Here's my guess. The first news will be the topline results. Any potential partner will want to take a good look at that data before committing to a joint venture. My guess is that we will see the topline next week or the week after and assuming a positive result, there will be a JV announced about a month later. We'll see soon enough.
"I don't think they've reached the events required."
Sorry, but with what facts we know it is highly unlikely that they are still waiting on the triggering event. They were "very close" on April 30 and on May 12 Dr. MMM promised a July readout and that represented a slight delay. Time to place your last minute bets as the roulette wheel is about to stop on red or black very soon. It is worth noting that by letting the cash run down to only several months of remaining clearway, management is betting on a positive outcome and even the skeptical AF predicted a statsig result. Its been an ugly ride so far, but hopefully that will all change soon.
"I'm with you..I do not wish bad for anyone either. Take look at the open interest from 3-4.50 on the calls....wash, rinse, repeat :)"
For the record, are you long, short or on the sideline as we approach the Meteor readout?
"Now, according to the agreement, EXEL is entitled to 50% of the profits from the first $200M. However, Roche will amortize development expenses across this value and there will be not GAAP profits."
The agreement was for EXEL to take the drug through phase 1 and then turn it over to Genentech for further development. EXEL bore the cost of preclinical and phase 1 development and Genentech/Roche from that point forward. Now you are interpreting the agreement to allow Roche to recover all of its development expenses before the profit split with EXEL. For tax purposes, Roche expenses its R&D costs annually. GAAP profit is not net of prior expense in previous years. In this solar system, drug co-promote deals do not allow the bigpharma to recover its development expenses from the aggregate revenue or profit pre-split.
"The next year, FY2017, sales my ramp up to $350 -450M. It is at this point the agreement states EXEl is to receive 30% of profits. With what I understand on costs of development of a typical therapy being on average $1B, lets have that for the sake of argument or $500M. If we say Roche amortized $200M in FY2017 that leaves $300M for FY2018. balanced with my sales estimate it means about $50 - 150M beyond expenses. Multiplied by 30% is $15 - 45M revenue to EXEL in FY2018."
The 50% of the first $200 million is reset every year and again, Roche does not get to amortize the drug development cost pre-split. Your are spinning yarns and presenting it as a fait accompli that cobi is worth precious little after Roche is done with the accounting. That is simply not the case.
"Ernie, I understand you're not a fortune teller, but as a scientist;;;"
I am not a scientist either.
."..can you postulate from that quote that the slowing of "events" is from the better than expected PFS of the cabo arm or the better than expected PFS of the everolimus arm?"
Let me set the table and then I'll answer your question directly. We have 2 prior studies of Afinitor in a post VEGF TKI setting. In its pivotal trial the Afinitor arm (n=277) had a median PFS of 4.9 months. In the recently reported Lenvatinib 3 arm study, the Afinitor monotherapy arm (n=50) the median PFS was 5.5 months. We also have the cabo phase 2 study (n=25) in RCC with a reported PFS of 12.9 months. The best data point is the Afinitor phase 3 study and the Lenvatinib study is consistent with that result. The Cabo study was small, uncontrolled and lacked blinded determination of progression. So we have two studies with combined n=322 showing Afinitor PFS falling between 4.9 to 5.5 months.
So to directly answer your question. there is nothing in the quote that gives any clue as to how either arm is performing. However, prior evidence creates an expectation for how the everolimus arm is likely to perform and when I see an aggregate longer than expected duration my best guess is that the this lengthened duration is more likely attributable to the Cabo arm than to the everolimus arm. You're free to draw your own conclusions.
"The all time low reflected the outflows of capital due to a lack of short term speculative activities."
The all time low was the result of Comet's 1&2 fizzling out. The run-up has been driven by speculation on Meteor and Cobi with an ever improving set of fundamentals pointing to a likely positive result. While the Comets failed, there is an emerging picture of cabo;s ability to extend PFS across several indications and Vem/Cobi data looks as good or better than the competition. The April 30 cc revealing the details of Meteor that indicate a combined median PFS in the 7-9 month range has added further impetus.
It's not just the approach of a speculative event igniting renewed interest, it also has something to do with how the outcome is being handicapped.
"This should have started chugging up the big hill by now."
Three months ago the sp was $2.64 and 6 months ago was $1.31. Much of the move is already discounted. How much is left will be based on how convincing the data set is.
"I think the reason the testing has gone on so long is because the Afinitor arm is doing so well."
Are you familiar with how Afinitor has performed in this setting in prior trials? Are you basing this opinion on anything other than personal bias?
From the letter to shareholders in the 2014 annual report: "To enable us to capitalize on RCC and other potential cabozantinib opportunities most effectively, we recently announced our intention to seek a partner for cabozantinib outside of the U.S."
This intention has also been reiterated multiple times since February. It is abundantly clear that the plan is to raise cash by selling ex-US rights to cabo following a successful Meteor outcome. If Meteor is not successful, I don't really care what they do as that will be the final straw for me.
"However, is this study not open label? Generally, a sponsor has access to trial data as the trial is executed. Open label would then mean they know whether IP or control was administered?"
The study is open label, but for confirmatory pivotal trials the data flow from the investigator to the CRO, DSMB and sponsor is very controlled. Generally the only information that makes it through to the sponsor is accrual information and overall event accumulation information, but only the DSMB is allowed to have the information patient disposition by treatment.
We have 5 entities with access to information. The patients, the investigators, the CRO (contract research organization), the DSMB (Data Safety Monitoring Board and aka IDMB DMB or IRB), and the sponsor. In an open label pivotal trial the patients, investigator and DSMB are completely unblinded. The patients and investigators are limited to individual treatment details without access to the big picture. The CRO gets coded information and the key to break that code is held by the DSMB.
The rationale for this is to limit type one error caused by any bias that might be introduced by the sponsor as a result of having more information that they are entitled. For instance, if it were apparent that a particular subgroup is underperforming a sponsor could seek a protocol change or exert inappropriate efforts to guide its investigators to limit individuals within that subgroup. For more detail see "Guidance for Industry
E9 Statistical Principles for Clinical Trials."
"Is it safe to assume that if EXEL is doing data cleansing and verification steps for METEOR then it would be inproper to make a Secondary Offering at this time?"
With EXEL it is never safe to assume that they might spring a secondary when least expected. This close to pivotal results would be unusual and the prospectus would have to make it abundantly clear that the company is still arms length from the analysis and completely unaware of the results. Even so it would be terrible timing and every one would suspect that the company knows more than they would claim.
The data cleaning and number crunching will be done by the CRO and the Data Safety Monitoring Board. Theoretically the company does remain in the dark, but secrets are hard to keep.
"We have not reached the cutoff date yet right?"
We do not know with 100% certainty. My best guess is that the last event occurred at some point in May. Companies do not usually make this type of information public. The April 30 comments by MMM were uncharacteristic and I suspect we will not hear anything else until the topline results are announced.
"Anyone knows how long it takes typically to do data collection data cleaning etc.. once the required PFS events have been reached?"
If you want to reflect on the EXAM experience, the actual cutoff date for the analysis was 6/15/2011. The topline was announced 10/24/2011. That trial analyzed 330 patients with 139 progression events. METEOR is looking at 375 patients and 259 events. The time consuming part in not the computation, but the blinded determination of the observation at which the progression event is determined to have occurred by a third party adjudication committee.
"The median PFS was 6·7 months with axitinib compared to 4·7 months with sorafenib (hazard ratio 0·665; 95% CI 0·544–0·812; one-sided p less than 0·0001)"
The product label breaks out the subgroup analyses. The interferon subgroup skewed the numbers. In the Sunitinib-refractory subgroup, Axitinib had a 4.8 month median and sorafenib only 3.4 months.
"...received pazopanib after sunitinib failure were included in this retrospective single center study."
Small sample size (n=31) in an open label trial with no central review of the radiologic data.
"LEN alone also prolonged PFS (7.4 months) vs EVE (HR 0.61; 95% CI 0.38–0.98; P = 0.048"
The lenvatinib arm did have a PFS of 7.4 months, but even more worrisome is that the lenvatinib plus everolimus arm had a PFS of 14.6 months. From a competitive viewpoint, the only good thing I can say is that the phase 3 has not started yet.
"Really interesting. Sounds like if we get good results from Meteor, it might be worth holding through Celestial..."
One way or another I plan to be less invested by the end of the year.
"Ernie, Would you care to share your thoughts on Roche buyout of EXEL? Is it a question of when, not if?"
I do not see it as an inevitability. I think it would take another puzzle piece. If perhaps Cobi proves effective in other indications besides melanoma, that might prompt them to make an offer. There is a lot riding on the Meteor results. Besides RCC revenue it will be an indication of what to expect from Celestial. I don't think Roche has a foothold in HCC or RCC, so acquiring Cabo would fit their portfolio of products nicely. MMM is still relatively young. As CEO he answers to the BoD, but as a practical matter his personal preference has a lot of influence on future strategy. He may want to restart the R&D side of the company and keep on working. We'll see. If Cabo is partnered with someone besides Roche, I think that will be rather telling.
"As an aside, how much will Roche charge for cobimetinib anyway?!"
Really good question as they own 100% of vemurafenib and have to split the cobi revenues with EXEL.
"This is ironically from the control arm population of their original TIVO-1 trial, and there's no way the FDA will approve them since there is no control and this makes the TIVO-1 control arm OS look even better than the experimental arm's."
Aveo is still trying to convince the Europeans to accept an NDA, but it has the major stumbling block of the control arm outperforming the treatment arm for OS. FDA just gave them guidance for a follow on study. They said a ph 3 Tivo vs Sorafenib in a 3rd line setting including at least one prior VEGF therapy "may" support a filing in a 3rd line setting. Problematic for Aveo is that they cannot afford another ph 3 study for Tivo and to date nobody seems that interested in partnering the drug. If the Cabo result is reasonably good, that further complicates the issue for them. If the Cabo result is good enough to project a likely OS advantage, that could take away a potential PFS primary endpoint and put an RCC indication out of reach. We'll see soon enough.
"It is usually assumed that Phase III results are more realistic and inferior than Phase II."
It is most unusual for a ph 3 to outperform its prior ph 2 lead in study. When it does, it is usually attributable to some tinkering with the entry requirements or dosing strategy by the sponsor.
"However VEGFR TKI's like sunitinib and axitinib in many ways actually "outperformed" in Phase III's of RCC. 1st line Sutent PFS from Phase II Study (Motzer. J Urol 2007) was 8.8 months. In Phase III it was 11 months ( Motzer J Clinic Oncol 2009). "
The ph2 required prior cytokine therapy and the ph3 required treatment naïve.
"2nd line PFS of Axitinib in Phase II study was 7.4 months (Rini. J Clinic Oncol 2009) and in the final report from AXIS Phase III (Motzer. Lancet Oncol 2011) it was 8.3 months."
The ph 2 was in sorafenib refractory patients. The ph 3 was in sunitinib or cytokine refractory patients and the cytokine refractory subgroup outperformed substantially.
Both your examples are very much apples/oranges comparisons.
"So in my opinion 2nd line PFS benchmark in the modern era with the currently available drugs is about 5 months."
I agree as long as we say second line VEGF refractory which is the Meteor population. Including cytokine only pretreatment will skew the results and as you said, the results of the competing TKI's used in second line disease need to be examined within this construct.