn’t take into account any of the other programs which are potentially much more valuable but not as advanced as Rintega. Also margins should be great since the vaccine is cheap to make unlike a biologic. Lastly there are competing drugs in much earlier stages; Amgen has an antibody targeted to EGFRvIII and there is also a CAR-T cell program targeting that mutation. However if the Phase III is successful it will be hard to enroll subjects in those trials.

My thesis is that if you believe Rintega gets approved for first-line therapy then Celldex is very cheap. My personal bias is that every indication points to Rintega working but we have all been fooled by unexpected results. I remain long CLDX.


Immunogen (IMGN)

IMGN’s stock has taken off after presentation of Phase I data from the platinum resistant ovarian trial with 853 (a folate receptor antibody toxin conjugate). This phase I study showed good efficacy in a difficult setting with an acceptable toxicity profile. The overall response rate was 53% in evaluable patients with 8 PRs and 1 CR. 6/9 responses were ongoing and 5 of them were out more than 15 weeks. These are really stunning results and if they hold up in larger trials 853 will be a huge winner. Furthermore approximately 80% of the ovarian patients over-expressed the folate receptor target; this is a higher proportion than the originally projected 50%. The drug will now enter a Phase II trial which could possibly be a registration trial. In the second-line setting nothing we have is great so this would be a major advance. Some of those patients (BRCA mutants) will first get a PARP inhibitor but eventually they will also fail. The last pre-ASCO alert mentioned IMGN as undervalued and prior alerts also mentioned that management had been telegraphing good Phase I data. This is a proprietary product to which IMGN owns world wide rights. The rest of their pipeline is interesting but 853 is the value driver. I remain long IMGN. The company is well funded thanks to monetizing the Kadcyla royalties.


Curis (CRIS)

CRIS had some good data on CUCD-907 in DLBCL. In 10 evaluable patients with DLBCL (diffuse large B cell lymphoma) they had 2 CRs, 4 PRs, 2 SD (stable disease) and 2 progressed. These were all heavily pretreated patients with a median of 5 lines of prior therapies. The plan is to take 907 into a Phase II registration type study. These are very good results but NHL is a very crowded field.

The real potential for CRIS are the oral immune checkpoint inhibitors licensed from Aurigene. An oral PDL1 antagonist is due to enter trials around year-end—this is what we need to keep our eye on. Preclinically it looks as good as any of the PDL1 antibodies.

I remain long CRIS.


Exelixis (EXEL)

A reader asked me to comment on the ASCO results. Cabozantinib (cabo) looked very good in lung cancer. They presented results from a Phase II randomized 125 patient trial either as monotherapy, in combination with erlotinib or with erlotinib alone. All patients were EGRF wild type. Clearly cabo was the better drug either alone or in combination. The problem is that toxicity remains an issue with cabo. With all the other things happening in lung cancer I wouldn’t hold my breath for EXEL. I own a legacy position bought at a much higher price—I would be happy to break even.


Ignyta (RXDX)


RXDX surprised everyone with exceptional data from a Phase I trial with entrectinib, an oral TRK, ALK and ROS inhibitor. In evaluable patients carrying one of the targeted translocations there was a 91% response rate (RR). Side effects were very manageable and the phase 2 dose was determined. Of the patients getting 400mg/meter sq 10 out of 11 patients had a response with 1CR, 7 PRs and 2 unconfirmed PRs. One of the patients with metastatic lung cancer had resolution of not only disease in the chest but also brain mets, which shows the drug gets past the blood-brain barrier. The fact that it works on ALK and ROS 1 activating translocations is of a bit less value since currently approved drugs also target these rearrangements. The company has lots of other interesting programs and recently did a deal licensing Teva’s oncology products. I have mentioned RXDX as being an interesting company in my alerts. I remain long RXDX.

I think these results bode well for Loxo Oncology (LOXO). Search the alert archive. They are in a Phase I with a more specific Trk inhibitor and we should hear more about their results towards the end of 2015 if not before.