AML (Acute myeloid leukemia) remains one of the few blood cancers in which no progress has been made for decades. This is in contrast to other blood cancers where novel treatments have turned fatal conditions into chronic diseases with long term remissions. Prominent examples are CML, which today has a low mortality rate and multiple myeloma where median survival is approaching 8 years and counting. The recent launch of Imbruvica and Gazyva followed by the anticipated approval of ABT-199 is expected to have a similar impact on CLL as well as on certain subtypes of B cell lymphoma.
Light at the end of the tunnel
Prognosis for newly diagnosed AML patients is grim, especially in older patients, with bone marrow transplant as the only potentially curative option. AML is still treated with chemotherapy, which has significant toxicity issues as well as limited impact on survival (if not followed by transplant).
All attempts to introduce novel targeted therapies for AML failed miserably. The only exception was Pfizer’s (PFE) Mylotarg (Anti-CD33 ADC), which had been approved in 2000 but was subsequently withdrawn from the market due to safety issues and limited benefit (Recent data with Mylotarg in younger patients imply the drug may have a role in AML after all).
Today, for the first time, there is reason for cautious optimism thanks to a growing pipeline that employs a multitude of therapeutic approaches. This growth emanates from a better understanding of AML’s biology as well as “technical” advances in the field of immunotherapy (ADCs, bispecific antibodies, CARs). Consequently, researchers can tailor drugs for specific AML subsets on the one hand and introduce more potent antibody based treatments on the other.
Below is a recap of the most promising AML drugs in development. Although most programs are still years from approval, many drugs should generate significant clinical data by YE2015. From an investment stand point, key names to follow are Agios (AGIO), Foundation Medicine (FMI), Ambit (AMBI), Seattle Genetics (SGEN), Epizyme (EPZM) and Macrogenics (MGNX).
Targeting driver mutations
One of the striking differences between the treatment paradigm of solid and liquid tumors is the role of biomarkers for patient selection. With most solid tumor breakthrough drugs, patients have to be selected based on specific mutations (EGFR, ALK, BRAF, HER2 etc.). In contrast, breakthrough drugs for blood cancers (Revlimid, Imbruvica, Velcade, Rituxan) are given to the entire patient population without the need of a companion diagnostic. In that sense, the current strategy in AML resembles the solid tumor approach, as the three most promising drugs are being studied in biomarker-defined subgroups of AML.
Agios – the most promising AML drug(s) in development
The most promising agent in development is Agios’ IDH2 inhibitor, AG-221. Agios, the pioneer of cancer metabolism, chose IDH2 (a metabolic enzyme) as a target based on a known mutation in the enzyme found in 15% of AML cases. Earlier this year the bet paid off and Agios reported impressive results in IDH2+ AML. The most recent update includes 9 CRs (8 of which were CR/CRp) and 5 PRs, leading to a response rate of 44% (14/32). Notably, most responses appear durable, which is unusual in AML as in most cases the effect is lost or treatment becomes too toxic for the patient.
Agios’ current market cap already factors in approval and good market penetration for AG-221. Potential upside could come from expansion to other IDH2-mutated tumors as well as initial results for the company’s IDH1 inhibitor (AG-120), which is in two phase I for solid and liquid tumors, respectively. Updated results for AG-221 and possibly AG-120 are expected at ASH in December.
Another way to get exposure to the Agios story is through Foundation Medicine, which will sell its diagnostic test as a companion diagnostic for both AG-221 and AG-120. On top of the direct sales potential ($100M in test for AML worldwide), AG-221’s approval (may come as early as 1H:16) will be the first opportunity for FMI to get an FDA approval and reimbursement. Foundation Medicine is collaborating with other companies, which plan to use a test from FMI as companion diagnostic for their drugs. Clovis (CLVS), for example, is using FMI’s test to identify patients sensitive to its PARP inhibitor (rucaparib). On Clovis’ earnings call, management revealed that the pre-defined gene signature for “BRCAness” is performing well and initial results are expected in November at the EORTC meeting.
Ambit – A promising drug despite the negative sentiment
Ambit’s quizartinib (FLT3 inhibitor) is not popular among investors but should still be viewed as a promising agent that has the right ingredients: Clear efficacy as monotherapy, a biomarker-defined population, good safety profile, regulatory visibility and a favorable phase III trial design. The drug entered phase III in April with top line results expected in early 2016 (Interim analysis in 2H:15).
I reviewed quizartinib’s advantages and disadvantages here (last section). The drug’s main value proposition is its ability to bridge FLT3+ patients to transplant without significant side effects. Based on the large phase II experience, more than a third of the patients were bridged to transplant, which is the only option for achieving long term remission. Today, physicians use intensive chemotherapy as a bridge to transplant but success rates are lower and in many cases patients are too old and frail to tolerate side effects. Quizartinib’s mode of action and benign safety profile make it ideal as induction therapy for FLT3+ AML but also for combination regimens and as maintenance therapy.
In the ongoing phase III, relapsed/refractory FLT3+ patients are randomized to quizartinib or standard chemotherapy with overall survival as the primary endpoint. In this population, the ultimate goal is reaching transplant in eligible patients. The protocol also allows patients on the quizartinib arm to re-initiate quizartinib treatment after transplant. This may further enhance the drug’s effect and increase likelihood of success. The company expects to present data in the maintenance setting at ASH and management already hinted results are promising.
Even when assuming low probability of success in the ongoing phase III as salvage therapy, quizartinib has a reasonable likelihood of reaching the market in other settings given its clear activity in FLT3+ AML and combinability. For a company which would like to establish a presence in AML and is willing to fund a broad development program, quizartinib is the only high-quality late-stage asset available. This makes quizartinib an attractive asset as biopharma companies are anxious to fill their advanced stage pipelines.
Ambit’s management indicated there are ongoing discussions around an ex-US licensing deal. Such a deal may alleviate the market’s concerns and support a broad development program. From a financial perspective, Ambit is also an obvious acquisition target given its $110M market cap ($53M in cash). For a 100% premium ($220M), an acquirer can get a phase III program with sufficient funds for phase III completion and global rights for a drug with a $1B market potential.
Epizyme – Waiting for updated data in 2014
Epizyme develops inhibitors for HMTs (histone methyltransferases), a group of enzymes that play a role in regulation of gene expression. The company is focusing on oncogenic HMTs that function as growth drivers in cancer. Its most advanced program, EPZ-5676, is a DOT1L inhibitor and is intended for a subset of AML with MLL mutations where DOT1L serves as an oncogenic driver. The drug has been licensed to Celgene in 2012.
Preliminary findings from EPZ-5676’s phase I presented in November 2013 demonstrated some hints of activity in MLL+ AML but were mostly uninspiring. The company plans to present updated results later in 2014, which will hopefully show more robust activity at higher doses with more intensive dosing regimens. Epizyme already disclosed 2 objective responses within one of the cohorts (unclear whether responses were in AML as the trial enrolls patients with additional tumor types). Until more data are presented, development outlook for EPZ-5676 in AML remains uncertain.
From an investor perspective, attention is shifting from EPZ-5676 to Epizyme’s EZH2 inhibitor (EPZ-6438), which is being developed in collaboration with Eisai. The company recently disclosed encouraging signs of efficacy early in phase I, including PRs in two patients with B cell lymphomas.
Antibody drug conjugates
It is hard to predict what approaches will be the winners in AML but one can safely assume more chemotherapy is not the answer. After years of failed attempts, we know today that throwing more chemotherapy at AML may have a short term anti-leukemic effect but does not improve survival and may lead to early mortality. Sunesis (SNSS) and Cyclacel (CYCC) both have novel chemo agents in phase III for AML but the likelihood of success is low given poor experience to date.
Antibody-drug conjugates (ADCs) are designed to allow targeted delivery of their potent payloads specifically to AML cells. Their main advantage is the limited systemic exposure which should allow higher and longer exposure to treatment without causing severe side effects.
CD33 remains the target of choice for both Seattle Genetics and Immunogen (IMGN), which are using their novel ADC technologies. Interestingly, 3 different CD33-targeting agents failed to date in demonstrating a relevant clinical effect: Mylotarg (ADC using Wyeth’s ADC technology), lintuzumab (a naked antibody from Seattle Genetics that reported promising phase I data that were not corroborated) and AVE9633 (Sanofi’s ADC based on Immunogen’s technology that had limited efficacy).
This time Seattle Genetics and Immunogen rely on new ADC formats with proprietary DNA-binding payloads that are claimed to be >100-fold more potent than those currently used. This will hopefully enable them to unlock the therapeutic potential of CD33 as a target for AML. SGN-33A is in phase I with data expected in December at ASH. IMGN779 is expected to enter the clinic in 2015. There is considerable expectation build-up for SGN-33A going into ASH. The phase I readout is viewed as the company’s 2nd most important catalyst in 2014, after phase III results for Adcetris as maintenance therapy (The AETHERA trial).
Immunotherapy – uncharted waters, high hopes
The phenomenal activity observed with bone marrow transplant (in some cases) is the ultimate proof that mobilizing the immune system can be very effective in AML. Immunotherapy treatments for AML are still early in development so they do not have clinical proof of concept. Programs in development include bispecific antibodies designed to redirect immune cells to attack AML cells, cell therapies such as CARs and antibodies against immune checkpoints.
For immunotherapy programs, CD123 is the most popular target. CD123 is a validated target in AML based on experience with Stemline’s (STML) SL-401, a toxin-fusion directed at CD123. SL-401 demonstrated anti-cancer activity in 25% of AML patients but only 3% achieved a CR. This may be explained by limited treatment duration and a narrow therapeutic window associated with bacterial toxins. SL-401 generated promising activity in a rare blood cancer related to AML (Blastic plasmacytoid dendritic cell neoplasm or BPDCN). Phase I data recently published in “Blood” included responses in 7 of 11 BPDCN patients after one treatment cycle. Of note, four of the responses were ongoing at the time of publication including a durable CR of 20 months.
Macrogenics has the first and only bispecific antibody for AML in clinical testing. MGD006 (anti CD123xCD3) entered phase I earlier this year and is expected to generate data in 2015. Xencor (XNCR) is also developing a bispecific CD123xCD3 antibody, expected to start phase I in late 2015. J&J (JNJ) recently licensed an Fc engineered antibody directed against CD123 from CSL, currently in phase I.
Although companies which develop CARs do not focus on AML as their first indication, there are academic institutions with programs in phase I or approaching phase I. A group from the Peter MacCallum Cancer Centre in Australia published preliminary findings with a CAR targeting Le-Y. Signs of activity were observed among 4 AML patients, but none qualified as an objective response. A phase I for a CD123-targeting CAR from City of Hope Medical Center is expected to start later this year.
Interestingly, AML is one of the only tumor types that are not pursued with PD-1 antibodies (Conflicting evidence about PD-L1 expression in AML). The most advanced immune checkpoint inhibitor is BMS’ (BMY) and Innate Pharma’s lirilumab (anti-KIR), which is designed to stimulate NK cells in contrast to PD-1 antibodies that activate T cells. NK cells are considered “early responders” in the immune cascade and although they have been implicated in anti-tumor activity, the approach of targeting an inhibitory NK receptor is still not validated.
Lirilumab is being evaluated as maintenance therapy for AML in a large phase II. As monotherapy, lirilumab had limited efficacy in AML but the indication was selected based on strong circumstantial evidence from stem cell transplant studies that demonstrated a correlation between KIR interactions and long term outcome.
Below is a table of upcoming data readouts and trial initiations. 2014-5 is shaping as an exciting time frame for AML research with multiple catalysts.
We are selling one of our Incyte positions in order to keep exposure below 10%. We are initiating new positions in Aerie Pharmaceuticals (AERI) and Stemline as well as adding another position in Foundation Medicine.
Portfolio holdings – August 24th, 2014