A new lucrative indication for Sage (and potentially Marinus)
Last week, Sage (SAGE) surprised the market by announcing preliminary but impressive results for SAGE-547 in patients with postpartum depression (PPD, also known as postnatal depression). Four patients with severe PPD experienced a dramatic improvement in their depression score from an average of 26.5 to 1.8. In other words, these patients entered the study with a severe debilitating depression and became symptom-free within 2-3 days. Despite the preliminary nature of the results, they generated a clear efficacy signal that merits evaluating SAGE-547 in a randomized trial, to be started later this year.Potential beyond epilepsy – Before the announcement, SAGE-547 was viewed as an anti-seizure drug but now investors are starting to realize the drug and related next-gen derivatives may treat a wider spectrum of neurological diseases, including depression. The decision to go after such a severe patient population resonates with Sage’s strategy in epilepsy. In both cases, the effect seen in a handful of patients without a control arm was so quick and profound that it enabled the company to validate the indications and de-risk the program.
Marinus gaining visibility – Sage’s announcement sent Marinus’ (MRNS) shares up almost 30%. This is the first time that investors link between the two companies, whose lead agents have a common mechanism of action (GABA-A activation) and are almost identical in terms of chemical structure (SAGE-547 is a formulation of allopregnanolone). In contrast to Sage’s strategy, ganaxolone has been tested in placebo-controlled trials of hundreds of patients with milder forms of epilepsy, demonstrating a relatively modest benefit. Another important difference between the two drugs is that SAGE-547 is given as an injection and ganaxolone is an oral drug.
Source: Marinus presentations
Valuation gap still significant – The notable gap in valuation ($2.4B vs. $181M) in favor of Sage reflects the strength of SAGE-547’s data package. Going after the severe end of the spectrum allowed Sage to get more credit and share appreciation based on very small studies. The complete lack of indication overlap makes it impossible to compare the two drugs and it is hard to speculate how ganaxolone would perform in Sage’s indications and vice versa. A preclinical poster presented by Sage suggests SAGE-547 is more potent in some assays, although both drugs demonstrated good efficacy. Sage also has a portfolio of next-generation molecules with better pharmacologic properties, including orally bioavailable drugs but these agents are still preclinical.
My working hypothesis (which I discussed two months ago) is that although SAGE-547 may be a better drug, there is a reasonable likelihood that the two drugs are comparable. SAGE-547 cannot be pursued as a classic anti-seizure drug because it is an injectable agent but an IV formulation of ganaxolone (expected to enter the clinic this year) can be tested in Sage’s high profile lucrative indications and potentially compete with SAGE-547.
Marinus is well positioned in depression – Last week’s announcement makes things even more interesting since PPD (as well as other forms of severe depression) may require prolonged treatment preferably without hospitalization, where ganaxolone’s oral bioavailability is a clear advantage. Realizing this, Sage intends to eventually pursue PPD with one of its oral next-generation compounds, which are expected to enter the clinic by year-end 2015 (phase I will likely be healthy volunteers). Marinus, on the other hand, can easily start a clinical program with ganaxolone which is in phase III trial for epilepsy and has a safety database comprising more than 1,000 patients. Ganaxolone’s well characterized safety profile (which enabled Marinus to pursue pediatric indications) cannot be over-estimated in indications like depression, where safety is often more important than efficacy.
For the first time, Marinus can leapfrog Sage and beat it to market in one of Sage’s indications. This may be the reason why for the first time, Marinus and Sage traded in tandem.
It is important to note that Marinus is still a high risk company and will remain one until it can provide an efficacy signal in depression. Even if Marinus pursues PPD, results are likely 9-12 months away. By then, the company will have results from its pivotal trial in epilepsy.
IMGN – Breaking the ADC curse?
Immunogen (IMGN) was one of the clear winners of ASCO 2015 based on preliminary data for mirvetuximab soravtansine (IMGN853). The company reported a 53% (9/17) response rate (including one complete response) in patients with folate-receptor alpha (FRα)-positive platinum-resistant ovarian cancer. This may trigger the long awaited shift in sentiment around ADCs following two challenging years, as I discussed several months ago.
Impressive activity… – This level of single agent activity is rarely observed in solid tumors, let alone with antibody-based therapies. In fact, this might be one of the highest response rates observed with antibodies or ADCs in solid tumors. Roche’s Kadcyla, which utilizes another ADC technology from Immunogen, is the only ADC approved for a solid tumor. In its phase I in HER2+ breast cancer, Kadcyla demonstrated a 37.5% (6/16) response rate at clinically relevant doses.
…but program is still risky – Acknowledging the high response rate, mirvetuximab is still a high risk program with multiple open questions. To begin with, it remains to be seen if this high response rate will be replicated in larger studies. Typically, oncology drugs generate a lower response rate in large studies compared to that observed in small trials. In addition, using a more rigorous assessment that requires a second scan to confirm responses, only 5 of 9 responders qualify as confirmed responses. Of the remaining 4, 2 responses were short-lived and two are awaiting confirmation. Therefore the confirmed response rate is currently 29.5% (5/17) with a potential to increase to 41% (7/17).
Response duration critical for accelerated approval – Although responses in 6 of 9 patients were still ongoing, the data set is too immature to conclude anything about response duration. Durability of response is a crucial factor in getting an accelerated approval, which Immunogen intends to pursue using a single arm phase II. The non-official bar for accelerated approval is a 30% confirmed response rate and a 6-month durability of response. At ASCO, only one response was ongoing for 6 months while the rest of responses had a shorter duration due to progression or limited follow up.
Source: Moore K , ASCO 2015
Pivotal trial planned for H2:2015 – Immunogen plans to start a pivotal single-arm phase II in FRα+ ovarian cancer. Although specifics were not given, the study will probably enroll 100 patients with response rate as the primary endpoint. Given the excitement around mirvetuximab and the lack of promising experimental agents in ovarian cancer, enrollment should be very quick with potential data and accelerated approval in Q4 2016 and mid-2017, respectively.
In parallel, Immunogen plans to evaluate mirvetuximab in combination regimens for earlier stage patients. The company is also evaluating mirvetuximab in additional FRα+ tumors including endometrial and lung cancer. So far data in these indications have been limited and did not include meaningful clinical activity.
Significant commercial opportunity – FRα+ ovarian cancer represents a ~$600M opportunity in the US assuming 14,200 annual deaths, 60% of cases with FRα+ and a $70k cost per patient. If brentuximab gets to earlier lines of treatment, the US potential increases to $1B. Immunogen believes that ~2500 patients will be initially eligible for the drug based on the indication pursued for accelerated approval, which represents a $175M opportunity.
Limited direct competition – One of the most compelling features of mirvetuximab is the lack of other ADCs against FRα in clinical development. Although other ADC companies will likely pursue FRα based on the recent data, Immunogen should have the market to itself for several years should mirvetuximab gets approval in 2017. Endocyte (ECYT) is developing small molecule drug conjugates (SMDC) targeting FR but to date single agent activity has been minimal.
There are other experimental agents in development for ovarian cancer that may compete with with mirvetuximab. These include Roche’s Anti-NaPi2b ADC (DNIB0600A), which generated a 50% response rate in NaPi2b+ ovarian cancer. Results from a randomized trial comparing DNIB0600A to Doxil are expected this year. Immunogen’s Mirvetuximab and Roche’s DNIB0600A have the potential to have a meaningful impact in ovarian cancer as both FRα and NaPi2b are expressed in the majority of cases.
We are selling our positions in Genmab (GEN.CO) and Morphosys (MOR.DE) for a profit of 972% and 404%, respectively. Even in light of daratumumab’s imminent approval and, Genmab’s valuation of >$5B more than factors in daratumumab’s 2B-$3B sales potential. The decision to sell Morphosys was based on the recent setbacks with Roche’s gantenerumab and MOR202, which was returned by Celgene.
We are adding new positions in Xenon (XENE) and Trevena (TRVN) which are developing promising pain products. Both companies are expected to report data from well-powered randomized trials for their respective programs in the coming months. We are also initiating a position in Ocata (OCAT) based on exciting data for its cell therapy in dry AMD.
Portfolio holdings – June 14, 2015