December 5, 2012
PD-991, A Nice to Have
Impact on our views: Phase II data for Pfizer’s (covered by David Risinger) CDK 4/6 inhibitor PD 0332991 (PD-991) in metastatic breast cancer (mBC) look good. Onyx is entitled to a single-digit royalty creating a new (albeit limited) revenue driver for the stock in 2016+.
Strong showing on PFS. Median PFS was 26.1 months for patients on the PD-991 + letrozole (LET) arm vs 7.5 months for letrozole (Exhibit 1) with a hazard ratio of 0.37 (95% CI 0.21, 0.63), an impressive result. As is typical with Phase II oncology trials, a handful of patients drive the PFS curves at the longer time points so the robustness of the 18.6-month PFS benefit remains a question (23 vs 41 progression events for PD-991 and control, respectively).
PD-991 valuation suggests ~$1-3 per share (Exhibit 2). Onyx receives an undisclosed single digit royalty on PD-991. Our sensitivity analysis of peak PD-991 sales ($0.5B - $2B) and royalty (3-5%) suggests an NPV per share of $1-3 assuming: 1) launch late 2016/early 2017, 2) a patent life with extensions to 2035 (MSe), and 3) a 50% risk-adjustment on eventual commercialization. However, the revenue opportunity is unclear as median treatment duration was just 8.9 months.