Someone recently commented that Bristol Myer Squibb’s (BMS) stock price was getting dangerously high on a forward price/earnings basis (this was before the Dec/Jan selloff). Technically this may have been true, but the science says this company (and Merck; MRK) and a few others are here for the long run, with therapeutics that will fundamentally transform cancer care. So I ask: who cares about PE? My view is to buy the key companies and watch them thrive for a decade or more, regardless of competition and possible price controls.
How can I be so bold (or stupid) you might ask.
I recently gave a talk for a local non-profit, the Boston Pharmaceutical & Bioscience Society (PBSS), which provides mentorship for students and job seekers in the biopharmaceutical industry. I decided to use cancer indications to advance the story of immunotherapy, and as I did I realized that we are sitting right at the bottom of a boon time for cancer treatment – for patients and biopharma of course, and ultimately for the payers and insurers. Why? because cured patients will be relatively cheap to maintain.
A magic word, much thrown about. In some hematologic malignancies and solid tumor indications (breast for example), cures can be anticipated if you catch the right patient at the right time. This has been the exception however, while the rule has been – to be blunt -let’s try to slow down you’re time to death.
So what is the evidence that immunotherapy will produce these extraordinary cures? We can start with advanced, metastatic melanoma. 10 years ago this diagnosis was a death sentence, with more than half of patients dead in a year, nearly all dead in 5 years. What’s changed? We can walk though some clinical trial data to sort this out.
here is where we start sometime pre-2010:
The key points being that chemo was a lousy solution, with 2/3rds of patients dead the first year, and that the available immunotherapy (high-dose IL-2) was not much better, except for a very few “super-responders” who experienced long term survival. This was a hint that immune-based therapy could work – the key was to get better response with less toxicity.
Most of those following immunotherapy know the “long-tail” story – that when a cohort of patients is treated with an anti-CTLA4 mAb or an anti-PD-1 mAb – a subset (10% or more depending on the indication) do very well and have durable responses and long term survival, creating a long-tail on progression free survival (PFS) and median overall survival (OS) curves, which you can see at the bottom of this figure showing response to ipilimumab (anti-CTLA4; BMS):
The OS curve on the right shows the long tail of survival out to nearly 5 years, and recent meta-analyses have highlighted patients living 10 years or longer, which is, as far as we can tell, a cure. We’ll note here the dosing regiment used for nearly all of these patients: treated once a month for 4 months. Period. We can conclude from this that when immune therapy works it does so by resetting the immune system response to the cancer – in some cases, permanently. Ipilimumab has a challenging toxicity profile, but in the face of such an improvement in response rate and in survival at 1 year – which jumped 15% over the chemo example in figure 1 – patients and their physicians will try to manage such toxicity.
If we look at results from anti-PD-1 treatment, the picture brightens again, as seen in this data from nivolumab clinical trials:
Note that a few things have changed here. First, chemo alone (dacarbazine) is doing better here than the data we saw in figure 1: 42% are alive at year 1 although nearly all of them have progressive disease. But the objective response rate (ORR) for treatment with anti-PD-1 (nivolumab) is a whopping 40%, and nearly 2/3rds of patients are alive at 1 year. This is an amazing improvement over chemotherapy.
Now to fast-forward a bit. Ipilimumab and nivolumab are antibody therapeutics developed by BMS. Pembrolizumab is an anti-PD-1 antibody therapeutic developed by Merck (MRK). MRK cleverly designed a advanced metastatic melanoma trial in patients who had tried (and relapsed after) ipilimumab treatment. The results were outstanding:
Two doses were tested here, but to simplify let’s just focus on the range of survival at one year: 58-72%. And look at chemo, right where we expect it at 30% alive at 1 year. Twice as many pembrolizumab-treated patients are alive at 12 months in this trial.
Rhe obvious thing to do next was to combine antagonists of CTLA4 and PD-1, which BMS got right to work doing. In the resulting trials the ORR jumped to 60%, although toxicity jumped as well, as seen here:
Grade 3-4 AEs are very nasty and not to be taken lightly. However with further dose modification of ipilimumab, and careful treatment, these adverse events (AEs) can be managed, especially in the context of an otherwise lethal cancer condition. Nonetheless, many patients experienceing AEs dropped out of the trial, i.e. discontinued treatment, and now things get really interesting:
So, 67% of patients comtinued to respond after treatment discontinuation! Now, consider that these patients only got four doses of ipilimumab – but they are kept on nivolumab for 2 years. Do they have to be on anti-PD-1 (nivolumab) for 2 years? Hell no, and this data proves it. So in a cost-constrained healthcare environment one might very well consider shorter courses of treatment with the potential to go back on to the drug (in this case, nivolumab) as needed. This is of course an abstraction at this point, but I’m certain we will see such trials performed in due course.
So where are we now:
This approval signals that a fundamental change in the treatment of advance metastatic melanoma occurred in about 7 years, from standard-of-care chemotherapy to immunotherapy. It would be unfair to ignore the contribution of other therapeutic modalities, notably of BRAF and MEK inhibitors, but those do not produce cures, while immunotherapy is clearly able to do so in a small percent of patients (that percentage to be determined).
So just to recap, from where we started to where we ended up:
The change in numbers from the dacarbazine line to the ipi.nivo combo line is staggering. The larger point in that the immunotherapy companies – BMS, MRK, AZN, Roche and others – will prosecute many other indications in exactly the same manner, with CTLA4, PD-1, PD-L1 and other, novel, therapeutics in a dizzying number of combinations. The value of such a class of medicines cannot be calculated in any meaningful way – each company is paying for hundreds of immunotherapy clinical trials – but it will take only a fraction of these trials to be successful to expand immunotherapy across the universe of oncology indications. The value of that success will be enormous – for patients, companies, shareholders and even, as mentioned, insurers and payers as we move patients from chronic and intensive treatment, to potentially curative treatments.
How does one guess the biopharma winners? Personally I like the bucket approach, as the ultimate winners will more than pay for the losers (and there will be some losers). As we ease into 2016 with certainly bearish sentiment about the biotech sector, I’m buying bluechip immunotherapy companies, and I won’t even look at them again for a year or two.