Regeneron, Sanofi finally get an aflibercept cancer win
On their fourth try, Regeneron Pharmaceuticals and Sanofi-Aventis have a pivotal stage win with aflibercept in cancer. Combined with chemotherapy, the compound now dubbed Zaltrap showed an overall survival benefit in second-line metastatic colorectal cancer compared with chemotherapy alone.
Data from the Velour trial allowed the two partners to announce they will be filing for US and European approval later this year, setting Zaltrap up for a possible 2012 launch. Based on previous failures in ovarian, pancreatic and non-small-cell lung cancer, investors and analysts have not ascribed much value to the vascular endothelial growth factor (VEGF) inhibitor; with this success however the value appears to be crystallising with analysts touting blockbuster potential and Regeneron shares gaining 8% to a record high of $56.21 in early trade today.
Observers considered colorectal cancer to be the least risky of the oncology settings in which Zaltrap is being tested; Roche’s Avastin, another VEGF inhibitor which stifles the growth of blood vessels delivering nutrients to tumours, is widely used for first and second line treatment of colorectal cancer and generates the bulk of its revenues from this cancer.
As the Bayer-partnered VEGF Trap-Eye, aflibercept has shown efficacy in wet age-related macular degeneration, a condition for which Avastin has been used off-label in place of Lucentis (Dosing the jewel in VEGF Trap-Eye’s crown, November 22, 2010).
Success in cancer has been elusive, however; it was just over a month ago that Regeneron registered its most recent setback, in NSCLC (Latest aflibercept setback in cancer more worrying for Sanofi than Regeneron, March 14, 2010). So far, no analysts covering Regeneron have put a specific sales estimate for aflibercept in cancer in their models.
EvaluatePharma’s consensus forecasts $332m in sales for Sanofi-Aventis in 2016, although as some analysts have not yet assigned any value to the product it is a number that is likely to increase in the near future.
In a note published this morning, analysts from JP Morgan estimate a $2bn “market potential” in the second-line setting, with Avastin taking $800m and Merck KGaA’s and Bristol-Myers Squibb’s Erbitux grabbling another $600m. The JP Morgan analysts conclude that Zaltrap might therefore have $800m-$1bn peak sales potential.
Thus it is not surprising, with little value placed on Zaltrap as yet, to see investors flock to Regeneron; with the 8% rise in early trade, the shares are up 13% this week and the company is now valued at over $5bn. Sanofi’s shares were flat today, at €53.18 in late afternoon trading.
Whilst investors are finally taking notice of Regeneron’s oncology pipeline, the New York company still has questions to answer. The partners have invested heavily in development, with 42 trials ongoing or completed that have enrolled a total of 6,400 patients. Under the 2003 deal originally signed with Aventis, Regeneron was due to receive up to $360m in milestones across eight indications in addition to sharing 50% of profits, but must repay half of development costs when the collaboration becomes profitable. Analysts from RBC Capital Markets estimate those development costs at $350m.
Given that Regeneron has already spent more than $1bn in the past three years on R&D - mainly on aflibercept for ophthalmology and the unpartnered monoclonal antibody REGN88 also in late-stage trials - it may come as a disappointment to know that any milestone bonuses will be offset by having to pay back Sanofi for the R&D costs should aflibercept successfully launch in oncology.
In addition, only topline data were announced. Full data will be presented at an upcoming medical meeting, with Asco a strong possibility. Thus very little was disclosed on safety and the magnitude of the survival benefit. Disappointing detailed data would erase much of Regeneron’s recent share gains while any further setbacks in tougher cancer settings still being tested, such as metastatic prostate cancer, may sour investors once more.
But for now, the two partners have managed to report encouraging data. Given that little was expected, it is not surprising to see today’s investor reaction. Full data will be anxiously awaited to discern whether Zaltrap will meet these now greater expectations.