Full analysis of MERECA top-line results

The Phase II MERECA study is the most advanced trial in the R&D pipeline. Patients enrolled for it (n=88) are newly diagnosed and have metastatic RCC, so this is a severely ill group of subjects. The patients were randomised to control (n=30) and active (n=58) arms. Patients in the active arm received two injections of ilixadencel (on day 1 and day 14), then all patients in both arms underwent kidney tumour surgery. The patients were allowed to recover for six weeks after the surgery before the treatment with Sutent; this gap is mandatory due to Sutent’s toxicity. In total, the patients were followed for 18 months (from the first injection of ilixadencel) according to the trial design. Survival follow-ups will be conducted every six months thereafter.

The primary endpoints of the study are the hard clinical endpoints of median overall survival (mOS) and overall survival (OS) after 18 months in addition to other secondary endpoints, such as median progression-free survival (mPFS), time-to-progression (TTP), objective response rate, CD8+ T-cell intratumoural infiltration, safety and various exploratory endpoints.

On 29 August 2019 Immunicum released the initial top-line results from the MERECA trial, while the complete top-line data analysis was released on 25 September 2019. Of the 88 enrolled patients, 70 were evaluable for overall response (RECIST v1.1; ilixadencel n=45 vs control n=25). Immunicum did not provide p values to indicate the statistical significance of the results, quoting that the trial is exploratory and not powered to detect predefined efficacy measures. Therefore, we can only evaluate the numerical differences. Safety and tolerability results were similar in both arms, implying a good safety profile, ie no added toxicity from ilixadencel. The key top-line efficacy results included:

The patient survival rate at the 18-month check was 63% in the ilixadencel arm and 66% in the control group. P values were not provided, but Immunicum’s interpretation was that the survival rates between the two arms were similar. Using July 2019 as a cut-off date, 57% of patients in the ilixadencel treatment group were alive compared to 43% in the control group. Immunicum included Kaplan-Meier plots in its presentation (Exhibit 2). This is not that common when the data are not mature, but added a lot more detail. There was no visible separation at the 18-month cut-off point (data are set and will not change); however, the curves started to separate after that point (data are subject to change). The projected curves will be updated be updated after each patient survival check, so will change. The separation can widen or narrow.

The missed primary endpoint (survival at 18 months) caused the initial negative reaction in the share price. As Immunicum explained, MERECA was an exploratory trial designed to accumulate data and gain insights into the potential efficacy of ilixadencel. The design of such trials, however, is not straightforward, so the sole focus on the primary endpoint alone may not have been an appropriate way to evaluate the MERECA trial results. Therefore, we believe that the additional readout expected in January 2020 will be more definitive than the predefined 18-month survival primary endpoint. Median overall survival has not been reached at the 18-month cut-off, but should be available in the data update.

Tumour response

The overall response rate (ORR) was similar in both arms (44% ilixadencel vs 48% sunitinib monotherapy). However, in the ilixadencel arm five out of 45 evaluable patients (11%) achieved a complete response, whereas only one of 25 patients (4%) achieved a complete response in the control arm. Other tumour response measures were also stronger in the ilixadencel arm:

So, while ORR was similar, ilixadencel seems to produce a more profound and more durable effect (numerically, as statistical significance evaluation is not available), which may be clinically relevant findings. For example, the first ever oncolytic virus vaccine, Imlygic (Amgen), which is also thought to act as immune primer, was approved after it demonstrated a durable response rate in melanoma patients defined as a complete or a partial response maintained continuously for a minimum of six months. Imlygic did not significantly improve the overall survival in these patients; however, it was approved by the FDA on the durable response endpoint alone.

Tumour infiltration

Immunicum performed the analysis of tumour tissues from the surgically removed tumours from the patients who received ilixadencel injections and those in the control arm (no treatment before surgery, Exhibit 1). The company decided to use a new method to evaluate the infiltration of CD8+ T-cells. Tissue samples were stained with anti-CD8 antibodies and a new computer algorithm was used to quantify the CD8-stained area as a percentage of the total tumour area. The results showed a median stained area of 1.08% in the ilixadencel group vs 0.84% in the control group, the difference being not significant.

The tumour infiltration assessment method was different than used before, so it is difficult to form any conclusions. Immunicum described that the variability of the CD8-stained area within the treatment groups was very high. The infiltration varied substantially even between tumour samples taken from the same patient or in those patients who demonstrated complete response (Exhibit 3). The novelty of the assessment method and variability in findings make it difficult to evaluate the tumour infiltration results.

Our view

The complete response result is a standout when compared to other relevant trials in RCC (Exhibit 4). Recently approved new drug combinations for RCC include pembrolizumab (Keytruda; anti-PD-1) plus axitinib (Inlyta; TKI), nivolumab (Opdivo; anti-PD-1) plus ipilimumab (Yervoy; anti-CTLA-4) and avelumab (Bavencio, anti-PD-L1) plus axitinib. All these novel treatment options include CPIs and demonstrated improved overall survival against sunitinib in their respective clinical trials. The 11% response rate seen in the MERECA trial was better than that achieved by axitinib plus CPI, which varied between 3.4% and 5.7%.

Other measures of tumour response were also numerically better in the ilixadencel arm. Better tumour response is a substantial clinical endpoint in itself, but normally this would increase the expectations of an improvement in survival rates. At this stage, the survival endpoints in the MERECA trial either did not provide a positive signal yet (OS) or have not been reached (mOS). The data seem too premature at this stage to draw any final conclusions. The next patient survival check at 24 months should provide a more definite answer (expected in January 2020).

Following the readout from the MERECA trial, the main focus will be on the other ongoing Phase Ib/II study, ILIAD (ILIxadencel in combination CPIs in patients with ADvanced cancer). The study is being conducted in the US and enrolled the first patient in February this year. ILIAD is expected to recruit 150 patients in total in three solid tumour indications: gastric adenocarcinoma in combination with CPIs, NSCLC and head and neck squamous cell carcinoma (HNSCC). The latter indication will be split into two studies with human papilloma virus (HPV) positive and negative tumour types to also study specific immune activation against HPV-related tumours.

In the Phase Ib part of the trial, ilixadencel will be combined with Keytruda and in the larger Phase II part with Keytruda in NSCLC and Bavencio (avelumab, Merck KGaA and Pfizer) in the other indications. As per the supply agreement, Immunicum will acquire Bavencio at no cost. The interim safety results from the first cohort were announced with no concerns raised. Full safety and efficacy data from the Phase Ib of ILIAD should be released in 2020 and controlled efficacy data from the Phase II of ILIAD should be obtained in 2022. The trial can be broken into two parts:

The ILIAD trial is important because it will be the first study to test ilixadencel in combination with CPIs. As well as safety and efficacy data, it is also designed to gather data to demonstrate the proof of mechanism of action by showing that ilixadencel generates a systemic tumour-specific immune response.

Ilixadencel is being developed as an immune primer for anticancer treatment combinations. Although the advent of new treatments can cause a paradigm shift in managing patients, it is an unavoidable part of the drug development business. When MERECA was initiated, TKIs such as Sutent were the standard of care and over the last several years three new combination treatments have been approved (as discussed above). Looking forward, CPIs appear to be the best combination partner drugs for Immunicum to explore, although in the 20 August corporate update presentation the company discussed ilixadencel’s wider potential beyond CPIs.

CPIs have well-established safety issues, which limit combination potential, so two CPIs can be more effective, but also increase toxicity. Therefore, when it comes to CPI and other anti-cancer therapy combinations, safety is as important as efficacy. From this perspective, immune primers tend to have benign safety profiles, so should combine with CPIs well. Specifically, ilixadencel’s safety data have been very good so far.

By the time full safety results from the Phase I part of the ILIAD trial are known (expected in 2020), Immunicum will also have mature data from the MERECA, liver cancer and GIST trials. We believe Immunicum will decide about further development and which indications to prioritise based on the whole dataset. The company expects this type of data package will also be interesting to a number of potential partners and improve the prospects for a potential out-licensing deal.

Immunicum’s Q219 operating loss of SEK33.2m was higher than the SEK19.3m loss in Q218 and slightly higher than our estimate of SEK30.0m. As expected, R&D costs accounted for the majority of the increase and were SEK25.8m (vs our estimate of SEK23.1m and SEK12.8m reported in Q218), while administrative costs were SEK7.3m vs our expected SEK6.6m and SEK6.4m reported a year ago. The increase in R&D costs was mainly due to the more intensive clinical R&D programme and process development for manufacturing. We have already incorporated increasing R&D in our model and for now keep our estimates unchanged, despite a slightly higher spend than we anticipated. Immunicum is in a transition phase where costs associated with the MERECA trial will wind down, but those associated with the ILIAD trial will increase.

Immunicum had cash of SEK363m at the end of June 2019. Management has guided that its cash runway is to the end of 2021, which is in line with our model. The cash position was substantially improved after the company completed an underwritten fund-raising split between a direct share issue (c SEK178m) and a rights issue (c SEK173m).

Our updated valuation is virtually unchanged at SEK2.0bn or SEK21.6/share. For the time being we have not made any changes to the underlying assumptions in our model (detailed in our last outlook report). The MERECA results were not straightforward to evaluate and one of the key inputs, ie median overall survival, is still missing. We therefore leave our assumptions unchanged until the mature survival data are in.