Three Small Companies With Big Name Partnerships In Immuno-Oncology

CORAL GABLES, FL / ACCESSWIRE / December 1, 2015 / Over the last twelve months, many of the biggest players in biotech have inked partnerships or acquisitions to gain exposure to the immuno-oncology space, or stimulating the immune system to attack cancer. Pfizer Inc. (PFE), GlaxoSmithKline plc (GSK) and Celgene Corporation (CELG) have all committed significant capital this year. Analysts expect immuno-oncology to generate $35 billion sales before 2023, growing to account for 60% of the total cancer management space. The big names are not the only players, however. There are a number of smaller development stage biotechs with candidates in trials that could be the target of the next big acquisition deal, or become blockbuster therapies in their own right. Here's a look at three of them that already have big name partnerships.

Peregrine Pharmaceuticals and AstraZeneca

Peregrine's (PPHM) lead pipeline candidate is a monoclonal antibody called bavituximab. It is targeting an indication of non small cell lung cancer, or NSCLC. Healthy cells have molecules called phosphatidylserine lining the inside, or PS. These molecules are immunosuppressive, meaning they block the immune system from having an effect on the cell. This is one of the body's ways of defending its own cells against attack by the immune system.

In tumorous cells, these PS molecules turn from lining the inside of a cell to becoming expressed on the outside of the cell. The result is that the immune system won't attack the cancer cell. Bavituximab is a PS inhibitor.It binds to the PS molecules and hides them from the immune system, nullifying their immunosuppression. This opens up the pathway for a combination therapy to illicit an immune response.

The company scored a partnership with AstraZeneca PLC (AZN) earlier in the year to kick off a phase I clinical trial evaluating the combination of bavituximab and durvalumab with chemotherapy in multiple solid tumors, and announced an expansion of this partnership in October that will see a phase II global study of bavituximab in combination with AstraZeneca's durvalumab for an NSCLC indication.

Peregrine also has an ongoing phase III for an NSCLC indication, trialing its candidate in combination with Sanofi's (SNY) Doxetaxal. The trial should finish before the end of next year, so be on the lookout for interim updates. The next milestone will be the completion of enrolling set for this December. If we can get efficacy in any of the three mentioned trials, Peregrine could benefit from a quick upside revaluation. The company has had a tough year - down 33% on 2015 highs, and might be a cheap exposure to the space at current prices.

MabVax Therapeutics and Juno

MabVax Therapeutics Holdings, Inc. (MBVX) is a little behind Peregrine from a development perspective, but its candidates are no less exciting. Its lead is called HuMab 5B1, and the company is currently trialing the drug as both a therapeutic and an imagining agent in a metastatic pancreatic and colon cancer indication. The antibody targets colon and pancreatic cancer cells, tagging them for an immune response to that cell.

5B1 is exciting for two reasons. First, it addresses a therapeutic indication that has a large patient population. Pancreatic and colon cancers are very aggressive, and notoriously difficult to treat, and any entrant into the space has the potential to become a blockbuster. We have preclinical and anecdotal efficacy, with the anecdotal evidence deriving from 7 already treated patients vaccinated at the drug delivery stage, of which 6 are still alive. The company announced today that a new drug application has been filed, in order to begin a phase I trial early next year. MabVax also recently reported that it had completed the manufacture of the bulk requirements for the drug's trial.

Second, it has a potential indication as an imaging target. Because HuMab5B1 targets pancreatic cancer cells so selectively, it can be joined with a radioactive label and introduced into a patient, where it will target and highlight cancerous cells. Pancreatic cancer is very difficult to diagnose, and if MabVax can demonstrate the efficacy of HuMab as an imaging diagnostic, it could expose itself to a circa $450 million market.

Why is this important? Because it will be much easier for the company to achieve approval for an imaging agent than a cancer therapeutic.

MabVax's big name partnership is with Juno Therapeutics (JUNO), which has licensed 5B1 as a targeting sequence for its own engineered anti-cancer T-Cells. Any of Juno's product that goes to market with 5B1 as a targeting sequence will get MabVax a royalty.

MabVax is currently trading at a market capitalization of just $28 million - a 78% discount on annual highs.

CTI BioPharma Corp and Baxter

Finally, CTI BioPharma (CTIC). Those familiar with the immuno-oncology space will likely already be familiar with CTI and Baxter's (BAX) collaboration drug Pacritinib. For those not yet familiar, the drug is what's called a janus kinase, or JAK inhibitor, with an initial target indication of myelofibrosis - a rare form of blood cancer. JAK inhibitors, as their name suggests, work by inhibiting the function of janus kinases, a group of enzymes responsible for cytokine signal transduction.

Cytokines are a type protein that affect what a cell does, how it behaves, grows, replicates and when it dies. They bind to receptors on the cell and then use JAKs to signal the required action/instruction. JAK inhibitors stop the signaling, and in turn, stop cells replicating. The already approved Ruxolitinib is an example of this type of therapy.

CTI reported good phase III data back in May this year, with a primary endpoint of 35% spleen size reduction (a side effect of this type of blood cancer) met across a sample size of 327 patients. The two companies met with the FDA in September, and announced on September 23 that they would submit an NDA before the end of the year based primarily on data derived from the latest trial. The drug has accelerated approval designation, meaning if CTI can get its NDA accepted before 2016 kicks off, we could get a decision from the FDA during the second half of next year.

From a financial perspective, the implications of an approval far outweigh CTI's current market capitalization. The drug would be a direct competitor with Ruxolitinib, a drug that generates more than $500 million a year, $358 million in the US and $279 million internationally.

Near term catalysts are the NDA submission in the next few weeks, FDA acceptance of the NDA, the issuing of a PDUFA date and, of course, the FDA decision which should come towards the end of next year if all runs smoothly.

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