Oncology Venture — Presence at ASCO 2018

On 1 June 2018, OV presented results from a 41-patient open-label 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). 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; as a result, PARP inhibition causes double strand breaks, which require BRCA1/2 for repair.1 Thus, PARP inhibition is particularly lethal in cancers containing BCRA1/2 mutations. It is important to note this trial included cancers without regard to BRCA mutation status where PARP inhibitors are more active. BRCA status was only known in six patients in this study (three with ovarian cancer; two breast cancer; one pancreatic cancer).

In total, 28 patients were administered 2X-121 orally, once daily at six dose levels in 28-day treatment cycles (Exhibit 1). Out of the 25 evaluable patients, the maximum tolerated dose was found to be 600mg, which was limited by fatigue, and this cohort was expanded to include 21 patients in total. PK were dose proportional and 2X-121 was absorbed rapidly at 1.5 hours with a half-life of eight hours (Exhibit 2). All dose levels demonstrated PARP inhibition, while the 600mg daily dose demonstrated maintained inhibition at approximately 90% (Exhibit 3).

Two patients achieved partial response, both with ovarian cancer, while 13 patients demonstrated stable disease. Eight of the 13 patients maintained stable disease for over 24 weeks, and seven out of eight of these patients had pancreatic cancer. It is important to note there are no PARP inhibitors approved for the treatment of pancreatic cancer. The Abramson Cancer Centre of the University of Pennsylvania is recruiting 42-patients with BRCA1/2 or PALB2 mutated advanced pancreatic cancer to participate in an open-label Phase II trial investigating the use of Rubraca (rucaparib, Clovis Oncology). Top-line data from this trial are expected in 2021.

This presentation also described OV’s 2X-121 DRP that was developed to identify drug responders and non-responders. The 2X-121 DRP, which is a biomarker based on mRNA expression of 414 genes from 61 cell lines, was tested in a small 13 patient blinded retrospective trial using biopsy materials (formalin fixed paraffin-embedded samples) from this dataset provided by Eisai. From the 13 available patient samples, the DRP correctly distinguished two patients who achieved partial responses from non-responders (ie stable disease and disease progression) (Exhibit 4). Moreover, the DRP separated the patients into two groups: those sensitive to treatment (six responders) and those resistant (seven non-responders). The difference between median time to progression among the responders and non-responders was minimal (p=0.14). However, median overall survival was greater than 800 days for the predicted sensitive/responder group and 208 days for the non-responder group, respectively (HR=0.26, p=0.07) (Exhibit 5).

Although the results are supportive of clinical activity, the real value is in the ability of the DRP to identify responders, which will need to be tested prospectively. It is also important to note the possibility of overtraining the 2X-121 DRP model, which can negatively affect performance on new data. Because the DRP makes use of 414 genes, which may include irrelevant data and noise, and was tested only a small dataset (13 patient samples), we expect the DRP to require further testing and validation.

As a reminder, OV plans to use its 2X-121 DRP to select the top 10% patients with metastatic breast cancer (mBC) and relapsed ovarian cancer highly likely to respond to the drug. OV is in possession of 13,000 capsules for initial studies. The laboratory in Europe is established with approximately 1,400 DRP screened patients with breast cancer whereas the US lab is undergoing Clinical Laboratory Improvement Amendments validation. The study is expected to begin this year and should be complete after approximately 12 months.

OV provided an update on its ongoing single-arm, open-label focused Phase II study investigating LiPlaCis in heavily pre-treated mBC patients via an electronically published abstract at ASCO in June. As a reminder, patients are administered 75mg LiPlaCis, which is liposomal version of cisplatin, intravenously (IV) in three-week cycles on day one and on day eight with efficacy evaluation every six weeks.

In total, 12 out of 20 evaluable patients selected from the DRP screening programme, which is used to classify tissue as highly likely to respond (high, top two-thirds) or less likely to respond (low, bottom one-third) from more than 1,400 mBC patients have been enrolled to date. Objective response rate (ORR) in the intention to treat group (from the top two-thirds) was 17%. However, two patients died before completing the treatment cycle and, according to the company and a safety committee, the deaths were unrelated to LiPlaCis. LiPlaCis was the median eighth line of treatment for this cohort.

Moreover, six out of the remaining 10 patients evaluable for response had a DRP score in the top third and four had a DRP score in the middle third. Out of the 10 patients, two patients achieved partial remission, while five and three experienced stable disease and progressive disease, respectively. Also, five out of the six patients with a DRP score in the top third were platinum-naïve and experienced a median progression free survival (PFS) of 25 weeks, which was significantly greater than a median PFS of eight weeks demonstrated by the two platinum-naïve patients with a DRP score in the middle third (p=0.008). This focused Phase II trial remains ongoing and, according to the company, depending on the required length of treatment, top-line results are expected by year-end 2018.

OV also published an electronic abstract at ASCO 2018 detailing the characterisation of resistance to APO010, a synthetic hexameric formulation of natural Fas ligands that targets first apoptosis signal receptors (Fas, also known as apoptosis antigen 1 or cluster differentiation 95 [CD95]) on cancer cells to potentially induce caspase-dependent apoptosis and antineoplastic activity,2 in human myeloma cell lines.

OV developed APO010-resistent variants of four human myeloma cell lines (LP1, Raji, MOLP-8, and KMS-12-BM) by exposing cells to increasing concentrations of APO010 over six months to one year. The developed APO010-resistant cell lines showed increased resistance to APO010 and Fas-receptor downregulation in comparison to the non-manipulated cell lines. According to the company, post-transcriptional or post-translational modification of the Fas-receptor is likely responsible for APO010 resistance. Describing the molecular mechanism of resistance to the drug may identify predictive biomarkers of APO010 in multiple myeloma (MM) treatment.

As a reminder, OV is investigating APO010 in a focused Phase Ib/II trial for the treatment of relapsed or refractory MM. OV is targeting enrolment of 15 patients most likely to respond to APO010 out of approximately 150 patient DRP screenings (using the 160-gene APO010 DRP). The company first aims to demonstrate effective APO010 monotherapy and follow-up with combination trials with other agents such as PD-1 inhibitors. The Phase I dose escalation portion of this trial is ongoing. The company may increase patient enrolment to include 30 patients in dose escalation, and if that is the case, the company expects to complete enrolment by H119.

We have slightly increased our valuation of OV to SEK830.2m or SEK60.02 per share from SEK823.8m or SEK59.56 per share derived from a risk-adjusted NPV analysis on the future earnings of six active clinical programmes, and as standard practice, this includes costs associated with each asset (Exhibit 6). This increase is primarily driven by rolling forward our NPVs, offset by lower net cash. Our valuation may change in accordance with OV’s decision to buy back shares in its incorporated subsidiary OV-SPV2 (~40% owned by OV, 10% owned by MPI, 50% owned by Sass & Larsen Aps). Announced in late May, OV has the option to acquire 35% of the shares in OV-SPV2 for $3.5m before 31 August 2018, which may increase OV’s stake in the programme (from 40% to 75%) and should provide significant upside to the valuation.

OV’s Q118 post-tax loss was SEK14.4m (Q117: loss of SEK11.6m), which was primarily attributable to costs associated with production (SEK1m), preparing and running clinical trials (SEK5m), and sales and marketing activities (SEK1m).

OV ended the period with SEK40.1m in cash and equivalents. As a standalone company, our forecasts 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 7). 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 the selling or outlicensing of Phase III-ready drugs. These estimates are based on expected cost per patient (ie $100,000 per patient) and Phase II clinical trial size.

Our combined R&D forecasts remain unchanged with SEK74m in 2018 and SEK194m in 2019 primarily associated with the advancement of the LiPlaCis programme into Phase IIb, ongoing irofulven and APO010 Phase IIa clinical trials, as well as 2X Oncology’s 2X-121 and 2X-111 development programmes, which are expected to initiate this year.

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