A Guess At What’s Behind The Adaptimmune Therapeutics PLC – ADR (NASDAQ:ADAP) Clinical Hold

Adaptimmune Therapeutics PLC – ADR (NASDAQ:ADAP) just announced that the FDA has placed a clinical hold on its pivotal oncology trial. The news came after market close, and the company has taken a close to 5% hit premarket on Thursday, but chances are we we see some further selling pressure come US open as markets digest the news.

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The problem is, there’s not that much to digest. Sometimes, this can be a positive. Others, it can leave markets with a worst case scenario belief, and this might be what plays into sentiment as we head into todays session. Whatever’s ahead, here’s a look at the drug in question, and what we know about the halt.

The drug is a T cell therapy that targets what’s known as the NY-ESO peptide. Various types of cancer cells express an antigen called the NY-ESO. However, in many cancers, the tumor cells have a way of masking these antigens from the immune system – this is why they don’t get recognized as pathogenic and can proliferate freely. The treatment that Adaptimmune has developed is a vaccine that – when introduced to the body – teaches the immune system that this antigen – the NY-ESO antigen – is foreign. Once the immune system has learned this fact, it sets about seeking out and recognizing other cells that express the antigen – specifically, the tumor cells associated with the cancer being targeted. It recognizes them, and recruits T cells to come and attack them. T cells attack, phagocytes clean up  the mess and the cancer recedes. This is the core of pretty much all T cell vaccine therapies.

Adaptimmune is running a host of trials to examine the safety and efficacy of its proprietary cancer vaccine in a number of different types of cancer, including ovarian, melanoma, NSCLC, multiple myeloma and synovial sarcoma. All of the trials are being run in collaboration with pharma giant GlaxoSmithKline plc (ADR) (NYSE:GSK).

The one that has just been put on clinical hold is looking at a type of sarcoma called myxoid round cell liposarcoma (MRCLS). Soft tissue sarcoma’s (the type that Adaptimmune is focusing on) are cancers of fatty tissue. They aren’t that common, and prognosis isn’t that bad if caught early, but they still have the potential to cause death in some cases. There have been a few notable cases over the past decade or so – Mayor Rob Ford of Toronto being probably the most well known in recent times.

Anyway, that’s a digression. This specific type of sarcoma, MRCLS, generally locates in the limbs, and its cells express the NY-ESO antigen, making it an ideal target for Adaptimmune’s drug.

So what happened with the trial? Well, as mentioned, there’s not that much information available as things stand. We know that its not related to a safety issue, which is why the markets haven’t sold off too heavily pre-open on the company. If it was a safety issue, chances are the whole program of GSK collab trials would be halted.

Here’s what the company says officially:

“…this partial clinical hold requires a number of questions to be answered before we can start a new MRCLS trial intended to be used for registration purposes.”

The questions relate to CMC, which is the chemistry, manufacturing and controls element of the trial (essentially, how is the company going to make and deliver the drug to sites) and also regarding trial design. As a guess, and using these two inputs as guidance, we’d say the questions are something along the line of whether the company can supply dosing to the correct degree (as outlined in the trial protocol), and at the right time, to trial sites.

So what’s the bottom line? We believe this one is going to be a quick resolution situation, and that the company will get back on track with the pivotal within a thirty-day period. That’s speculative, and optimistic, but the fact that its not a safety issue, combined with the fact that the company has been allowed to continue with its ongoing trials, allows for a spot of optimism.

As such, this may well be an opportunity to pick up an exposure to Adaptimmune at a discount on an event driven pullback. Let’s see how deep the pullback runs during today’s session.

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