Imugene — HER-Vaxx Phase II underway

New data on the Phase Ib study of Imugene’s HER-Vaxx B cell cancer vaccine were presented at the AACR 2019 Annual Meeting in Atlanta, Georgia on 2 April by Professor Ursula Wiedermann from the Medical University Vienna, the lead-inventor of HER-Vaxx and member of Imugene’s Scientific Advisory Board.

HER-Vaxx aims to replicate the efficacy of approved monoclonal antibodies that target HER2, such as Herceptin (trastuzumab, Roche), Perjeta (pertuzumab, Roche) and Kadcyla (trastuzumab emtansine, Roche). Herceptin is used in breast and gastric cancers. Herceptin in combination with chemotherapy adds 2.7 months to median survival in gastric cancer.

In the HER-Vaxx Phase Ib study, doses of 10, 30 and 50µg were tested in three cohorts of three to five patients with HER2-positive gastric cancer. Each patient received three injections of the selected dose of HER-Vaxx. Patients were treated with standard chemotherapy in combination with HER-Vaxx; the first HER-Vaxx injection was administered two weeks before the start of chemotherapy and the second and third were administered during the first two cycles of chemotherapy, as shown in Exhibit 1.

Exhibit 2 shows the HER-Vaxx vaccinations stimulated increased production of HER2-specific antibodies in all but one subject; that subject received the lowest dose of HER-Vaxx. There was a clear dose response, in that higher HER2-specific antibody levels were observed in the 30µg and 50µg cohorts than were seen in the 10µg cohort. In the 50µg cohort, two of the three subjects recorded approximately 50-fold increases in HER2-specfic antibody levels.

Exhibit 3 shows that 11 subjects were evaluable for tumour responses. One had no evaluable target lesions, one subject showed a complete response, five showed partial responses and four showed stable disease.

It is not possible to draw any definitive conclusions about the efficacy of HER-Vaxx from the study, because patients also received concurrent chemotherapy. However, looking across the three cohorts there appears to be a dose response, with greater tumour growth in the low-dose cohorts and greater tumour shrinkage in the high-dose cohort.

In an important finding, the HER2-specific antibodies from one of the subjects in the high-dose cohort were effective at inhibiting HER2 phosphorylation. Exhibit 4 shows that when HER2-expressing gastric cancer cells were incubated with serum samples from subject TW02 004, serum from day 56 post vaccination inhibited phosphorylation by 18% compared to pre-vaccination serum. While the degree of inhibition was less than the 64% observed with Herceptin, it is evidence that the HER2-specific antibodies induced by the HER-Vaxx vaccinations are having the desired biological effect. HER2 phosphorylation is a key step in the HER2 signalling pathway, and an ability to block HER2 phosphorylation implies an ability to block HER2 signalling.

Exhibit 5 shows that among the three evaluable subjects in cohort three (50µg dose), the reduction of tumour size in millimetres was very strongly correlated with serum HER2 antibody levels (r2=1.00). This analysis is based on the change in tumour size in millimetres, but tumour responses are more commonly assessed based on the percentage change in tumour size from baseline. Using this criterion, the two subjects in cohort three with partial responses both had similar percentage changes in tumour size (reductions of 45% and 41% respectively).

We have independently performed a similar correlation analysis of the standard tumour response criterion of percentage change in tumour size from baseline, using antibody concentrations read off the graph shown in Exhibit 5. While we estimated the correlation using this response criterion to be somewhat lower (r2=0.79 vs r2=1.00), this would still be considered to be a strong positive correlation between tumour shrinkage and HER2 antibody levels.

The authors of the poster presentation commented that there was only a moderate correlation between antibody levels and tumour responses in cohort two.

We can see from Exhibit 2 on page 2 that the subjects with the highest HER2-specific antibody production reported levels in the range of about 1,000–5,000 ng/ml (or 1–5 µg/ml). If we compare these levels to the steady-state levels in the bloodstream reported from the Phase III study of the marketed monoclonal antibody Herceptin in gastric cancer patients1 (average minimum concentration 33ug/ml and average maximum of 131ug/ml) we can see that the HER2-specific antibody concentrations in the HER-Vaxx high responders were around one to two orders of magnitude lower than those reported in the Herceptin Phase III study.

However, evidence from previous preclinical studies suggests that these lower HER2 specific antibody levels in patients following HER-Vaxx vaccination may be offset, at least in part, by higher potency.

Data from a previous preclinical study showed that polyclonal antibodies produced following vaccination with HER-Vaxx were more potent than Herceptin at inhibiting the growth of breast cancer cells. Exhibit 6 shows that less than half the dose of HER-Vaxx-stimulated antibodies was required to inhibit cancer cell growth to the same degree as Herceptin; 18.75µg of polyclonal antibodies isolated from the serum of rabbits that had been immunised with HER-Vaxx inhibited the growth of breast cancer cells to the same degree (39%) as 50µg of the Herceptin monoclonal antibody.

The first patient was dosed in Imugene’s open-label Phase II study of HER-Vaxx in gastric cancer in March. The Phase II study will measure the efficacy, safety and immune response in 68 patients with metastatic gastric cancer overexpressing the HER2 protein (clinical trials.gov ID: NCT02795988). Patients will be randomised into two arms of either HER-Vaxx plus standard chemotherapy or standard chemotherapy alone. The primary endpoint is overall survival, with progression-free survival as a secondary endpoint.

The study will enrol subjects at multiple centres across Asia, Eastern Europe and India. In these countries there is a higher incidence of gastric cancer and patients have difficulty accessing approved anti-HER2 antibody treatment such as Herceptin and Perjeta. The company aims to complete the study in 2020.

KEY-Vaxx is a PD-1 B-cell vaccine that Imugene in-licensed from Ohio State University (OSU) in 2018. It aims to induce the body to produce polyclonal antibodies that block PD-1 signalling and thus produce an anticancer effect similar to Keytruda, Opdivo and the other immune checkpoint inhibitor monoclonal antibodies that are transforming treatment of a range of cancers.

Imugene had a productive pre-IND meeting with the FDA in February, which provided a clear roadmap for a successful IND submission and subsequent clinical development of KEY-Vaxx.

The meeting was aimed at obtaining guidance as to the preclinical, chemistry, manufacturing and controls and the Phase I clinical development plan to be included in the IND submission for KEY-Vaxx.

The researchers from the KEY-Vaxx programme at OSU presented a poster (Abstract 1453) summarising the preclinical development of KEY-Vaxx at AACR earlier this month. We previously summarised the key features of the KEY-Vaxx preclinical studies, including impressive efficacy in an industry-recognized colon cancer mouse model, in our report published in August 2018. In that study, KEY-Vaxx inhibited cancer growth to a greater extent that the gold-standard mouse anti-PD-1 antibody that was used in preclinical testing of Keytruda and Opdivo. The inhibition reached 90% when KEY-Vaxx was combined with a HER2 B-cell vaccine.

Imugene plans to commence a Phase I study of KEY-Vaxx in Q419. The company has mentioned non-small cell lung cancer as one of the clinical indications under consideration for KEY-Vaxx.

Imugene had already commenced an in-house programme to develop a PD-1 B cell mimotope vaccine before it in-licensed KEY-Vaxx from OSU. The programme was led by Professor Wiedermann at the Medical University Vienna. Imugene, together with the Medical University Vienna, presented findings that provide proof of concept and validation for KEY-Vaxx in a poster at AACR on 3 April.

As part of a proof of concept study, the researchers designed a B-cell vaccine (mimotope) that was specific for the mouse PD-1 molecule (vs KEY-Vaxx, which is specific for the human PD-1 molecule).

Firstly, they demonstrated that antibodies produced when rabbits were vaccinated with the mouse PD1 mimotope were as effective as an industry standard mouse anti-PD1 monoclonal antibody at inhibiting tumour growth in mice (Exhibit 7).

Secondly, they showed that active immunisation of mice with the mouse PD1 mimotope inhibited breast cancer tumour growth compared to injection with a saline control (Exhibit 8). The immunised mice also had higher levels of PD1-expressing immune cells in the tumours.

Taken together, these two studies provide proof of concept and validation for the strategy underpinning the KEY-Vaxx human PD-1 B-cell cancer vaccine.

In March 2019 AstraZeneca signed a US$6.85bn co-development deal with Daiichi Sankyo for trastuzumab deruxtecan (DS-8201). The terms include US$1.35bn upfront and US$5.5bn of potential milestone payments.

DS-8201 is an antibody-drug conjugate of Herceptin linked to a topoisomerase I inhibitor payload. It reported impressive results in a Phase I study in patients with a range of HER2 positive tumours that had failed treatment with Herceptin or Kadcyla. In the Phase I study in HER2, positive solid tumours including breast and gastric cancer the overall response rate (ORR) was 51% (81/160), with the highest ORR of 64% achieved in HER2-positive breast cancer.

The deal highlights the ongoing interest from big pharma in drugs that can successfully target HER2

Imugene’s ongoing clinical development programme is focused on HER-Vaxx and KEY-Vaxx (Exhibit 9). It commenced the Phase II study of HER-Vaxx in gastric cancer in March and aims to complete the study in 2020. It aims to submit an FDA IND for KEY-Vaxx in Q319 and commence a Phase I study in Q419.

These two programmes will provide initial clinical proof of concept for its B-cell vaccine platform, as well as being promising potential therapeutics in their own right.

Imugene has also in-licensed the B-Vaxx HER-2 B cell vaccine from OSU. B-Vaxx has completed a Phase I study and is currently enrolling patients into a Phase II study. This is fully funded by OSU.

Imugene is planning to conduct several preclinical studies to investigate combinations between its existing pipeline products and between its pipeline and other marketed therapies. However, we do not expect any decision to be made regarding clinical development of a combination until after initial clinical data from KEY-Vaxx monotherapy studies are available.

Our valuation of Imugene has increased to A$159m (from A$147m). We last published on Imugene in August 2018. We have rolled our model forward in time and included the FY19e net cash balance in our valuation (we previously used FY18e cash). Our other valuation assumptions remain unchanged. We have incorporated the FY18 financial results, but our financial forecasts are broadly unchanged.

Our valuation is based on a risk-adjusted discounted cash flow model, which includes net cash plus our estimates of the future milestone payments and royalty streams for HER-Vaxx and KEY-Vaxx. We have extended our cash flow forecasts out to 2039 (supported by 12 years of biological market exclusivity in the US and 10 years in Europe) but have not included any terminal valuation. We assume that HER-Vaxx sales decline at 20% per year after market exclusivity expires in 2037. We assume a long-term exchange rate of US$0.76/A$ and apply a 12.5% discount rate.

Our valuation is equal to 4.4 cents per share (vs 4.1 cents per share) on an undiluted basis and 4.2 cents per share (vs 4.0 cents per share) after diluting for the 624m options on issue (exercise prices range from 1.25 to 4.5 cents).

Our valuation of the HER2 B-cell vaccine programmes is based on HER-Vaxx in the gastric cancer indication, which is the subject of the randomised Phase II trial that commenced in Q119. The detailed assumptions for individual gastric cancer markets are shown in Exhibit 11.

For our valuation of KEY-Vaxx we assume an indicative present-day sales potential of US$1,000m as the lead indication is not yet known. Given that the two leading anti-PD-1 drugs, Keytruda and Opdivo, both achieved sales of over US$6.5bn in 2018, we believe this is a conservative estimate of the sales that KEY-Vaxx could potentially achieve if it is shown to be safe and effective.

Exhibits 10 and 11 show our market assumptions for HER-Vaxx and KEY-Vaxx and the rNPV for each product. We have offset the risk-adjusted trial cost against revenue for each indication.

We assume upfront/milestones of US$84m/US$520m for a licence deal for Imugene’s product pipeline. We assume half of the milestone payments in the benchmark licence deals (ie US$260m) are for clinical and regulatory milestones and half are sales-based milestones. We do not include the potential sales-based milestones in our forecasts, and instead model a 15% gross royalty rate on net sales.

We split the US$84m upfront and US$260m clinical and regulatory milestones between the HER-Vaxx and KEY-Vaxx programmes, weighted according to peak sales. We assume a 50% probability of entering a licence deal, with the probability of subsequent milestones declining gradually to 20% for approval milestones.