Onxeo — Progress with both REVOCAN and DRIIV-1b trials

Following the out-licensing of belinostat in April 2020, Onxeo’s main value driver is R&D work, which is centred on the platON platform. The two disclosed assets are AsiDNA and OX401. AsiDNA is in Phase Ib/II stage trials, while the more recently introduced OX401 is in preclinical development with in vivo proof-of-concept studies ongoing.

The most advanced asset, AsiDNA, belongs to the DNA damage repair inhibitor class, like PARP inhibitors, but has a unique mechanism of action. It is the only oligonucleotide decoy agonist in development that disrupts and exhausts the tumour DNA damage response mechanism. The combination of AsiDNA with DNA-damaging chemotherapies, such as platinum-based anticancer drugs, is expected to produce synergies.

Currently, Onxeo is running a triple combination Phase Ib study (n=6; AsiDNA plus carboplatin plus paclitaxel). Top-line results should be available in H121, subject to the impact of the COVID-19 pandemic and the duration of control for three patients still being treated. A major expansion of the R&D programme is the new Phase Ib/II REVOCAN trial. This new study is evaluating AsiDNA’s potentially unique ability to reverse tumour resistance to the PARP inhibitor, niraparib. The first patient was recruited on 21 October 2020. First data are expected in mid-2021.

In its preclinical studies, Onxeo identified AsiDNA’s potentially unique ability to abrogate acquired resistance to PARP inhibitors. Some of the accumulated proof-of-concept preclinical data were presented at the American Association for Cancer Research (AACR) Annual Meeting in April 2019. More recently, Onxeo released a fresh set of in vitro and in vivo data, where AsiDNA allowed resistance to PARP inhibitors to be overcome, even when it was introduced after resistance had emerged (Exhibits 2A and B).

Onxeo has demonstrated that the underlying mechanism whereby AsiDNA prevents resistance to PARP inhibitors relies on the fact that AsiDNA acts on so-called drug-tolerant cancer cells (DTCs). With its preclinical studies, Onxeo showed that resistance to PARP inhibitors evolves from DTCs, ie those cells that are not responsive to PARP therapy, which then leads to cancer recurrence. Those same DTCs are eradicated with AsiDNA. These data were presented at this year’s AACR conference in June 2020.

Onxeo is exploring this strategy in a clinical setting for the first time in the Phase Ib/II study, REVOCAN (REVersion of resistance in Ovarian Cancer with AsiDNA and Niraparib). In this study AsiDNA is used to abrogate resistance to the PARP inhibitor niraparib (Zejula, Tesaro/GSK; consensus sales forecast of $2bn in 2026, source: EvaluatePharma). To date, there are four approved PARP inhibitors and, while commercially successful drugs, they still suffer from rapid development of resistance. If the ability to abrogate resistance can be proven, AsiDNA could be a suitable partner drug because of its benign safety profile.

In the REVOCAN study Onxeo plans to enrol up to 26 platinum-sensitive, relapsed ovarian cancer patients in up to six French centres; the first patient was recruited on 21 October 2020. AsiDNA will be given to the patients once the serum biomarker (CA125) for tumour progression starts to rise. Primary endpoints are safety/tolerability and a decrease in CA125. Secondary endpoints are progression-free survival and overall survival. Preliminary results are expected in early 2021.

Based on extensive preclinical data (which we have reviewed in our previous reports), Onxeo has presented a potential pathway to expand the use of AsiDNA in different combinations. Synergy with classic chemotherapy, like carboplatin, and the ability to counter acquired resistance to PARP inhibitors are being explored in the ongoing Phase Ib and Phase Ib/II REVOCAN trials, respectively. The outcomes of these studies will define AsiDNA’s mid- to late-stage development, so they represent substantial catalysts for the share price. Onxeo could prioritise several different indications with these combinations depending on the available funding. The range of potential indications is summarised in Exhibit 4.

Newer preclinical data published this year opened yet another potential pathway – combinations with targeted therapies, such as tyrosine kinase inhibitors (TKIs). In the in vitro models of non-small cell lung cancer, AsiDNA prevented the emergence of resistance to two different TKIs, erlotinib (anti-EGFR) and alectinib (anti-ALK) (Exhibits 5A and 5B). This is the first time Onxeo has reported proof-of-concept data showing that such a mechanism of action is not limited to PARP inhibitors, but also includes TKIs. If confirmed, this could substantially broaden AsiDNA’s potential use in combination with anticancer treatments. The underlying mechanism is the same – DTCs are an established cause of resistance to TKIs and since AsiDNA is effective against those cells, it could potentially counter DTC-driven acquired resistance to a wide range of targeted therapies.

The Phase I dose-escalation trial (n=22) showed that intravenous administration of AsiDNA had no serious drug-related side effects and had a positive effect on activity biomarkers (increased levels of γH2AX and pHSP90) at the optimal dose of 600mg.

The ongoing Phase Ib DRIIV combination study is the first study testing AsiDNA in combination with carboplatin alone in the first cohort and carboplatin plus paclitaxel (standard of care in many solid tumours) in the second cohort. Patients with various solid tumours have been included. Notably, these patients were heavily pre-treated with advanced metastatic tumours and had a progressive disease at inclusion.

In September 2019, Onxeo released initial results from the first cohort of patients (n=3) in the DRIIV Phase Ib study. According to the latest update (November 2020), the trial is now fully enrolled with the second cohort (n=6). Onxeo pooled the results from both cohorts and provided an initial assessment.

With the caveat that the patient sample is too small for efficacy analysis, the first signs of efficacy are encouraging. A good efficacy profile is a substantial positive as AsiDNA will be combined with standard-of-care chemotherapy. Three patients are still being treated and Onxeo should report the final results in H121. However, the company has already mentioned that it has started working on a potential design for the Phase II study with AsiDNA plus chemotherapy and will announce more details in the coming months.

The second asset that Onxeo has chosen to progress from its platON platform is OX401. The first detailed preclinical data were presented at the PARP & DDR Inhibitors Summit in Boston, MA, on 29–30 January 2020, which we summarised in our last published report. In June 2020, Onxeo released an update describing the preclinical profile in more detail and confirmed that OX401 was ready to enter the final stages of preclinical validation. If all goes well, the first clinical study could start within 18–24 months.

Like AsiDNA, OX401 comprises double-strand oligonucleotides, a linker (coupling agent) and a cellular uptake facilitator (cholesterol). An oligonucleotide is composed of 16 DNA base pairs, and is optimised to bind and activate PARP signalling enzymes. This is the main difference to AsiDNA, which is composed of 32 DNA base pairs and has a broader effect (hyperactivates PARP and DNA-PK). Like AsiDNA, OX401 acts as decoy agonist. However, while AsiDNA binds mainly DNA-PK and to a lesser extent PARP and other proteins, OX401 binds PARP proteins specifically and then hyperactivates them, thus distracting it from its role in cancer cells. PARP is a major component in the DNA repair mechanism and PARP inhibitors have been proven clinically successful. In addition, preclinical data show that OX401 is able to activate the cGAS-STING pathway, which makes OX401 a very differentiated approach from existing PARP inhibitors. In preclinical in vivo studies, Onxeo demonstrated that OX401 had a higher potency of activity than current PARP inhibitors in controlling tumour growth. Like AsiDNA, preclinical findings also show that OX401 does not induce tumour resistance to treatment, which is another differentiating characteristic from PARP inhibitors.

The cGAS-STING pathway is a component of the innate immune system, which detects cytosolic DNA. DNA is normally found in the nucleus of the cell. The appearance of DNA in cytosol is associated with carcinogenesis or viral infections. A STING receptor is a known mediator of the immune system which, when activated, induces expression of interferon and other T-cell recruitment factors. This results in the activation of dendritic cells, which act as antigen-presenting cells. The ultimate outcome is a tumour-specific immune response with ‘trained’ CD8+ T-cells attacking the cancer.

The cGAS-STING pathway is still a relatively new area in immunoncology with only a handful of Phase I–II trials ongoing. However, preclinical research is active, with large pharma also involved. The strategic opportunity for STING activating therapies, and for OX401, could be combinations with anticancer therapies that act late in the immunity cycle, like checkpoint inhibitors (which make the tumour ‘visible’ to T-cells), as the STING pathway should prime the production of cancer-specific T-cells, so both technologies are potentially synergistic. Onxeo indicated that as a next step it will explore the combination of OX401 and checkpoint inhibitors in in vivo studies, which will inform clinical development.

Onxeo booked revenues of €1.1m in H120, mainly direct sales of Beleodaq (recognized up to the date of the agreement signed with Acrotech in April 2020). Following the royalty sale agreement with SWK and the updated licensing deal with Acrotech, Beleodaq-related sales growth is no longer a value driver for Onxeo (agreement details in our last published report).

Total operating expenses amounted to €5.5m in H120 vs €8.6m in H119. The y-o-y decrease is due to lower spending on preclinical research, but also lower AsiDNA Phase I trial-related spending, which was partly due to the COVID-19 pandemic causing slower progress of the trials. Onxeo also booked other non-current operating income and expenses totalling €10.0m, which is related to the out-licensing of Beleodaq to Acrotech Biopharma in April 2020 and treated as a disposal of belinostat-related assets according to IFRS.

Our revenues for 2020 are lower compared to 2019, as Onxeo booked Beleodaq sales only for the period January to April 2020, which is when the agreement with Acrotech was signed. We have lowered our total forecast operating spend to €10.6m from €14.0m in 2020 and to €10.8m from €14.0m in 2021. This is subject to further revisions depending on the development of the COVID-19 pandemic and how it affects clinical R&D activity.

Onxeo reported a cash position of €19.6m at the end of H120 vs €5.7m at the end of 2019. The increase is due to the private placement of €7.3m in June 2020 and proceeds of €3.2m from an equity financing line with Nice & Green. The updated licensing deal with Acrotech Biopharma brought in another €5.1m net. A research tax credit of €1.4m was also received in H120. Onxeo estimates that its existing cash position is sufficient to finance operations until Q122, in line with our model.

Our valuation of Onxeo is €160m or €2.04 per share vs €134m or €2.00 per share previously. The changes include rolling the model forward and a higher cash position. The valuation per share is largely unchanged due to the private placement and use of the equity financing line. We have made no other changes to our valuation assumption, although we may revise it once the final three patients in the DRIIV-1b have treatment results, expected at some point in H121.

We continue to include AsiDNA in two indications, although there is potential to expand beyond that as the R&D pipeline develops. More details on our valuation assumptions are in included in the our published outlook report. We do not yet include OX401 in our rNPV model due to the preclinical stage of the project, but Onxeo has guided that this product could enter clinical development within the next 18–24 months.