Many on Wall Street who follow Seattle-based Oncothyreon know it as the developer of Stimuvax, a product designed to stimulate the immune system to fight cancer cells. But what fewer realize is that Oncothyreon (NASDAQ: ONTY) has long envisioned a product that could trump its original Stimuvax, and it has only recently gotten the money to put this idea to the test in clinical trials.
The idea for a “son of Stimuvax” is a big part of the reason why investors recently poured $54 million into the company after what was interpreted as bad news for its lead product candidate. There are some very interesting scientific and business reasons why Oncothyreon wants to test the second-generation product, called ONT-10. It is attached to a more potent immune-boosting compound than the original, and the new drug is designed to stimulate a sort of two-pronged immune response, instead of just the T-cell reaction sparked by the original.
Both of these product candidates aim for a marker known as MUC1 that is found on a wide variety of tumor cells—including those in common malignancies of the lung, breast, ovarian, prostate, and other cancers. So if Oncothyreon can gather data that says the second-generation product offers important advantages to patients, it could be quite lucrative. That’s because not only could the product be useful for many cancer patients, but Oncothyreon owns the full commercial rights to ONT-10, and doesn’t have to split the profits with a partner, like it does on Stimuvax with Germany’s Merck KGaA.
“If Stimuvax works, we might decide to take ONT-10 all the way through on our own. We own it. We could have the follow-on product to ourselves,” says Oncothyreon CEO Bob Kirkman.
The differences between the two products could end up providing some fascinating scientific answers about what matters in the development of drugs that stimulate the immune system to fight cancer, which are sometimes called therapeutic cancer vaccines.
A little science is required to see to the differences between the two products. Stimuvax has two key components. The first is a 25-amino acid peptide segment of the MUC1 protein, which doesn’t have any sugars attached. The second piece is an immune-boosting compound known as an adjuvant—in this case a natural product from GlaxoSmithKline called MPL that is derived in bacterial cells. The combination of the MUC1 marker, known as an antigen, and the MPL adjuvant is supposed to trigger the immune system’s T-cells to recognize cancer cells as foreign invaders worthy of attack, like a flu virus.
ONT-10 also has two components, which are quite different. The backbone of the product is a longer, 43-amino acid snippet of MUC1, which does have short sugar molecules attached—which Kirkman says is thought to more closely resemble how MUC1 appears on cancer cells. Then, to make sure the immune system gets the hint, Oncothyreon has attached its own synthetic adjuvant compound that is thought to elicit a more potent immune reaction than MPL. By making those changes, Oncothyreon is hoping to trigger a broader immune system attack against cancer cells, by mobilizing both antibodies and T-cells, Kirkman says.
Olja Finn, the chair of the Department of Immunology at the University of Pittsburgh School of Medicine, said she’s encouraged by the changes the company has made to the second-generation product. She says MUC1 remains a great target for developing cancer vaccines, and she was originally “very excited” by Oncothyreon’s mid-stage clinical trial experience, which suggested that Stimuvax might be able to help extend the lives of people with Stage IIIb lung cancer.
But while Finn says she was happy to see that program advance to the final phase of clinical trials—now being conducted by Merck KGaA—she says many of her academic peers “lamented the fact that Stimuvax did not have a strong adjuvant to increase its performance in the Phase III setting.” Now that ONT-10 has been engineered to use a more potent, synthetic adjuvant or immune-boosting compound, and the rest of the drug has been engineered to more closely mimic the MUC1 peptide that appears on cancerous cells, she says it ought to spark a more robust immune reaction than the original product.
“This modification of the peptide, plus a strong adjuvant should be an improvement over Stimuvax,” Finn says. “A direct comparison in a two-arm randomized Phase II will be needed to confirm that in people.”
Oncothyreon also has clear business reasons to root for ONT-10 over the original. Merck KGaA pays the expenses and makes the decisions on development of Stimuvax, leaving Oncothyreon with what Kirkman says is a “mid-teens” percentage royalty on sales if the drug reaches the market in North America, and a “very high-single digit” royalty in other parts of the world. But with ONT-10, Oncothyreon still owns 100 percent of the commercial rights to the product, and doesn’t owe anybody a royalty for the adjuvant component, which it developed internally. Merck KGaA has the “right of first negotiation” to co-develop ONT-10 with Oncothyreon, but Kirkman says that leaves him a lot of options. It’s possible that Oncothyreon could develop the second-generation product on its own, or choose another partner besides Merck KGaA for co-development if it can get better terms, he says.
Like most things in biotech, it will take a long time to get satisfying answers about how good both cancer vaccines really are. Investors sold off Oncothyreon shares in March when the company said it would take until 2013 to get the final results from the ongoing Phase III trial of Stimuvax in lung cancer patients, known as Start. And Oncothyreon’s first trial of ONT-10 is still quite preliminary—a Phase I safety study that will assess people’s immune reactions to the product in a variety of doses. That small study should yield data in 2013, Kirkman says.
Oncothyreon has seen a big surge in the number of shares held in a short position—essentially a case where investors bet that the stock will fall—so there are certainly plenty of people who doubt Stimuvax and the company’s pipeline. And Kirkman bristled about the market reaction to the Stimuvax news from March, in which Merck KGaA said it will need more follow-up time before it can hope to show a benefit.
But when we spoke—just days before Oncothyreon pulled the trigger on a $54 million underwritten stock offering—Kirkman said there are people on Wall Street who fairly recognize the potential of not just Stimuvax, but the second-generation product, too. And the money they’ve provided will certainly help push forward this program in clinical trials, after it spent a couple of recession years on the corporate back burner.
Those days are now behind the company. While Seattle-based Dendreon has helped popularize the concept of cancer vaccines on Wall Street, and Bristol-Myers Squibb has had success with a new immunotherapy, no other biotech company has broken much new ground in the field. Oncothyreon is hoping that by aiming two vaccines against one prominent target, it will get clear answers on what kind of immunity it takes to really rev up the immune system most effectively against cancer. “From a scientific perspective, it’s a fascinating question to ask,” Kirkman says.
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