Vantage Snippets are short summaries of breaking news stories.

Trulicity needs to pull it out of the bag with heart benefit claim

As Bernstein analysts put it, Rybelsus getting a cardiovascular risk-reduction claim on its label so soon was always a long shot. The FDA yesterday confirmed that it wanted results from Novo Nordisk’s long-term outcome study, Soul, before this accolade can be bestowed on the oral GLP-1 agonist. The agency did, however, allow data from Pioneer 6 on Rybelsus’s label; this shorter trial only showed non-inferiority to placebo, with a 21% reduction in Mace failing to hit statistical significance for superiority. Still, the new data should give Rybelsus a boost in the meantime – 21% is impressive compared with other outcome studies in this field. Meanwhile, once-weekly Ozempic – both agents contain the same active ingredient – got its risk-reduction claim thanks to the Sustain 6 result. Trulicity is up next, and Lilly could win an important differentiation if the FDA allows a risk-reduction claim in all type 2 diabetes patients, regardless of prior cardiovascular disease. Rewind was unique in that it recruited subjects without existing heart problems, though the results were far from clear-cut. If the decision goes Lilly’s way the company would be handed an advantage when it comes to payer negotiations, a crucial factor in this highly competitive space.

Major type 2 diabetes drugs and the cardiovascular claims
          Sales ($bn)
Product Mechanism Company CV risk reduction claim? Result and study  2020e 2024e
Trulicity Once-weekly GLP-1 agonist Lilly Decision due in H1'20 12% reduction in Mace in Rewind 4,797 6,634
Ozempic Once-weekly GLP-1 agonist Novo Nordisk Yes, FDA approved Jan 2020 26% reduction in Mace in Sustain 6 2,819 6,178
Jardiance SGLT2 inhibitor Boehringer Ingelheim/Lilly  Yes, FDA approved late 2016 14% reduction  in Mace in Empa-Reg 2,498 3,849
Rybelsus Oral, once-daily GLP-1 agonist Novo Nordisk Label describes non-inferiority to placebo 21% risk reduction in Pioneer 6; data from Soul outcome study due 2024. 377 3,305
Farxiga SGLT2 inhibitor Astrazeneca Claim for reduction of risk of hospitalisation for heart failure (hHF) 13% reduction in hHF in Declare-TIMI58 1,913 2,979
Victoza Once-daily GLP-1 agonist Novo Nordisk Yes, FDA approved 2017 13% reduction in Mace in Leader  2,947 1,129
Invokana SGLT2 inhibitor Johnson & Johnson Yes, on label since 2018 14% reduction in Mace in Canvas  668 588
Steglatro SGLT2 inhibitor Merck & Co No Vertis study should report later this year. 229 520
Source: EvaluatePharma,

As takeouts of private companies dip, investors grease the deal wheels

2019 was widely considered a strong year for biopharma deal making, and a previous Vantage analysis of EvaluatePharma data found a preponderance of takeouts in the “sweet spot” and a big jump in premiums. Cutting the numbers another way tells a different story: buyouts of private companies have fallen over the past five years, both in absolute terms and as a proportion of all deals. There are probably several explanations here. Testing valuations in many therapy areas could be one reason, although this is increasingly being managed by venture firms with the use of tranched takeout terms. The second chart below shows a big rebound last year in the proportion of private deals that involved a contingent value, dependent on future successes. Other points to remember: the IPO window has been open for a few years now, allowing venture-backed start-ups to float more quickly. Perhaps most importantly, the deep pools of venture capital available has meant that many young drug developers simply do not need to seek a buyer. The last two factors are far from constants, however, so this is a trend to keep an eye on. 

Reality check sees Neon fall to Biontech

Biontech’s purchase of Neon Therapeutics today sees the German jack of all trades putting its stock to use to strengthen its presence in cell therapy. More importantly, at a time when some are worried that acquisition targets are overpriced, it shows that once prices fall far enough deals will get done. And Neon has fallen. Its investors get a 77% premium to yesterday’s close, but the reality is much harsher: Neon had floated in June 2018 at $16, and the Biontech buyout represents a whopping 86% discount to that IPO price. As reality checks go this is quite extreme, and means that Neon is effectively being sold as a distressed asset; its owners are not even getting cash – the $67m buyout is entirely in shares of Biontech, which is sitting on a 130% gain to its own IPO last October. Neon’s neoantigen cancer vaccine NEO-PV-01 had shown early signs of promise last year, but the group swiftly scrapped it in favour of neoantigen-based adoptive T-cell therapies. As Neon failed to attract additional funding its stock drifted. Its pipeline will now sit alongside Biontech’s anti-claudin-6 Car BNT211, which after a lengthy delay has yet to enter the clinic.

Biontech/Neon combined adoptive cell therapy pipeline
Project Type Target Status
BNT211 Car-T therapy Claudin-6 First-in-human solid tumour study planned for 2020
NEO-PTC-01 Non-engineered T cells Multiple antigens Melanoma & ovarian cancer trials planned for 2020
NEO-STC-01 Non-engineered T cells Ras G12X neoantigens Ras+ve pancreatic cancer IND filing 2022
NEO-PV-01 Cancer vaccine Neoantigens Discotinued in phase I
NEO-SV-01 Cancer vaccine Neoantigens Discotinued in preclinical
Source: company filings.

Manufacturing divestment boosts RTI Surgical

RTI Surgical’s move to sell its original equipment manufacturing business to Montagu Private Equity for $490m has delighted its long-suffering shareholders. The deal is huge for the orthopaedics company, which had a market cap of only $203m before the deal was announced. RTI’s stock closed up 63% yesterday after it said it would rid itself of the unit, which the sellside sees as the slowest-growing out to 2024, according to EvaluateMedTech’s consensus forecasts. RTI plans to remake itself as a pure-play spine business; its spinal therapies unit includes the products it obtained from the acquisitions of Zyga Technology two years ago and Paradigm Spine last March, and is forecast to grow much more rapidly than the manufacturing business. As well as investing in its spine offering, the company intends to become debt-free – it had $51.6m total liabilities at the end of October. $480m of Montagu’s payment comes as cash; the other $10m is unspecified.

RTI Surgical
    Global sales ($m)
Unit Segment 2019 2020e 2022e 2024e CAGR
Orthopaedics Original equipment manufacturing 125 128 137 146 +3%
Orthopaedics Legacy international 26 27 29 31 +3%
Orthopaedics/ other Sports medicine and orthopaedics 55 56 59 62 +2%
Spine Zyga 5 5 7 8 +13%
Spine Paradigm US 27 43 61 79 +24%
Spine Paradigm OUS 9 11 13 14 +11%
Spine Established therapies 76 78 85 92 +4%
  Total company revenues 323 348 391 433 +6%
Source: EvaluateMedTech.

Market feeling frothy? You might be right

Yesterday saw substantial share price gains for Adaptimmune and Nantkwest on the back of very early results; the latter’s 99% jump is even more remarkable considering that it was triggered by comments made by the chief executive in an interview. Over-the-top reactions to small datasets seem to be relatively frequent at the moment, a phenomenon that can perhaps partly be explained by the advancement of gene therapies, which can generate excitement with responses in only a handful of patients. But some investors have been voicing concerns about a “frothy” or irrational market for some weeks now. Here, Vantage looks at the biggest out-of-the-park share price reactions since the beginning of 2016 that have been attributed to early clinical results. The findings seem to confirm the fears: five of the 10 biggest phase I data-prompted valuation hikes have happened since October. It is surely no coincidence that this is when the latest biotech rally commenced on the Nasdaq biotechnology index. This is far from a rigorous test of market conditions, of course, but it seems that biopharma remains primed to provide investors with a wild ride. The fact that several of these advances proved misplaced should also be noted. 

Jumping the gun? Some huge leaps on phase I data – and where they are now
Company The phase I projects that prompted the rise, and progress since Share price reaction Resulting market cap ($m) Current market cap ($m)
Proteostasis (Oct 2018) Three cystic fibrosis doublets, which have since disappointed. 448% 380 104
Adaptimmune (Jan 2020) Four partial responses from three T-cell-based projects.  200% 420 420
Infinity (Oct 2017) PI3k inhibitor IPI-549, which has since disappointed. 123% 189 68
Applied Genetic Technologies (Jan 2020) Retinitis pigmentosa gene therapy that had been tested in 25 patients; outcome tbd.  123% 169 137
Proqr (Sep 2018) Data in 10 patients treated with gene therapy for Leber’s congenital amaurosis; outcome tbd. 121% 560 417
Mustang Bio (Apr 2019) Data in 10 patients treated with a gene therapy for "bubble boy" disease; outcome tbd. 112% 154 168
Forty Seven (Dec 2019) Anti-CD47 project magrolimab in haematological cancers; further data due YE'20. 111% 1,286 1,510
Nantkwest (Jan 2020) CEO reveals one complete response in 11 pancreatic cancer patients treated with company's NK cell therapy. 91%  669 669
Eloxx (Oct 2019) ELX-02 safety data presented at a cystic fibrosis confererence; phase II data due Q1 2020. 80% 243 303
Arqule (Mar 2019) Single response reported with BTK inhibitor ARQ 531; company subsequently bought by Merck & Co.  67% 593 2,700*
Note: moves that resulted in a market cap gain <$75m excluded. *Merck takeout price. Source: EvaluatePharma. 

Adaptimmune investors value a partial remission at $70m

The struggling UK cell therapy company Adaptimmune has spent recent years with little meaningful news flow, and its stock drifted accordingly. With cash levels nearly down to zero, therefore, it was fortuitous that yesterday’s announcement of four partial remissions coincided with the first day of the JP Morgan healthcare conference, and sent the group’s shares up 200%. That amounted to an additional $70m of market cap for each response; as an overheated market reaction this is not a record, but it is remarkable nevertheless, especially as two of the responses are still unconfirmed and nothing has been said about response duration. And this is not the first time Adaptimmune has reported partial remissions, though the latest ones do suggest activity beyond its usual sphere of synovial sarcoma. Perhaps one hope is that this is a sign that the company’s new-generation T-cell receptor approach can avoid the sorts of patient deaths seen previously. Last September Adaptimmune had only $39m in the bank; this morning it struck a target discovery alliance with Astellas worth $50m up front, but the big cash injection it needs will come from a secondary equity offering that is surely imminent.

What just happened? Adaptimmune T-cell receptor pipeline highlights
Project Target Trial What's new Earlier news
ADP-A2M4 Mage-A4 NCT03132922 2 PRs (1 unconfirmed) in rectal mucosal melanoma & H&N cancer 1 patient death
ADP-A2M4CD8 Mage-A4 Surpass 1 PR (unconfirmed) in gastro-oesophageal junction cancer
ADP-A2AFP Alpha-fetoprotein NCT03132792 1 confirmed PR in liver cancer
GSK3377794 NY-ESO-1 NCT03967223 Licensed to Glaxo; 1 patient death, 2 clinical holds
ADP-A2M10 Mage-A10 NCT02592577 1 patient death; deprioritised
Mage-A3 TCR   Mage-A3 2 patient deaths; discontinued

Encouraging progress, but Applied Genetics still has questions to answer

Applied Genetic Technologies’ shares more than doubled yesterday on encouraging data from its retinitis pigmentosa gene therapy. But the jump left AGT capitalised at a mere $169m, a relatively tiny sum for a company that is working with a technology generating much investor excitement – and interest from buyers. Biogen, which now owns AGT’s direct rival Nightstarx, walked away from a deal with AGT that included this project in late 2018, helping to explain the low valuation. The data released yesterday were largely a confirmation of earlier findings, but in a few more patients, with some tracked a little longer. 25 subjects with X-linked retinitis pigmentosa caused by mutations in RPGR have been treated with the XLRP project so far; AGT said yesterday that, of the eight patients that have been followed for six months so far, half showed a sustained increase in visual sensitivity. The crucial question now is why some patients are not responding, and on that there is no answer yet. A pivotal trial is to start by the end of the year, but the company needs to figure out how to identify these non-responders before real progress can be made.

Pipeline for X-linked retinitis pigmentosa caused by RPGR mutations
Project Company  Trial ID Status
BIIB112 (NSR-RPGR) Biogen (from Nightstarx) NCT03116113 (Xirius) Phase II/III expansion ongoing
XLRP (AGTC-501) Applied Genetic Technologies  NCT03316560 Phase II results due this year; pivotal targeted for YE'20
AAV-RPGR J&J/Meiragtx NCT03252847 Phase I/II ongoing 
Source: EvaluatePharma. 

Bavencio scores an unexpected first in bladder cancer

As an also-ran in the immune checkpoint race Pfizer/Merck KGaA’s Bavencio rarely gets much attention, but yesterday it surprised: its success in the phase III Javelin Bladder 100 trial made it the first ever anti-PD-(L)1 MAb to prolong overall survival in first-line urothelial bladder cancer. This is quite a coup, notwithstanding the availability of numerous checkpoint blockers in this tumour type. Quick approvals of five such drugs second line were backed by some questionable data, and Roche’s Tecentriq failed a confirmatory second-line study, Imvigor-211. Meanwhile, Imvigor-130 has not comprehensively backed Tecentriq in the first-line setting, where the Roche drug is also approved (Esmo 2019 – PD-L1 status moves centre stage in bladder cancer, September 30, 2019). Still, the comparison against Bavencio is not direct, as Javelin Bladder 100 was a maintenance trial, rather than a pure treatment study like Imvigor-130. Nevertheless, Bavencio’s success – in all-comer and PD-L1-high populations alike – should soon see the drug add this setting to its US label.

US status of anti-PD-(L)1 MAbs in urothelial bladder cancer (supporting studies in brackets)
  1st line 2nd line
Tecentriq Approved in ≥5% PD-L1+ves, & chemo-ineligible all-comers (Imvigor-210)* Approved (Imvigor-210)**
Opdivo NA Approved (Checkmate-275)
Imfinzi NA Approved (Study 1108)
Bavencio NA; OS benefit in 1st-line maintenance (Javelin Bladder 100) Approved (Javelin Solid Tumor)
Keytruda Approved in chemo-ineligible (Keynote-045 & 052) Approved (Keynote-045 & 052)
*Imvigor-130 data were mixed; **failed Imvigor-211 study.

Keytruda’s head and neck approvals reveal regulatory divergence

A flurry of pre-Christmas immunotherapy approvals by Japan’s Pharmaceuticals and Medical Devices Agency revealed a disparity in regulatory views of Keytruda’s Keynote-048 study in first-line head and neck cancer. The trial has been used to back the Merck & Co drug’s approval as a monotherapy and as part of a platinum/5-FU chemo combination, but different regulators have applied different restrictions. Japan looks to have backed the broadest label, effectively approving Keytruda in all-comers in both settings, while the US FDA, which had given its green light last June, states that to qualify for monotherapy patients have to be ≥1% PD-L1 expressers. The EU authority is strictest, demanding PD-L1 positivity in monotherapy and chemo combo settings alike. The situation is a result of Keynote-048's highly equivocal result, showing an overall survival benefit for the monotherapy over chemo alone in patients expressing PD-L1 at above 20% and 1%, but not in all-comers; the chemo combo, meanwhile, worked in all-comers, but paradoxically showed no benefit in PD-L1 expressers, and there was no PFS benefit in any group (Esmo 2018 – Merck & Co’s head (and neck) scratcher, October 22, 2018).

Keytruda approvals in 1st-line head & neck cancer (Keynote-048 study)
Region Approved setting
EU PD-L1 +ve (≥1%), metastatic or unresectable, recurrent
US PD-L1 +ve (≥1%), metastatic or unresectable, recurrent
Japan Recurrent or distant
Chemo combo
EU PD-L1 +ve (≥1%), metastatic or unresectable, recurrent
US Metastatic or unresectable, recurrent
Japan Recurrent or distant

US regulator takes aim at Stryker’s bid for Wright

The $4.7bn merger between the orthopaedics groups Stryker and Wright Medical has attracted the attention of the US Federal Trade Commission – and with the antitrust authority having shown its teeth recently over the $1.2bn Illumina-PacBio deal this might be more than a mere formality. On December 31 the FTC sent a second request to Stryker and Wright, and the two groups must now submit reams of documentation and their management teams must attend hearings. The upshot might not be as drastic as that of the Illumina-PacBio investigation – that deal was formally terminated yesterday – but the probability is that divestments will be necessary to get the deal done. One of the overlaps between Stryker and Wright is lower extremity joint implants, with Wright having a 70% share of the total ankle replacement market, for example. The companies will have to work fast to hit the initial close date of the second half of 2020. If the FTC does scupper the deal it could open the way for Smith & Nephew to step in as a buyer. Smith & Nephew is rumoured to have made a counterbid for Wright, and probably poses less of an anticompetitive risk.

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