Thursday 17 October 2013

Biotech Buzz Post No. 22 - EXEL

Exelixis (Nasdaq: EXEL) gained FDA approval in November 2012 for its first drug, a receptor tyrosine kinase inhibitor called Cometriq.      

Exelixis (Nasdaq: EXEL) – A report from the frontline

Diseases desperate grown by desperate appliance are relieved, or not at all.” -  Hamlet, Act IV, Scene 3.


This week has been a great week to be me. On Monday, I joined my new firm of Baillieu Holst, ending the enforced ‘gardening leave’ that was imposed on me by Bell Potter Securities when I left them in June (which, by the way, was unpaid for three months – go figure). Then on Thursday I met a patient with an interesting story to tell about a newly approved drug from an emerging US company. Let me tell you about my new job doing equities research at Baillieu Holst and then I’ll tell you about the patient who’s doing well with the new drug.

Baillieu Holst is an Australian stockbroking firm with a long history and a great reputation down here. The firm is now seriously building its institutional business and I believe that under the current leadership we can grow to be the No 1 majority Australian-owned firm in our capital market. I’ve joined Baillieu Holst with a mandate to build its Life Sciences coverage, and I confidently predict that in the not-too-distant future we will become the No 1 house for healthcare and biotechnology transactions in Australia, given the high level of expertise that’s already here, combined with my own knowledge base from covering the sector for the last twelve years.

One of the things I find gratifying about going to work for Baillieu Holst is the fact that there’s a lot of heritage in this firm. Edward Lloyd Baillieu (1867-1939), known as 'Prince', and his brother Richard Percy Clive Baillieu (1874-1941), known as Joe, started E.L. & C Baillieu in 1889, so we’ve seen a fair few market cycles over the last 124 years. It’s fair to say that the Baillieu family, led by Prince and Joe’s elder brother William Lawrence Baillieu (1859-1936), were the leading players in the building of the Australian economy from the 1890s through to the 1930s. Their legacy, through the Collins House group of companies they were associated with, lives on today in names like the ANZ Bank, Rio Tinto, Amcor and Pacific Brands. I’ll tell you more about the Baillieus and how they helped make Australia rich in a future Blog entry. I like to think that if Willie, Prince and Joe were around today they’d be founding and investing in Australian biotech and medical device companies, because that’s where a fair bit of new wealth is going to be created here in Australia as the 21st Century progresses.

Now let me tell you about the patient that I met on Thursday.  Meeting a patient is a big deal for us biotech analysts because we spend so much time looking at abstract stuff like p values, response rates and composite endpoints, but rarely get to meet the real people who sit behind that data – real people who can experience anxiety about their illness, face bewildering treatment choices, and have a whole bunch of other muck to deal with, but still bravely show up at the infusion room to be the human guinea pigs we need to move this whole biotech thing forward. My new friend told me in our first conversation that he had prostate cancer. Before I could tell him that treatment outcomes for that cancer were fairly good these days – the 15 year survival rate is 93% - he added that it was metastatic. That’s not so good. If longevity is your game don’t get diagnosed with metastatic Castration-Resistant Prostate Cancer (CRPC). The castration-resistant part means you’ve already cut off the supply of testosterone feeding the tumour (chemically with LHRH agonists or surgically) and the tumour is still growing.  The metastatic part means the tumour has spread to other organs, most notably the bones. That generally means you’ve got a little over a year left (click here), with perhaps another drug like taxotere buying you some time. This didn’t seem to bother my friend, who had failed on taxotere but seemed to have calmly accepted the whole prostate cancer curveball. Maybe it was because he was a stockbroker by profession and still working – in this industry natural-born optimists are more likely to succeed. However my friend had another thing going his way. Have you heard, he said, of cabozantinib? He was in a clinical trial. No, I hadn’t, I replied. We googled it. It was from Exelixis (Nasdaq: EXEL), the drug developer from South San Francisco, Ca.  Wow, I said, this company is capitalised on Nasdaq at US$999m. I might buy some, said my friend, who also told me during this conversation that there’d been a reduction in his tumour size at about the third months after he’d enrolled, and he hadn’t experienced any adverse events other than perhaps some mild neuropathy, which is something you already get with taxotere.  I told him I’d take a look ahead of this Blog post.

Now I think I know why my new friend seems to be doing well, other things being equal. Cabozantinib is Cometriq, a small molecule which gained FDA approval in November 2012 for the treatment of metastatic medullary thyroid cancer. It was Exelixis’s first drug after 13 years as a public company. As with all these cancer drugs the first indication is just the beginning. ‘Medullary’ thyroid cancer is a subtype of thyroid cancer that got its name because, when pathologists first saw this kind of tumour, they were reminded of the grey-coloured soft tissue in the medulla, or brainstem.  It's a rare condition. Medullary thyroid cancer only goes metastatic in around 500-700 patients a year in America. For these patients at Phase III Cometriq improved Progression-Free Survival (PFS) to 11 months versus only 4 for placebo. However the big money for Exelixis will come from where the drug goes next. Cometriq is now in two Phase IIIs in metastatic CRPC, one of which has my friend as a trial subject. The drug started Phase III in metastatic Renal Cell Carcinoma in May 2013, and a Phase III trial in advanced Hepatocellular Carcinoma started in September.

The big news for Exelixis in 2014 will be top-line results from the metastatic CRPC trials, called COMET-1 and COMET-2. The Phase II data, from 171 men, suggests that this drug seems to work. You know it’s good when the trial report, as published in the Journal of Clinical Oncology, tells us that randomisation of patients to either treatment or control ‘was halted early based on the observed activity of cabozantinib’. Where men did get placebo, before this decision was taken, the median PFS was just under six weeks. For the men who got Cometriq, median PFS was 23.9 weeks (p<0.001). The investigators also found a reduction of soft tissue and bone lesions, and, importantly, lower levels of pain. When cancer metastasises to the bones it really, really hurts, to the point where you need narcotics like oxycodone to kill the pain. At Phase II Cometriq was able to cut narcotic use in half, which is great news given how controversial opioid use in medicine has become over the last decade or so. Exelixis was so excited about the effect of its drug on bone pain that it wrote a pain palliation endpoint into the COMET-2 trial.

Cometriq is able to work its anti-tumour magic because it’s an inhibitor of multiple receptor tyrosine kinases. I’ve written in the past about a particularly successful tyrosine kinase inhibitor called Gleevec, the Novartis drug for the treatment of Chronic Myeloid Leukaemia (click here for that post) which did US$4.7bn in sales last year. Since Gleevec was FDA approved in 2001, various other tyrosine kinase inhibitors have come on the market such as Sutent and Inlyta from Pfizer, Tarceva from Roche, and Tykerb from GSK. The attraction of tyrosine kinases is that they are commonly found in those cellular signalling pathways that go wrong in cancer. Kinases are simply enzymes that attach a phosphate group to a particular target molecule, the target for tyrosine kinases being the amino acid tyrosine (others act on serine and threonine). When this attachment takes place it changes the target molecule, which induces that target to act on other downstream molecules until the phosphate-based signal has made its way to the nucleus of the cell. Receptor tyrosine kinases sit on the cell surface where signals come in from the outside. If something goes wrong in one of those signalling gateways, cells can end up processing a continual and uncontrolled stream of messages to grow and divide, resulting in cancer. Block that gateway with a tyrosine kinase inhibitor and you shut off the faulty signals. There’s dozens of  known tyrosine kinasess, and Cometriq seems to work well as a cancer drug because it can block more than one, with activity against RET, MET and VEGFR2.

Cometriq isn’t the only arrow in Exelexis’s quiver – it has spent the last 13 years building up a strong pipeline of small molecules, most of which hit rogue elements in the bad signalling pathways. XL518, partnered with Roche’s Genentech division, targets a serine/threonine kinase called MEK, part of the RAS/RAF/MEK/ERK pathway.  That drug just generated some great objective responses in a Phase Ib trial in metastatic melanoma where there’s a particular kind of mutation called BRAFV600. Meanwhile GSK is in Phase II with Foretinib, an Exelixis-sourced VEGFR2 and MET inhibitor and Sanofi has gone to Phase II with a couple of drugs that act on the PI3K pathway.  However all eyes with be on Cometriq ahead of the COMET data given the widespread prevalence of prostate cancer – about 240,000 cases a year in the US, with one in six of us guys in line to get it one day – and the potential to be one of the first cancer drugs that can cut the level of pain associated with the disease. Hopefully my friend is in one of the COMET treatment groups and it gives him a chance to see that top-line data come out – and maybe to see Baillieu Holst turn in to the new biotech powerhouse in Australia.








Stuart Roberts, Australian biotechnology analyst, with global focus
+61 (0)447 247 909
Twitter @Biotech_buzz

About Stuart Roberts. I started as an equities analyst at the Sydney-based Southern Cross Equities in April 2001, focused on the Life Sciences sector from February 2002. Southern Cross Equities was acquired by Bell Financial Group (ASX: BFG) in 2008 and I continued at Bell Potter Securities until June 2013. I joined Baillieu Holst in October 2013. Over the last twelve years I have built a reputation as one of Australia's leading biotech analysts. Before joining Southern Cross Equities I wrote for The Intelligent Investor, probably the most readable investment publication in Australia. I have a Masters Degree in Finance from Finsia. My hobbies are jazz, cinema, US politics and reading patent applications filed by biotechnology and medical device companies.

Previous Australian Biotechnology Buzz posts:
Acorda Therapeutics (Nasdaq: ACOR), 10 October 2013.
Advanced Cell Technology (OTCBB: ACTC), 4 September 2013
Alcobra Pharma (Nasdaq: ADHD), 17 September 2013
Amicus Therapeutics (Nasdaq: FOLD), 22 September 2013
Aradigm (OTCBB: ARDM), 8 September 2013
BioSpecifics Technologies (Nasdaq: BSTC), 26 September 2013
Celldex Therapeutics (Nasdaq: CLDX), 9 November 2013
Cellular Dyamics (Nasdaq: ICEL), 3 September 2013
Exelixis (Nasdaq: EXEL), 17 October 2013
ImmunoCellular Therapeutics (NYSE MKT: IMUC), 27 August 2013
Immunomedics (Nasdaq: IMMU), 21 August 2013
Inovio Pharmaceuticals (NYSE MKT: INO), 24 August 2013
Merrimack Pharmcaceuticals (Nasdaq: MACK), 26 August 2013
Novavax (Nasdaq: NVAX), 3 October 2013
Oncolytics Biotech (Nasdaq: ONCY),  22 August 2013
Pharmacyclics (Nasdaq: PCYC), 2 September 2013
Regulus Therapeutics (Nasdaq: RGLS), 23 August 2013
SIGA Technologies (Nasdaq: SIGA) - 30 September 2013
Sunshine Heart (Nasdaq: SSH), 28 August 2013
Synta Pharmaceuticals (Nasdaq: SNTA), 1 September 2013
TrovaGene (Nasdaq: TROV), 15 September 2013
Verastem (Nasdaq: VSTM), 5 September 2013

Disclaimer. This is commentary, not investment research. If you buy the stock of any biotech company in Australia, the US or wherever you need to do your own homework, and I mean, do your own homework. I'm not responsible if you lose money.

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