BerGenBio — Checking its course

BGBIO’s strategy is primarily focused on developing bemcentinib in oncology indications, with the aim of establishing efficacy in proof-of-concept studies for rapid regulatory approval and concurrently developing line extensions to eventually move higher up the treatment paradigms. We believe that commercial prospects for the AXL inhibitor class could be propelled from defined subsets in a handful of cancer types to broader use in AXL-positive tumours (diagnosed by companion drug testing or biomarkers), and potentially in an earlier line of therapy in combination with chemotherapy, immunotherapy or targeted therapies (due to its treatment-enhancing effects).

The ongoing BGBC003 study includes five cohorts in the Phase II expansion. The cohorts to focus on in the near term are Cohort B2: bemcentinib combination with low-dose cytarabine (LDAC) in newly diagnosed or relapsed acute myeloid leukaemia (AML); and Cohort B5: further expansion of the Cohort B2 LDAC combination in relapsed AML. The initial survival data coming out of these cohorts are impressive and will shape the subsequent Phase IIb/III clinical trial design and registration strategy. The FDA has granted bemcentinib both Fast Track and Orphan Drug designations in AML.

Data presented at both the European Hematology Association (EHA) and the American Society of Hematology (ASH) in 2021 from the ongoing Phase II BGBC003 trial have been impressive, in our view. These are immature, but suggest a median overall survival of 13.3 months for bemcentinib in combination with LDAC in elderly relapsed AML patients (Cohort B2/B5, n=18), which is more than double the survival benefit of historical data in this population (c 4.7 months), albeit we should caution the usual caveats apply when comparing data across trials. Complete responses (CR/CRi) have been achieved in 22% of patients, with a clinical benefit rate (CBR) of 72% and these have been durable (mDOR of 32.7 weeks). The regimen is generally well tolerated with anaemia (19%) and QTc prolongation (11%) the most common grade 3/4 treatment-related adverse events (TRAEs) observed, an important feature considering this is a frail patient population. Based on these data, BGBIO is now planning to conduct a randomised, placebo-controlled trial with this combination, which it expects to start H222. Feedback from regulators is expected in early 2022 and will help shape trial design, which we expect could potentially be registrational and enable launch in 2024.

BGBIO will now additionally pursue a first-line opportunity in non-small cell lung cancer (NSCLC), focusing on patients harbouring STK11 mutations. Loss of function mutations occurring to STK11 (also known as LKB1) are oncogenic and have been associated with ‘cold’ tumour environment and inferior responses to immune checkpoint inhibitors (ICIs). Notably, this has been observed for several approved anti PD-(L)1 inhibitors in NSCLC; data that collectively looks compelling, in our view:

BGBIO has presented some initial data at the Society for Immunotherapy of Cancer (SITC), which imply that AXL could be an important contributor in STK11m NSCLC, and bemcentinib could potentially restore or enable therapeutic responses to PD-(L)1 inhibitors. These included preclinical data that indicate bemcentinib enables expansion of tumour-associated T cells (TCF1+ CD8+) and restored sensitivity to pembrolizumab in a mouse model for STK11m NSCLC. This was further supported by some preliminary, anecdotal data from the ongoing Phase II BGB008 trial, which highlighted clinical responses have been observed in all three patients identified with STK11m NSCLC who have received a regimen of bemcentinib plus pembrolizumab.

Additional rights to pursue this opportunity have now been secured from UT Southwestern Medical Center (deal terms undisclosed) and a Phase Ib trial is expected to start during H122. Notably, the FDA has now also granted Fast Track designation to bemcentinib in combination with an anti-PD-(L)1 for patients with STK11 altered NSCLC without other actionable mutations, providing strong external validation of this approach. BGBIO believes STK11m could occur in up to 20% of patients, making it a potentially substantial opportunity.

NSCLC represents a significant opportunity from either a first-line or second-line perspective. Bemcentinib is still being evaluated for second-line use in the broad Phase II BGBC008 trial with several cohorts, including monotherapy and combinations with Keytruda. PD-(L)1s such as Keytruda are increasingly used as a first-line standard of care for NSCLC patients not harbouring a specific driver mutation (c 75% of patients). This has left a vacuum in the second-line setting, with limited treatment options (chemotherapy agents such as docetaxel or Taxol that achieve ORR <10% for a limited duration) creating a high unmet medical need and a large market potential.

Data from the ongoing BGBC008 trial are expected during H122 and should provide a better picture of bemcentinib’s potential positioning in second-line and its utility when combined with Keytruda. Until additional data emerge or additional trials in first-line start, we maintain our forecast $1.2bn worldwide peak sales for in NSCLC, which is only based on second-line use.

BGBIO has presented encouraging combined data from two Phase II studies of bemcentinib in addition to standard of care in hospitalised COVID-19 patients at ECCMID. Post hoc analysis in a subgroup of patients with a higher disease severity (>60% of evaluable patients) showed a significantly reduced likelihood (69%) of progression to ventilation and significantly increased likelihood (88%) of shorter time to recovery or discharge. Treatment with bemcentinib also led to numerically fewer deaths and preclinical studies highlight potential continued efficacy against COVID-19 variants. As a next step, BGBIO has now announced it will use an EU-sponsored platform trial (EU-SolidAct) to confirm these initial efficacy signals, which we believe should enable better access to trial sites and patient recruitment at a reduced cost. This is a randomised, placebo-controlled Phase II/III trial and during H122 an additional arm for bemcentinib is expected to start enrolling patients hospitalised with COVID-19 (up to 500). We believe data generated from this trial could potentially enable approval and launch in 2023 (2022 previously).

The continued roll-out of COVID-19 vaccines programmes will likely lead to widespread vaccination and improved levels of immunity. However, this will continue take time on a global level and questions will likely persist on durability and the impact of mutagenicity, as evidenced by recent concerns stemming from the rise of the Omicron variant. From a global public health perspective, over the near term we believe there remains a need to develop a range of effective treatment options. Bemcentinib has presented a unique dual mechanism of action that could prevent viral intracellular entry and augment the type 1 interferon response (a key antiviral defence mechanism). It does not directly target the SARS-CoV-2 spike protein ACE2 interaction, an approach taken by the majority of vaccines, which could be a significant advantage given that the emergence of new variants with mutations of the spike protein have brought the efficacy and durability of these vaccines into question. Bemcentinib may therefore be variant (spike protein) agnostic and could even find use in combination with approved treatments.

We value BGBIO at NOK4.93bn or NOK55.7/share, versus NOK4.91bn or NOK55.8/share previously. We have rolled forward our model in time, updated for shares in issue and net cash of NOK508.4m at 30 September 2021, which should provide a cash runway into 2023.

Our risk-adjusted NPV is primarily comprised of bemcentinib’s potential use across oncology indications and our assumptions remain unchanged. We forecast $1.2bn worldwide peak sales in second-line NSCLC (NOK42.1/share) and $600m worldwide peak sales in second-line AML (NOK13.4/share), both risk-adjusted to a 35% probability of success. The potential for bemcentinib to be used in early-lines of treatment, such as first-line STKm NSCLC, could provide additional upside but we have not yet incorporated this into our model, as clinical development in these settings has not yet initiated. We assume a licensing deal for bemcentinib (in all oncology) after registrational data in AML and include a pay away to Rigel Pharmaceuticals based on the original in-licensing deal. We have pushed back our forecast launch for COVID-19 to 2023 (from 2022) given communicated timings, but highlight this is remains only a minor component of our valuation (NOK4.4/share). We currently do not assign any value to tilvestamab.