Oncolytics Biotech Inc. CEO Brad Thompson told BioWorld Today that the FDA's approval of the first oncolytic virus agent, Amgen Inc.'s Imlygic (talimogene laherparepvec) for melanoma, should make raising capital easier for his firm and clear the way for others working with "very complicated agents" in the space.

Thousand Oaks, Calif.-based Amgen won U.S. clearance on its PDUFA date Tuesday for use against nonresectable metastatic melanoma, news that came as little surprise since Imlygic in April won a 22-1 yes vote from the FDA's Cellular, Tissue and Gene Therapies and Oncologic Drugs Advisory Committees. European regulators, too, have expressed their favorable view of the genetically modified herpes simplex virus type 1, designed to replicate within tumors and produce granulocyte-macrophage colony-stimulating factor (GM-CSF).

"The main challenge has been to learn how [oncolytic viruses] work at the same time as performing clinical trials," Thompson said, an understanding that "has only been gained by observing how the agent works in people, which is different than earlier drugs where the mechanism of action could be studied before treating patients."

Though Imlygic's exact mechanism of action is unknown, the idea is that, by sparking GM-CSF production, the tumor can be ruptured, releasing tumor-derived antigens, thereby potentially creating an immune response. Imlygic, which has not improved overall survival (OS) or affected visceral metastases, was given the nod by U.S. regulators for the local treatment of unresectable cutaneous, subcutaneous and nodal lesions in patients with disease that recurs after the first surgery.

Amgen will make Imlygic available to patients within a week at an average cost of $65,000, though dosing is expected to vary from patient to patient. J.P. Morgan analyst Cory Kasimov wrote in an email alert to investors that he "find[s] it somewhat refreshing that a company isn't simply pushing the price of a cancer drug (and an immuno-oncology one at that) as aggressively as possible, at least until there's more robust data supporting it. We don't think the slightly-lower-than-expected wholesale acquisition cost will materially impact our commercial estimates for Imlygic." The drug likely will not be a top-line driver for Amgen, in his view, with peak worldwide sales of about $300 million. "More importantly perhaps, development with Imlygic continues in combination with other immuno-oncology assets in melanoma and other solid tumors, which represent potential upside to our numbers if successful," he wrote. Imlygic is being tried with the likes of melanoma drugs Yervoy (ipilimumab, Bristol-Myers Squibb Co.) and Keytruda (pembrolizumab, Merck & Co. Inc.).

Calgary, Alberta-based Oncolytics, for its part, is developing Reolysin, a variant of the nonpathogenic respiratory enteric orphan virus, better known as the reovirus. When a normal cell is infected with the reovirus, an antiviral response is activated, which prevents the bug from replicating within the cell. But inside a cancer cell with one or more mutations on the Ras growth pathway, an aberrant antiviral response takes place that can't keep the virus from replicating, and it multiplies to a degree that's fatal to the cancer cell. Reolysin has been used alone and in combination with chemotherapy and radiotherapy for various cancers, including head and neck cancers in an ongoing phase III trial. "The addition of checkpoint inhibitors is a logical next step" in the research, Thompson said.

In September, Oncolytics presented multiple myeloma (MM) data with Reolysin plus Kyprolis (carfilzomib, Amgen Inc.) in a poster at the International Myeloma Workshop in Rome. All eight patients with relapsed MM showed an objective response as defined by blood monoclonal protein. The company said at the time that it intended to start new trials in the indication, and was considering registrational experiments for muscle-invasive bladder cancer as a neoadjuvant, as well as glioblastoma. Thompson confirmed the registration path, and said the firm is "currently not raising capital to support these programs." Analyst Edward Tenthoff with Piper Jaffray noted that the company had only $24 million on hand, though, and will need to raise cash before advancing Reolysin into pivotal trials.

KEEP 'CALM' AND CONSIDER INVESTING?

Meanwhile, Roth Capital Partners analyst Joseph Pantginis said the "broken regulatory barrier to a live viral therapy" brought about by the Imlygic approval "significantly favors" Viralytics Ltd. with Cavatak (coxsackievirus A21) in phase I and phase II trials. The compound is a formulation of an oncolytic common cold virus that attaches itself to ICAM-1, a protein expressed on many cancer cell surfaces. Once latched on, the virus enters the cancer cell, replicates and bursts the cell, after which the viral progeny replicate. Release of tumor cell fragments could spur an immune response that would destroy the cancer. Sydney-based Viralytics is testing Cavatak as an intratumoral and intravenous agent in melanoma as well as prostate, lung and bladder cancers.

Imlygic was approved based on durable response rate from the pivotal study, Pantginis noted in a research report, and highlighted the lack of an OS benefit or effect on visceral metastases, both of which could mean Cavatak upside. He pointed to the phase II study called CALM (Cavatak in Late stage Melanoma), an experiment in 54 evaluable patients. The dosing schedule provides for injections of Cavatak into multiple tumors over an 18-week treatment phase, and monitoring for immune-related progression-free survival (irPFS) at six months after the first dose. (The irPFS is the length of time during and after the first injection of Cavatak that the patient lives without the cancer progressing.)

Interim results from CALM turned up an overall irPFS rate of 37 percent at six months (19 of 51 evaluable patients) and a one-year survival rate of 64 percent (21 of the first 33 patients alive at one year). The primary endpoint of the study required 10 patients from a total of 54 evaluable patients reporting irPFS at six months after the first dose of Cavatak. That endpoint was reached in September 2013 after only 30 evaluable patients. A recruitment extension to the CALM study has been started, consisting of another cohort of 12 patients from three sites in the U.S. Biopsies from injected and non-injected melanoma lesions will be examined.

Imlygic's approval, Pantginis said, "will further stoke the business development fire for Viralytics' ongoing discussions." Big money might be on the table: In 2011, to get Imlygic, Amgen bought Woburn, Mass.-based Biovex Group Inc., a University College London spinout, in a deal valued as high as $1 billion: $425 million up front and $575 million in potential regulatory and sales milestone payments. (See BioWorld Today, Jan. 26, 2011.)

"We believe that Viralytics and Cavatak have put together a thorough development program to date and has delivered strong data in the CALM study, which we believe is differentiated from Imlygic, and [the company] is developing Cavatak for diverse administration routes for multiple tumor types, whereas Imlygic is currently focused only on intralesional injection," wrote Pantginis. What's more, Cavatak is a non-engineered virus, which could provide a better safety profile, giving the compound fast-follower potential, possibly as the second approved oncolytic virus. Another player making news in the space is Toronto-based Turnstone Biologics Inc., which raised $11.3 million in a series A round for an oncolytic virus platform based on a modified rhabdovirus strain. (See story in this issue.)

Amgen was scheduled to discuss third quarter earnings during a conference call after the market closed Wednesday, and shareholders were poised for good news. J.P. Morgan's Kasimov noted that the firm has beat estimates in five of the last six quarters, "most recently bumping 2015 revenue and raising earnings per share guidance after a beat in the second quarter" of this year. He wrote in a preview report that analysts will be listening specifically for word about launch progress with proprotein convertase subtilisin/kexin type 9 (PCSK9) inhibitor Repatha (evolocumab) in the U.S. and European Union, along with "commentary around payer negotiations for PCSK9s, continued thoughts on biosimilars space, including preparation of their own pipeline and external risk, and pipeline updates to keep tabs on future potential growth drivers." Repatha was approved by the FDA over the summer for use in addition to diet and maximally tolerated statin therapy in adult patients with heterozygous familial hypercholesterolemia, homozygous familial hypercholesterolemia, or clinical atherosclerotic cardiovascular disease such as heart attacks or strokes, who require additional lowering of LDL cholesterol. The U.S. clearance came about a month after Repatha won the go-ahead in Europe. (See BioWorld Today, July 22, 2015, and Aug. 28, 2015.)

Earnings did not disappoint, with third quarter revenues jumping 14 percent to $5.7 billion, and adjusted earnings per share (EPS) rising by 18 percent to $2.44. Foreign exchange headwinds clipped revenue and product growth sales by 2 percentage points, but that still left Amgen's adjusted EPS hiked by 18 percent vs. the third quarter of 2014 to $2.72, thanks to higher revenues and operating margins, the company said. Adjusted operating income increased 19 percent to about $2.6 million, and the adjusted operating margin improved by 2 percentage points to 49 percent. GAAP EPS were $2.44 compared to $1.61, and GAAP operating income was about $2.3 million compared to about $1.4 million. The firm pulled in $2.7 billion of free cash flow, compared to $2.6 billion in the third quarter of last year. Amgen's look-ahead was pleasing, too. For 2015, total revenues and adjusted EPS guidance rose to $21.4 billion to $21.6 billion and $9.95 to $10.10, respectively.

In what RBC Capital Markets analyst Michael Yee called "a surprise move, perhaps implying management's confidence on the business," 2016 preliminary guidance was disclosed early. For next year, revenues and adjusted EPS guidance were $21.7 billion to $22.3 billion and $10.35-$10.75, respectively. The numbers seem solid on the top-line and probably conservative on the bottom line, "as our experience shows the company starts annual guidance conservatively and then raises through the year (they've done this for years now)," Yee wrote in a research report, noting that "no specific Repatha sales were broken out and are likely small in our view, given only a partial launch in the quarter (other product revenues were $23 million vs. $20 million last quarter, so we estimate Repatha was probably $2-3 million vs. consensus of $5 million-plus). However, the company says 'insurance verifications' are running higher than expectations."

Evercore ISI analyst Mark Schoenebaum, in an email alert to investors, said Amgen reported "what appears to be an good quarter," with a "beat [of estimates] on both top and bottom lines," and guidance raised above the numbers guessed by Wall Street.

Amgen shares (NASDAQ:AMGN) closed Wednesday at $162.67, up 69 cents. Oncolytics Biotech (NASDAQ:ONCY) ended at 46 cents, up 4 cents.

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