JMP - should CELG experience weakness on JUNO news-consider it a good entry point. We remain bullish on Celgene and we forecast total revenues to rise to $21B+ by 2020. Out top pick. $152 TP
Juno Reports Clinical Hold on JCAR015 Phase II ROCKET Trial
CELG: $104.41 | Market Cap: $81,617M
Market Outperform | Price Target: $152.00
Celgene partner Juno Therapeutics (JUNO, NC) announced that it has received notice from the FDA of a clinical hold on its Phase II trial of JCAR015 in adult patients with r/r ALL, known as the “ROCKET” trial; we reiterate our Market Outperform rating and $152 price target based on our discounted cash flow and sum-of-the-parts analyses. The clinical hold was placed after two patient deaths last week, following the recent addition of fludarabine to the pre-conditioning regimen. JUNO's management believes that the combination of fludarabine and JCAR015 induced neurotoxicity that led to fatal cerebral edema in these patients. The company reported that the clinical hold will likely delay the timelines set forth for approval of JCAR015. However, JUNO’s trials and plans for its other CD19-directed CAR-T cell programs, including JCAR017 and JCAR014, are unaffected. We remind investors that CELG retains the rights for JUNO’s CD19 program in Europe and other markets outside of North America and China. Although the clinical hold and resultant delays in the development of JCAR015 represent an obvious detriment to the program, we maintain our $152 price target on CELG as we currently assign no value to this program in our model. Should CELG shares experience weakness in reaction to this news, we would consider it a good entry point for long-term oriented investors. CELG is one of the least expensive of the megacap, profitable biotech names on a PEG basis on FY16 and FY17 numbers.
We remain bullish on Celgene and we forecast total revenues to rise to $21B+ by 2020. We expect Celgene’s four blockbuster drugs (Revlimid, Abraxane, Otezla, and Pomalyst) to drive revenues approaching $13B by 2017, and over $17B by 2020. Further, we believe the recent acquisition of Receptos and investments in collaborators, such as Acceleron (XLRN, MO, $39 PT), Epizyme (EPZM, MO, $28 PT), OncoMed (OMED, MO, $18 PT), Agios (AGIO, NC), and others, likely ensure growth from 2017 and beyond. We continue to view CELG as our top large-cap pick and reaffirm our Market Outperform rating.
FIGURE 1. Upcoming Catalysts Timing Drug Milestone Indication 2H16 Otezla Phase II - Top-Line Results Atopic Dermatitis (Eczema) 2H16 Otezla Phase II - Top-Line Results Ulcerative Colitis (UC) 2H16 Revlimid Phase III - CLL-002 Top-Line Results CLL/SLL - NHL 2H16 RPC4046 Phase II HEROES - Trial Completed Esophagitis 2H16 RPC4046 Phase II HEROES - Top-Line Results Esophagitis 2H16 Otezla JNDA Filing Psoriatic Arthritis (PA) 2H16 Otezla JNDA Filing Psoriasis 10/30/2016 Istodax Expiration of 30-Month Stay Cutaneous T-Cell Lymphoma (CTCL) - NHL 11/1/2016 Refludan Patent Expiration Heparin-Induced Thrombocytopenia (HIT) 07/01/2016-12/31/2016 Ozanimod Phase II - Top Line Results Crohn's Disease 07/01/2016-12/31/2016 GI-6207 Phase II - Top-Line Results Thyroid Cancer 12/31/2016 GED 0301 Pediatric Trial Initiation Ulcerative Colitis (UC
Bloomberg: Ziopharm CEO Laurence Cooper said his company isn’t affected because it doesn’t use a similar pre-conditioning regimen"
Juno has asked the FDA for permission to continue the trial without using fludarabine as part of the pre-conditioning treatment. The FDA has told Juno it needs to change its trial protocol, patient consent forms and information it provides to investigators, the company said. Juno plans to submit the information to the FDA this week.
Shares of competitors testing CAR-T therapies fell in late trading. Kite Pharma Inc. dropped 7.2 percent to $48.33, while Bluebird Bio Inc. slipped 4.7 percent to $46.52 and Ziopharm Oncology Inc. slid 3.8 percent to $5.78.
“Our program is on track and it is unaffected by today’s news,” David Chang, Kite’s chief medical officer, said in a phone interview. “We believe that we have done all the due diligence a company should do, including for the chemo-conditioning dose.”
Kite Chief Executive Officer Arie Belldegrun said the company has worked with the National Cancer Institute for 10 years, using that time to fine-tune details and reduce the risk of all aspects of the treatment before starting company-sponsored trials.
Kite investors shouldn’t be concerned about the Juno news because Kite uses a far lower amount of fludarabine in pre-conditioning patients in trials, according to Eric Schmidt, an analyst at Cowen & Co. who rates Kite shares outperform.
Kite “has a lot of data to support a low-dose regimen, which is safe and efficacious,” Schmidt said in a phone interview. “Comparing that to a high-dose regimen is apples to oranges.”
Benefits and Risks
Pharma giant Novartis uses fludarabine in its studies, said spokeswoman Julie Masow. “We have a positive benefit/risk profile," she said in an e-mail. Ziopharm CEO Laurence Cooper said his company isn’t affected because it doesn’t use a similar pre-conditioning regimen. Bluebird declined to comment.
Celgene Corp., which last year spent $1 billion to invest in Juno and join it in a 10-year CAR-T partnership, said after the announcement that it stands by the company. In April, Celgene said it would exercise an option to develop and commercialize Juno’s CD19 CAR-T program outside of North America and China. CD19 is a protein on cancer cells targeted by the Juno treatment.
“Celgene remains committed to Juno’s CD19 franchise and the potentially transformative impact of CAR-T therapy,” Greg Geissman, a Celgene spokesman, said in an e-mail.
A spokesman for the FDA didn’t immediately comment.
Full MTSL ZIOP coms...consistent with my take ..."the new terms with a new management team needed to be in place before the next deal"...ZIOP is a BUY under 12 with a TARGET PRICE of 18
Full Med Tech Letter – anyone I talk to who has followed Kirk (ZIOP’s Chairman and largest individual shareholder) understands this restructuring sets up the final negotiations for either a HUGE TCR deal plus a side IL-12 deal or an acquisition by Big Pharma/Biotech of ZIOP. I agree with MTSL comments per my previous post on this subject which I will repaste under the MTSL comments. RC
ZIOP – Enrolls 3 Cohort in GBM & Restructures XON Partnership
ZIOP has started the enrollment in a third cohort at 30 mgs of Ad-RTS-hIL-12 + orally administered veledimex to treat recurrent or progressive glioblastoma (GBM) or grade III malignant glioma. This follows the successful completion of enrollment in the first (7 patients at 20 mgs) and second dose cohorts (6 patients 40 mgs). To date, toxicities in both dose cohorts were consistent with those previously reported, with a higher incidence of Grade 3 or greater adverse events in the 40 mg dose group. The primary objective of the study is to determine the safety and tolerability of a single intratumoral Ad-RTS-hIL-12 injection activated upon dosing with oral veledimex. The company appears to have found the “sweet spot” for IL-12 expression in the brain with the 30 mg dose. The optimal dosing may be reached sooner than initially anticipated, which would potentially allow for a registration trial to be the next clinical step. The company expects to present updated results from the study at a scientific meeting later in the year.
ZIOP and their partner XON have restructured their agreement to facilitate increased investment in clinical development by ZIOP. The new terms are:
Operating profit rates payable to XON from ZIOP on products developed under its two existing collaborations (graft vs. host disease and cancer) will be reduced from 50% to 20%. This reduction will not apply to any royalties or other payments made with respect to the companies’ existing collaboration with Merck KGaA. Economics from any future sublicensing arrangements with potential third party collaborators will remain 50/50.
In consideration of the amendments, ZIOP will issue shares of a new class of preferred stock that would carry an initial stated value of $120 million and a monthly dividend of 1% payable in additional preferred shares. The shares will convert on the first approval in the U.S. or upon a change of control of ZIOP. The preferred shares issued to XON will be converted into ZIOP common stock equal to the aggregate stated value divided by the volume weighted average closing price of ZIOP’s common stock over the 20 trading days ending on the date that the product approval is announced or a change of control occurs.
The dosing of the 3 cohort in the IL-12 GBM trial is a positive and could lead to a registration trial that could start as soon as yearend in a patient population that has run out of treatment choices. While the restructured deal appears to favor XON initially, the goal of increasing ZIOP’s R&D investment near term should counter balance the dilution. The restructuring also helps explain why we have not seen any recent partnerships from ZIOP as the new terms with a new management team needed to be in place before the next deal.
ZIOP is a BUY under 12 with a TARGET PRICE of 18
Consistent with my previous post:
re: I believe this deal is a big positive. Investors need to read the tea leaves
Crystal Clear - Kirk said in Jan their are more international and large pharma/biotechs interested in ZIOP and the immuno-oncology platform then ever before. They have been negotiating a large TCR deal since late last yr. They have a PD-1 partner selected and are in negotiations. Multiple parties have to at least put pencil to paper re aquiring ZIOP. Three things have delayed deals to the frustation of this board.
1) Kirk will not give this away - needed a little more data and some publications. Has enough now for deals imo.
2) Feeling Kirk is loose canyon without Pharma experience. Gene G as President answers that in a big way.Need for more pharma experience on Board. Fred Hassan one of the most experienced and respected Big Pharma guys on the planet. Addressed.
3) the 50% arrangement while incredible for ZIOP to have traded Pali for large % of profits on every immuno-oncology drug XON ever invents now including also MDA SB (especially good for ZIOP with XON paying all the discovery and preclinical expenses)....it made deals in IL-12 and TCR and possible acquisitions less attractive and much more complicated likely with 3 or 4 or more participants in deals. Yesterdays transaction fixes it all. ZIOP now owns 80% of the profits to every XON immuno-oncology drug for infinity including the entire MDA SB and SB 2.0 and SB 3.0 platforms.
In my opinion Big Pharma is in late stage negotiations with ZIOP. Adding one of the most respected men in the industry to XON Board Fred Hassan, getting Big Pharma experience in XON as President and this percentage raise for ZIOP to 80%....to me its all part of current negotitations - Big Pharmas request in order to complete transactions, partnerships or an all out acquisition of ZIOP. Those who follow Kirk understand how he moves chess pieces before he completes the deal. Did it before Scios, New River, Clinical data, MD Anderson deals. Late stages imo. ZIOP is also in better shape than ever to negotiate new partnerships and deals and many of the companies that may have left because of the 50% deal could return to table imo.
In my opinion this is a great deal for ZIOP...sets up huge deal...ZIOP now owns (& can sell) the rights to 80% of the profits to every immuno-oncology cancer drug Intrexon ever makes for infinity....
outside of Merck KGaA deal......this gives , Merck US, BMY, GILD, PFERoche, etc now the ability to buy an unencumbered immuno-oncology platform with 80% potential with XON paying all the preclinical and discovery expenses. A great deal for ZIOP imo. Dilution comments are silly. This is step 1.
Gilead for instance who IMO Broder was brought back to step up talks, are actively looking for a cancer leader and immuno-oncology platform. They have $4 bill a qtr in cash. Imagine spending less than one quarters cash and getting Cooper to lead your cancer efforts and one of the few immuno-oncology platforms not partnered - especially the key TCR, SB Non-viral, NK OTS and neoantigen advantage in solid tumors all subjects of recent Rosenberg (NCI) platform and now we know NCI is starting to use the rheo switch.
This deal is a huge win for ZIOP - and for intrexon its a win if they sell the company or do a huge TCR deal with Big Pharma. This is step 1. If you do not see that you do not follow Kirk. Let the Big Pharma bidding begin.
ZIOP now owns rights to 80% of profits to every immuno-oncology drug XON ever makes for infinity … Let bidding begin
While success in the ph.III Revlimid lymphoma study is not a sure thing, our
analysis suggests REMARC is more likely than not to work, and regardless we
see upside/downside as relatively modest ($1/$3 to DCF, though stock move
could be slightly greater) and see minimal readthrough to other lymphoma
indications. We would continue to take advantage of recent stock volatility
on macro/NT catalyst concerns given CELG's strong pipeline and LT growth
Upcoming data for REMARC expected soon. Recall the ph.III study (n=650) is testing Revlimid maintenance treatment vs. placebo following initial response to R-CHOP in older (60-80 yo) DLBCL pts. Based on CELG's recent comments, we believe the data will be top lined this summer.
We see several reasons REMARC could be successful. Revlimid has demonstrated clear activity, clinically and preclinically, in suppressing DLBCL. Additionally, we note two recent ph.IIs presented at ASH which support the benefits of Revlimid maintenance in DLBCL, albeit in different populations vs. REMARC.
Though we believe Revlimid will likely be active, there are some risks to it
showing statistically significant benefits in REMARC. While Revlimid has been
tested extensively in lymphomas, it has never been tested directly in REMARC's setting, and variables such as lower relapse rate in front-line pts could reduce ability to show a benefit, especially given a relatively high PFS bar. Inclusion of GCB-type pts, in whom Revlimid may be less active, could also dilute Rev's treatment effect; however, our analysis also suggests the importance of this GCB/non-GCB issue may be overstated, given some evidence Revlimid works in GCB cells, possible Street overestimating the size of GCB pool, and selecting for older pts (which may increase % of pts who would have otherwise relapsed)
could help offset the effect.
Overall, we model a 65% prob. of success with modest ($1/$3) upside/
downside and limited readthrough to other lymphoma indications. Assuming
~60% of 1st-line elderly DLBCL pts eligible for maintenance and penetration of 24%, sales could be ~$460M in this indication by 2025. Even if REMARC misses, we believe Revlimid could likely still be active in other settings (e.g., ABC subtype); removing lymphoma completely from our model would reduce DCF valuation by $11.
Our $140 tgt reflects a DCF analysis. Risk include competition, pipeline failures, and IP.
We expect upcoming data from REMARC, one of five ph.III trials CELG is conducting in NHL, in the coming weeks. Revlimid is currently approved and used extensively in multiple myeloma, with one approved NHL indication (MCL); while there is a range of data supporting use of the drug in various NHL indications, we believe off-label usage at present is relatively minimal. Based on recent comments at the Jefferies Healthcare Conference, we expect phase III REMARC data to be reported this summer, with data from four other phase III studies in NHL expected over the next 1.5 years.
REMARC has a unique design that could potentially address a large subgroup of NHL patients, though one limitation in predicting success is that Revlimid has not been specifically tested in this way previously. DLBCL represents the largest subgroup of NHL (~40%) and predominantly affects elderly patients. R-CHOP is potent in induction therapy and can generate a high rate of CRs in frontline DLBCL. However, there is a high rate of relapse in DLBCL; elderly relapse can be ~30-40% and these pts have a very poor prognosis and are challenging to treat into a second relapse. REMARC tests Revlimid maintenance x2 years in elderly patients with DLBCL who respond (CR/PR) to front-line R-CHOP; maintenance data would support registration of the drug for this indication.
They got to maximum dose without even one additional death in this very sick population - P/R "All related side effects were reversed upon cessation of veledimex. No subsequent deaths have been reported." of paramount importance imo. Very positive...
ZIOPHARM Oncology, Inc.
Jun 27, 2016
ZIOPHARM Completes Enrollment in Second Patient Cohort and Initiates Enrollment in Third Cohort in Phase 1 Study of Gene Therapy Candidate Ad-RTS-hIL-12 in Brain Cancer
BOSTON, June 27, 2016 (GLOBE NEWSWIRE) -- ZIOPHARM Oncology, Inc. (Nasdaq:ZIOP), a biopharmaceutical company focused on new cancer immunotherapies, today announced the successful completion of enrollment in the first and second dosing cohorts as well as the initiation of enrollment in a third cohort in the Company's ongoing multi-center Phase 1 study of Ad-RTS-hIL-12 + orally administered veledimex to treat recurrent or progressive glioblastoma (GBM) or grade III malignant glioma. Ad-RTS-hIL-12 + veledimex is a novel viral gene therapy candidate for the controlled expression of interleukin 12 (IL-12), a critical protein for stimulating an anti-cancer immune response.
The primary objective of the study is to determine the safety and tolerability of a single intratumoral Ad-RTS-hIL-12 injection activated upon dosing with oral veledimex. Secondary objectives are to determine the maximum tolerated dose, the immune responses elicited, and assessment of biologic response. The first cohort of seven patients received 20 mg doses of veledimex, the second cohort of six patients received 40 mg doses of veledimex, and the third cohort will receive 30 mg doses of veledimex to refine the effect of activating the immune response within the tumor. The resultant immunologic activity that follows IL-12 expression in the brain suggests that no further dose escalation will be necessary and the optimal dosing may be reached sooner than initially anticipated.
Francois Lebel, M.D., Executive Vice President, Research and Development, Chief Medical Officer at ZIOPHARM, commented: "With the RheoSwitch® (RTS®) technology, the only switch currently in the clinic that operates on gene transcription, we have demonstrated the ability for veledimex to cross the human blood brain barrier and activate production of IL-12 in GBM tumors in a dose-dependent manner, giving us the potential to precisely tune the balance between activity and tolerability."
Data from 11 patients with recurrent high-grade gliomas were recently presented at the 2016 American Society of Clinical Oncology (ASCO) Annual Meeting. All of these patients failed at least two prior lines of therapy and underwent partial resection leaving residual tumors, in certain cases with significant tumor burden. Ad-RTS-hIL-12 was administered through direct injection into the brain tumor and veledimex was taken orally to activate the production of IL-12 from the tumor site and stimulate an immune response.
As of May 18th, the date of data collection for the ASCO presentation, overall median follow up was 6.2 months, with 10 of 11 recipients alive. IL-12 in the bloodstream was measured and was found to be proportional to the amount of veledimex administered, demonstrating that this orally-delivered activator crossed the blood brain barrier to turn on the RheoSwitch® technology in a dose-dependent manner.
To date, toxicities in both dose cohorts were consistent with those previously reported, with a higher incidence of grade 3 or greater adverse events in the 40 mg dose group. All related side effects were reversed upon cessation of veledimex. No subsequent deaths have been reported.
The Company expects to present updated results from the study at a scientific meeting later in the year.
"Overall survival remains the gold standard of therapeutic success in glioblastoma, particularly in high-grade, recurrent disease, where survival is too often measured by just a few months," said Laurence Cooper, M.D., Ph.D., Chief Executive Officer of ZIOPHARM. "We remain encouraged by the outcomes of Ad-RTS-hIL-12 as a single agent tuning the immune system in this GBM study. We believe that these early results also have positive implications for our combination approach utilizing this novel gene therapy with immune check point inhibitors. We look forward to additional follow up as we work to fine-tune dosing levels using the RheoSwitch® technology."
Ad-RTS-hIL-12 + veledimex has been granted Orphan Drug Designation by the U.S. Food and Drug Administration for the treatment of patients with malignant glioma.
Glioblastoma is an aggressive primary brain tumor affecting approximately 74,000 people worldwide each year.i, ii Recurrent glioblastoma is an aggressive cancer with one of the lowest 3-year survival rates, at 3%, among all cancers.iii For patients who have experienced multiple recurrences the prognosis is particularly poor, with a median overall survival (OS) of 6-7 months, while OS in patients that have failed temozolomide and bevacizumab, or equivalent salvage chemotherapy, is approximately 3-5 months.iv, v