Here’s A Near Term Opportunity In Oncology

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Merrimack

Back in July, we published this piece highlighting Baxalta Incorporated (NYSE:BXLT) and its promising pipeline. One of the candidates we touched on was MM-398, the company’s co-development therapy with Merrimack Pharmaceuticals, Inc. (NASDAQ:MACK). The catalyst we were noted as the one to watch at the time was the FDA Prescription Drug User Fee Act (PDUFA) goal date, which was announced alongside the report that the FDA had granted the MM-398 NDA priority review status. The date we are looking at is October 24, and if we get some positive news, we could see a quick upside revaluation in the market cap of both companies. With this is mind, let’s look at the treatment in question, its performance in trials, and see if we can put an estimate on the likelihood of approval.

First up, a quick note for clarity. Most reading this will already know what is meant by PDUFA goal date, but for those not sure, it simply means the date by which the FDA must make its approval decision on newly developed therapies. Normally, it is ten months from the NDA submission, but in this instance (since MM-398 has accelerated review status) it is 6 months. Since this is the outer limit of the review period, we could see an announcement any time between now and then, so if you’re looking to take a position ahead of a potential approval, sooner is better than later to avoid missing out on the action.

So, MM-398. The drug under review for a pancreatic cancer indication, specifically for the treatment of sufferers that have already received gemcitabine treatment – a standard of care chemotherapy developed and currently marketed by Eli Lilly and Company (NYSE:LLY). The active element of MM-398 is called irinotecan, which is encapsulated inside a lipid casing in its ready-to-administer form. After administration, the irinotecan turns into something called SN-38, which is an inhibitor of an enzyme called topoisomerase – which is where this description of MM-398s MOA gets complicated. Topoisomerase is an enzyme responsible for releasing tension in DNA strands that have become “supercoiled” – an expression used to refer to the twisting of DNA as part of its replication process. Topoisomerase basically cuts the DNA strands into two pieces, unwinds them and reattaches them in an unwound fashion. It’s difficult to describe this any clearer with prose, but if you want some clarification, check out this video (it describes the process far better than we can!). By inhibiting this process in the cells of pancreatic cancer tumors, MM-398 (theoretically) can stop the cancerous cells replicating and halt progression of the cancer.

In the phase III on which Merrimack based its NDA submission, the treatment demonstrated statistically significant efficacy, and met both its primary and secondary endpoints, increasing overall survival from 4.2 months to 6.1 months when compared to a combination of 5-FU and leucovorin (a common chemo treatment for pancreatic cancer at the present). So we’ve got demonstrable efficacy – what about safety and tolerability? Well, chemotherapy treatments are notorious for adverse events, but the FDA will make its decision based on whether it believes the toxicity of the chemo drug is worth putting up with for the extension of survival it offers. In this instance, the most common side effect (20% of tested patients) was neutropenia, which is basically an increased susceptibility to infection. The FDA has approved many chemo drugs with neutropenia side effects in the past – indeed, the condition itself has drugs that treat it – so this shouldn’t be an issue when it come to MM-398.

So what’s the takeaway? Well – we’ve got about a week tops until we find out whether the FDA will approve MM-398. In its phase III, the treatment demonstrated statistically significant efficacy and Merrimack proved that adverse events are no more prevalent, and no more serious, than already approved treatments in the space. From a chance of approval perspective, things look promising. If we get approval, both Merrimack and Baxalta should receive a boost. Keep an eye on press releases from both companies between now and Friday next to see what happens.

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