Event – Oncothyreon awaits pivotal cancer vaccine data

Analysis

With only one real champion, and a now slightly tarnished one at that in Dendreon's Provenge, the field of cancer vaccines could use more positive news if it is to ever live up to the promise it once held out as a revolutionary new treatment.

As such, interim phase III data for Oncothyreon and Merck KGaA’s non small cell lung cancer drug, Stimuvax, due early next year will be watched closely. A positive result might not only revive interest in cancer vaccines, but also transform the fortunes of Washington-based Oncothyreon.

Company Oncothyreon Merck KGaA
Product Stimuvax
Market cap $327m $22.1bn
Product NPV $722m $417m
% of market cap 220% 2%
Event type Phase III results
Date Q1 2012
Trial IDs NCT00409188 (Start)

Stimuvax is a liposome based vaccine derived from the human mucin 1 (MUC1) protein, which is found in 75% of all tumours, and is designed to create an immune response to cancer cells that express the protein.

Patients in the pivotal Start trial, who have inoperable, stage III cancer, were given weekly injections of Stimuvax for eight weeks followed by injections every six weeks until their disease started to show progression again. The primary endpoint of the trial is overall survival, with time to disease progression as a secondary endpoint.

Longer than expected

Interest in the results from the 1,476 patient study has been growing since August when the group extended the time for the interim data read out from the end of 2011 to the first quarter of 2012, an announcement that has led some to believe the shifting timeline is due to patients in the Stimuvax arm living longer than expected.

While this may be the case and one that supporters of the stock are claiming, caution might be advised given that past trials have shown that a longer time to interim results can be down to better patient care resulting in longer survival in the placebo arm.

This has still not stopped some of the most hopeful observers speculating that the drug could be so effective that the trial will be stopped early. If the group’s share price climb over the last year is anything to go by, more than doubling, investors at least are expecting some sort of positive outcome. Today the shares were almost 3% higher at $7.88, following interest from a large fund in the last few days. 

Cash on the horizon

The drug is the most advanced in Oncothyreon’s pipeline and is expected to generate royalties from Merck of $98m by 2016 and is potentially worth $722m to Oncothyreon, a figure that is more than double the group’s $327m market cap and could reflect some of the optimism in market.

If Stimuvax is successful the expected filing of the drug by the end of next year, following full top line data in mid 2012, will trigger some of the $90m regulatory milestones connected to the deal that Oncothyreon struck with Merck back in 2006 that saw the German group get worldwide development and commercialisation rights to Stimuvax

In return, alongside its milestone payments, Oncothyreon is set to receive royalties from global sales, with a higher royalty rate on US sales.

Risk/reward

But there are still significant risks. The world of cancer vaccines has been more notable for the number of failures it has generated, including GVax and TroVax, against the relative success of Provenge.

Stimuvax itself has also had a bit of a chequered history. In March 2010 the drug was put on clinical hold following a case of encephalitis in a phase II multiple myeloma trial, where Stimuvax was being used in combination with multiple doses of chemotherapy agent cyclophosphamide (Merck halt cancer vaccine trials in another knock for sentiment, March 23, 2010). The hold was eventually lifted in June 2010, by which point Oncothyreon’s shares had fallen almost 30%.

It should also be noted that the Start trial was designed based on a sub analysis of results from the 170-patient phase II study, which as a whole failed to meet its primary end point of survival, where Stimuvax was most effective in a subset of just 65 patients with a more advanced form of the disease.

Medical need

However, if the Start trial does reveal that Stimuvax offers longer-term survival its success is almost guaranteed given the paucity of options for patients with advanced lung cancer. Also, as an ‘off-the shelf’ cancer vaccine if it does get approved, it should not suffer the scale up issues that have partly blighted Provenge’s progress.

Analysts at Cowen are forecasting sales of anywhere between $750m-$4.7bn for Stimuvax in the US alone, but given the history of cancer vaccines and that the fact it remains an area that is still little understood in terms of the full interactions with the immune system, investors might want to hold off counting their chickens or profits until the drug is finally approved.

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