Merus N.V.'s second-quarter earnings report included an important update on phase I MCLA-117, which Jefferies analyst Maury Raycroft said could be a best-in-class "game-changer" for the treatment of acute myeloid leukemia (AML) – a candidate that "alone is a reason to own the stock," in his view.

But the Utrecht, the Netherlands-based firm has more to intrigue backers, a further-along oncology prospect that gained credence by way of a multibillion-dollar pact between two big pharma firms.

First, MCLA-117. The drug emerged from the company's Biclonics platform, which designs full-length human IgG antibodies. Biclonics exploits the attributes of Merus' bispecific antibodies and patented screening technologies to come up with immuno-oncology drugs. MCLA-117 binds with fairly low affinity to CD3, a cell-surface molecule on all T cells, and CLEC12A, a cell-surface molecule on AML cells as well as stem cells. The compound is meant to recruit and activate T cells to kill CLEC12A-expressing AML tumor cells and stem cells as a way of blocking recurrence of the tumor.

Dose escalation in the patient phase I experiment goes on and preliminary antitumor activity has been observed, Merus said. The first such evidence turned up in the third quarter of 2018. In July of this year, Merus amended the protocol to allow for the exploration of higher doses; the trial kicked off at a low dose level based on the potent nature of T-cell engagers. Due to the amendment and continuing dose escalation, Merus plans to offer the first peek at data during a medical conference in the first half of next year. The company during its earnings report would not disclose any specifics on dosing for competitive reasons, and details on the number of patients as well as the extent of durability were held back. Merus "wants to provide a 'meaningful update at the higher doses,'" Raycroft noted. That the maximum tolerated dose (MTD) had not been reached means the firm is "continuing to widen the therapeutic window, which could enable flexibility in dosing and maximize efficacy potential," he said. The company has told Wall Street that if the MTD is hit before the first half of next year, which would trigger a dose expansion cohort of about 15 patients, then an update might be in order. "Regarding the bispecific's targets, we believe CLEC12A is an optimal target in AML, given that it is restricted to myeloid blasts (spares normal hematopoietic stem cells), relative to broader-acting anti-CD123/CD33 approaches), and the company's use of low affinity CD3 should translate to optimal T cell activation," opined Raycroft.

That notion is supported by the success of Blincyto (blinatumomab) from Amgen Inc., of Thousand Oaks, Calif. Used to treat B-cell precursor acute lymphoblastic leukemia in patients who still have detectable traces of cancer after chemotherapy, Blincyto was cleared in late 2014, proving the wisdom of Amgen's $1.16 billion payout to acquire Rockville, Md.-based Micromet Inc. The latter developed the bispecific, CD19-directed CD3 T-cell engager antibody platform called BiTE that produced blinatumomab, in phase II development when Amgen made its move. Blincyto, like Merus' candidate, is a low binder of CD3 but bears a short half-life. The low-binding thesis gains further credence by way of early research by Roche Holding AG with a CLEC12A-targeting therapy with higher-affinity CD3 binding, which seemed to work less well, according to a February 2017 paper in the journal Blood. Scientific literature shows that 91% of AML patients have blasts expressing CLEC12A heterogeneously. (See BioWorld, Jan. 27, 2012, and Dec. 4, 2014.)

The Blood paper described findings in cynomolgus monkeys, where two different bispecifics with varying affinities for CD3 were tested, one low and one high. Monkeys treated with 0.5mg/kg antibody at the high dose developed vascular shock and fever and all three were euthanized. Another cohort of three was administered the low-affinity bispecific at 0.5mg/kg, and this group had attenuated side effects that could be managed with antibiotics and nonsteroidal anti-inflammatories, though one animal had to be put down. A final cohort of six was treated with low-affinity bispecific at the 0.2 mg/kg dose, and this group responded with good depletion of CLEC12A-positive cells and an acceptable safety profile.

Gilotrif effort suggests win

If MCLA-117 is cause enough to buy Merus shares, then MCLA-128 may represent a solid bonus. Consider the deal this spring, whereby London-based Astrazeneca plc agreed to pay Daiichi Sankyo Co. Ltd., of Tokyo, up to $6.9 billion to jointly develop and commercialize an antibody-drug conjugate (ADC) for the potential treatment of multiple HER2-expressing cancers. The deal for trastuzumab deruxtecan (DS-8201) included $1.35 billion up front for Daiichi Sankyo. It could also yield a further $5.55 billion in milestone payments. (See BioWorld, April 1, 2019.)

The arrangement gave Astrazeneca what might turn out to be a way to treat low-expressing as well as high-expressing HER2 tumor types across a spectrum beyond metastatic breast cancer (MBC) that includes gastric, colorectal, and non-small-cell lung cancer (NSCLC). Need is especially strong in low-expressing HER2s, and Astrazeneca during a conference call related to the deal said bispecific antibodies hold particular allure. They could work well as alternative or add-on therapies to DS-8201.

Enter Merus' bispecific MCLA-128, which is one of several antibodies with similar mechanisms of action. They count at least partly on bringing immune cells to the tumor, while also in most cases turning off the HER2 signal. MCLA-128 docks on HER2 and thereby blocks heregulin-stimulated growth of tumor cells by binding to HER3. The drug, Merus noted, is designed to overcome the inherent and acquired resistance of tumor cells to HER2-targeted therapies using two mechanisms: blocking growth and survival pathways to stop tumor expansion; and recruitment and enhancement of immune effector cells to eliminate the tumor. The approach could fit nicely with DS-8201, operating via the ADC's chemotherapy payload. A phase II trial testing MCLA-128 in combination treatments in two MBC populations is ongoing. Merus will provide an update, which will include data from both cohorts in the fourth quarter of 2019. The firm has amended the single-agent phase I/II trial in solid tumors to focus solely on the exploration of MCLA-128 in those harboring Neuregulin 1 (NRG1) fusions. As rejiggered, the study is testing the activity of MCLA-128 in three cohorts, each aiming to treat patients harboring an NRG1 fusion: patients with NSCLC, with pancreatic cancer, and with any other solid tumor (the basket cohort). Merus promised more about the effort by the end of this year.

Roth analyst Tony Butler likes the setup. Merus' idea, based on preclinical studies, that MCLA-128 could block tumor cell growth in NRG1 fusion-positive tumors by inhibiting HER2/HER3 dimerization is backed by experience with afatinib (Gilotrif, Boehringer Ingelheim GmbH), a pan-HER kinase inhibitor, for the treatment of NRG1fusion-positive lung adenocarcinoma and intrahepatic cholangiocarcinoma. That work was the subject of a paper in 2017 in Annals of Oncology. Butler has a buy rating on Merus' shares with a $20 price target. The stock (NASDAQ:MRUS) was trading in late August at about $15. Regarding MCLA-117, he said in a report that the latest word from Merus is " important because it suggests, at least currently, that safety is not a concern for this T cell engager, despite the activity. Of course, we do not know anything about duration of effect but are keen to learn of activity and dose," probably at the annual meeting of the American Society of Clinical Oncology or the American Association for Cancer Research next year.

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