Despite the upgrades, palbo fails to wow Amgen investors

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Pfizer’s breast cancer project palbociclib, one of the most hastily upgraded pharma assets of 2013, ended up being a key pawn in Amgen’s battle for control of Onyx Pharmaceuticals. So it is surprising that Amgen investors largely ignored results of its phase II Paloma-1 study, toplined yesterday.

Pfizer’s initial surge on the news revealed a stark difference of opinions in the market. While Pfizer investors view the very limited data disclosure as a home run, those following Amgen seem far less convinced, perhaps awaiting confirmation of the full dataset, including overall survival results, at April’s AACR meeting.

Palbo, a cyclin-dependent kinase (CDK) 4 and 6 inhibitor, started to feature in sellside models just over a year ago after the release of positive interim data from Paloma-1.

But the fact that Pfizer owed an 8% royalty on it to Onyx made it an important asset to consider for a different reason: Onyx’s market cap was surging and analysts needed to justify even higher valuations (Palbo could be Onyx’s secret weapon in valuation war, August 7, 2013).

As rumours of an imminent bid for Onyx spread last year, so sellside forecasts for palbo climbed: 2018 sales expectations rose from around $600m to $800m last April, according to EvaluatePharma’s archived forecasts, before breaching the $1bn barrier when the Amgen bid was revealed in July. They currently stand at $1.8bn.

At this level the project’s NPV is a hefty $8.3bn, making the 8% royalty worth some $660m – yet Amgen fell 2% yesterday. On the other hand, Pfizer shares traded up as much as 4%, a massive $8bn in market cap terms, before falling back in a very negative market for healthcare stocks.

Precious little

In fact Pfizer released precious little from Paloma-1, an open-label trial in endocrine receptor-positive, Her2-negative, postmenopausal women, in which palbo was added on top of letrozole. The company said the final readout showed statistically significant and clinically meaningful improvement in progression-free survival (PFS) versus letrozole alone.

The interim analysis had shown a PFS for palbo plus letrozole of 26.1 months, versus 7.5 months for letrozole alone. The bull case now says Pfizer will be able to file palbo on the strength of Paloma-1 alone, a view driven by the project’s US breakthrough therapy status in ER-positive, Her2-negative breast cancer, though the precise benefits of this designation are far from clear.

Moreover, for a filing on phase II data to be possible, analysts agree that palbo has to improve overall survival (OS) significantly; UBS analysts believe that a four-month improvement in median OS would be good enough.

Initial OS results, along with the actual PFS data, will be presented at the AACR, but the final OS data will likely not mature until later this year. Thus the bulls will bank on a strong reduction in risk of death being shown at the AACR, possibly presaging a rolling NDA submission.

Phase III results might be available next year, but waiting for these before filing must at present be seen as a worst-case scenario – to be pursued should the median OS benefit in Paloma-1 miss statistical significance or fail to show clinical relevance.

Pfizer can also rely on the fact that palbo is a potential first-in-its-class project. The only other CDK 4 and 6 inhibitors in clinical development are Novartis’s LEE011, recently moved into phase III in combination with letrozole, and Lilly’s LY2835219 (phase II). Even if palbo is not filed early it will remain well ahead of the competition.

What it will take for Amgen investors to take it seriously is a different matter. A continuing disconnection in the asset’s valuation could open up an interesting opportunity for Amgen to monetise the royalty stream by selling it.

Pfizer's key palbociclib studies
Study Detail Primary endpoint Readout Trial ID
Paloma-1 177 ER+, Her2- postmenopausal women, plus letrozole (open label)   Safety & PFS Full data at AACR 2014 NCT00721409
Paloma-2 450 ER+, Her2- postmenopausal women, plus letrozole (double blind)   PFS 2015 NCT01740427
Paloma-3 417 ER+, Her2- women, second line, plus fulvestrant (double blind) PFS 2015 NCT01942135

To contact the writer of this story email Jacob Plieth in London at jacobp@epvantage.com or follow @JacobEPVantage on Twitter

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