Oncology Venture — PARP inhibitor Phase II study initiates

On 26 June 2018, OV announced the initiation of its open label Phase II study of 2X-121 as a single agent in patients with mBC, with the dosing of its first patient (of the 30-patient recruitment goal) in Denmark. As a reminder, 2X-121 is an orally bioavailable small molecule and a dual PARP-1/2 and TNKS-1/2 inhibitor (previously named E7449, in-licensed from Eisai in July 2017). PARP enzymes repair single-strand DNA breaks and since BRCA1/2 mutated cells are incapable of double-strand break repair, PARP inhibition is particularly lethal and causes genomic instability and cell death.1

This new trial follows previous encouraging data from a 41-patient, open-label, dose escalation Phase I study of 2X-121 as a single agent in patients with advanced solid tumours (including pancreatic, ovarian, breast, colorectal, lung and other cancers), along with development and preliminary testing of the 414-gene 2X-121 DRP algorithm in 13 patients. The results were recently presented at the American Society of Clinical Oncology (ASCO) annual meeting in June. The maximum tolerated dose was identified as 600mg, which maintained PARP inhibition at approximately 90%. The 2X-121 DRP identified responders and non-responders with median overall survival of more than 800 days and 208 days, respectively. It is important to note this trial included cancers without regard to BRCA mutation status, where PARP inhibitors are more active.

Based on these results, OV will use its 2X-121 DRP to select the top 10% of patients with mBC who are highly likely to respond to the drug. Once selected to participate in the trial, patients will receive 600mg of 2X-121 orally, in a 21-day cycle. The primary endpoint of the trial is overall tumour response according to RECIST at more than 24-weeks post-treatment. The secondary endpoints include progression free survival, duration of response and overall survival (OS). OV is in possession of 13,000 capsules for initial studies. Additionally, the laboratory in Europe that will be running the DRP test is established with approximately 1,400 DRP screened patients with breast cancer, while the US lab is undergoing Clinical Laboratory Improvement Amendments (CLIA) validation. Top-line data are expected in H220. We expect the results of this trial to elucidate whether the DRP can prospectively identify responders to 2X-121.

Also in June, OV announced that it has received orphan drug designation from the FDA for the development of dovitinib for the treatment of ACC. As a reminder, OV in-licensed dovitinib, an oral tyrosine kinase inhibitor (TKI) that inhibits fibroblast growth factor (FGF), vascular endothelial growth factor (VEGF) and platelet-derived growth factor (PDGF) receptors from Novartis in January 2018. OV’s initial aim was to develop the drug and its DRP to identify patients with locally advanced or metastatic renal cell carcinoma (RCC) and liver cancer most likely to respond to treatment.

ACC is a rare, aggressive, and often indolent form of adenocarcinoma that typically originates in secretory glands such as the major and minor salivary glands of the head and neck. ACC can also occur in the trachea, lacrimal gland, breast, skin, and vulva, 2 although origination at these sites is less common. According to the National Cancer Institute, more than 1,220 patients in the US are diagnosed with ACC each year, or 0.4 per 100,000 men and women on an age-adjusted basis. Moreover, the disease is associated with three- and five-year relative survival rates of 87.4% and 55.3%, respectively.3 Treatment for localised ACC includes surgical resection of the tumour followed by postoperative radiotherapy. Due to the high rate of distant metastases4 and historically poor response rates of metastatic or recurrent ACC to chemotherapy,5 a number of alternative systemic therapies have been investigated, such as combination chemotherapy with platinum, hormonal therapy, immunotherapy, and biologic agents, including targeted HER-2, EGFR, and c-kit therapies.6 Several TKIs have also been investigated in the treatment of ACC, most notably, Sutent (sunitinib, Pfizer), Nexavar (sorafenib, Bayer) as well as dovitinib (Exhibit 1). However, only minimal activity has been found and there are currently no approved drug regimens for ACC. The strength in OV’s protocol lies in the ability of the dovitinib DRP to identify responders to the drug, which may improve outcomes.

OV first plans refine its dovitinib DRP biomarker to identify patients highly likely to respond to dovitinib using an ample amount of data provided by Novartis. We then expect future trials to elucidate whether the dovitinib DRP can identify responders with ACC to the drug. If the company decides to pursue this indication in parallel to RCC and liver cancer, it could increase the value of the asset as well as hedge on potential shortcomings of the other programmes.

Our valuation of OV remains unchanged at SEK830.2m or SEK60.02 per share, derived from a risk-adjusted NPV analysis on the future earnings of six active clinical programmes; as standard practice, this includes costs associated with each asset (Exhibit 2). We expect to add the new dovitinib indication to our valuation if the company initiates a trial for ACC. OV has announced that it has the option to buy back 35% of the shares in its incorporated subsidiary OV-SPV2 (c 40% owned by OV, 10% owned by MPI, 50% owned by Sass & Larsen Aps) for $3.5m before 31 August 2018. This transaction may increase OV’s stake in the programme (from 40% to 75%) and should provide significant upside given our current valuation of OV-SPV2’s only asset, dovitinib. Post-merger, the combined entity will be comprised of 50.3m shares and current OV shareholders will own 51% of the new company.

As a standalone company, our forecasts for OV model a total of SEK610m (SEK60m in 2018, SEK300m in 2019, and SEK250m in 2020) in R&D expenditure, which we record as illustrative debt, to bring all six of its anticancer programmes to Phase III out-licensing (Exhibit 3). However, following the merger, we expect MPI’s cash (DKK3.3m at end FY17) to partially offset this funding requirement. Such financial requirements may be offset further via selling or out-licensing Phase III-ready drugs. These estimates are based on the expected trial cost per patient ($100,000) and Phase II clinical trial size. Our combined R&D forecasts remain unchanged, with SEK74m in 2018 and SEK194m in 2019. These costs are primarily associated with the advancement of the LiPlaCis programme into Phase IIb, ongoing irofulven and APO010 Phase IIa clinical trials. They also include 2X Oncology’s recent initiation of its Phase II 2X-121 trial and its 2X-111 development programme, which is expected to initiate this year.

Due to the forthcoming merger between OV and MPI, which the board of directors approved in late May, we expect these financials to change to reflect the new entity.