Mendus — Sights on vididencel (in AML) combination study

AML is an aggressive type of blood and bone marrow cancer that affects a patient’s white blood cells. While the disease is among the most common leukaemia types in adults, AML is still a relatively rare cancer, with an estimated 20,380 new cases expected to be diagnosed in the United States in 2023. While chemotherapy may not be suitable for certain patient populations, particularly older individuals, the regimen continues to be widely used with c 75% of AML patients potentially eligible to receive this treatment. However, despite advances in AML therapies, c 50% of AML patients who have achieved complete remission will experience disease relapse. An emerging space in AML treatment paradigms is that of maintenance therapy, which involves the complete eradication of residual cancerous cells from the body, following a patient’s complete response to induction therapy, to prolong remission duration, prevent relapse and improve overall survival (OS). An important concept in AML maintenance therapy is measurable residual disease (MRD), which refers to the presence of cancerous cells at levels conventional testing methods cannot detect but that more sensitive modern methods can. Therefore, a patient may be classified as in complete remission while still being MRD positive. Importantly, as a prognostic biomarker, MRD status is recognised as an important relapse risk factor in AML, and MRD negativity is associated with superior long-term survival.

Maintenance therapies are designed to combat MRD after remission, as the safety and toxicity of continuing certain chemotherapy regimens is unsatisfactory (venetoclax + azacitidine, 3+7 regimens). However, there are only two approved maintenance treatments indicated in AML patients following complete remission after 3+7 chemotherapy (three days of an anthracycline antibiotic and seven days of cytarabine chemotherapy):

As the number of AML patients in complete remission is likely to increase as new, effective therapies are approved and patients survive longer, the requirement for safe and effective AML maintenance therapies that do not affect patient quality of life will represent a considerable area of medical need, in our opinion.

Onureg is the only approved AML maintenance drug that has been indicated in patients who are in complete remission following induction chemotherapy. Onureg was approved by the FDA as an AML maintenance therapy in 2020, based on data from the randomised, placebo-controlled, double-blind Phase III QUAZAR AML-001 (NCT01757535) study, where the drug demonstrated a median overall survival (mOS) of 14.6 months (vs 10.4 months in placebo group) and median relapse-free survival (mRFS) of 7.1 months (vs 2.7 months in placebo group) in baseline MRD+ patients. With currently limited treatment options, there remains significant scope for new AML maintenance treatments that can demonstrate more durable clinical responses to offer market differentiation, in our view.

The AML maintenance pipeline may appear quite competitive on first inspection; however, on closer analysis, the setting that Mendus is strategically prioritising with vididencel (patients in first complete remission, CR1, after induction chemotherapy) appears to have relatively limited emerging technologies, Exhibit 1.

To our knowledge, the only late-stage therapeutic vaccine technology currently under development in AML maintenance is Sellas Life Sciences’ Wilms tumour-1 targeting peptide cancer vaccine, Galinpepimut-S. However, the treatment currently does not appear to directly compete with vididencel as it is being investigated as a maintenance therapy in patients who have undergone complete remission following second-line salvage therapy (CR2), not following first-line chemotherapy. While Sellas has selected the CR2 setting to secure an initial FDA label for Galinpepimut-S, the company has communicated its Phase I and II clinical data in CR1 patients could potentially support future label expansion into the CR1 maintenance line.

We note that the Phase III VIALE-M study (AbbVie/Roche) investigating the combination of Onureg (alternatively called CC-486) plus venetoclax is the most direct competition to vididencel. Venetoclax in combination with injectable azacitidine has previously received FDA approval as a first-line therapy in chemo-unfit patients (over the age of 75) and the VIALE-M trial is looking to expand venetoclax into the AML maintenance setting. Should the results from the combination VIALE-M study show clinically meaningful improvements in mRFS compared to Onureg alone, it could potentially disrupt the existing SoC in AML maintenance and may have an impact on Mendus’s future clinical strategy for vididencel. Astellas is also conducting a Phase II AML maintenance study in CR1 patients with Gilteritinib (FDA approved in relapsed/refractory line FLT3+ AML patients). However, the scope of this trial is focused on patients who possess an FLT3 mutation (FLT3+), representing c 30% of the AML population.

The most recent clinical data reported for vididencel are from the Phase II ADVANCE II trial where at a median follow-up period of 19.4 months, mRFS for the study patient population (n=20) was not yet reached (but 12-month RFS was estimated at 64%) and mOS stood at 30.9 months, Exhibits 1 and 2.

Patients who were still in complete remission (12 out of 20 patients) had been so for 16 to 47 months after start of treatment and those who had converted to MRD-negative displayed a significantly prolonged RFS and OS, with neither mRFS nor mOS being reached in this sub-group. Additionally, vididencel continued to display a good safety profile, with no serious or severe adverse events reported (the main adverse events continued to be injection site reactions occurring within 48 hours of treatment). While we caution against direct comparison between the results of differently designed clinical studies (the QUAZAR AML-001 trial is randomised, placebo controlled and double blind), the fact that ADVANCE II had not reached RFS at a median follow-up period of 19.4 months suggests significantly improved relapse rates with vididencel treatment (mRFS in QUAZAR AML-001: 7.1 months). This is further supported by the mOS data from the ADVANCE trial (30.9 months), which, in our view, compares very favourably with the QUAZAR AML-001 data for Onureg (14.6 months). We acknowledge that the results of the ADVANCE II study are based on a smaller patient population (n=20) and that larger studies will need to be conducted to strengthen the evidence of vididencel’s clinical utility.

One of the major limitations of individualised cell therapy approaches continues to be constraints around manufacturing and patient access. Large-cap pharma companies, such as Bristol Myers Squibb and Johnson & Johnson, have reported ongoing issues around supply chain bottlenecks associated with their personalised multiple myeloma (MM) CAR-T treatments, Abecma and Carvykti. As a result, MM patient waiting times can be over six months and, once patients are referred, the turnaround time from patient biopsy to CAR-T infusion (‘vein-to-vein’ time) can be three to six weeks on average. Our view remains that the operational infrastructure to support the effective commercialisation and mass production of personalised treatments is not yet in place and may not be for quite some time. As such, we believe more universal cell therapy approaches looking to provide more timely, upfront access to treatment for patients offer significant potential to differentiate in the market.

With vididencel, Mendus is developing an ‘off-the-shelf’, multiple tumour-associated antigens (TAA) expressing, dendritic cell vaccine produced from the company’s proprietary AML cell line, DCOne. This cell-line based approach aims to circumvent the existing challenges encountered by patient-derived treatments by allowing for scalable, centralised manufacturing that may facilitate more timely and wider patient access. As vididencel is a non-individualised therapy, it could potentially benefit from shorter production and ‘vein-to-vein’ times compared to those currently observed for personalised cell therapies. Mendus has now engaged with Minaris, a global contract manufacturing organisation specialising in cell-therapy scale up, to support the clinical and commercial-scale production of vididencel. With these potential logistical advantages, and provided vididencel can continue to demonstrate a durable clinical and safety profile, we believe there is significant potential for Mendus’s lead asset to differentiate itself in the AML maintenance treatment market.

The re-emergence of cancer vaccine technology has seen the signing of notable licensing deals in recent years, Exhibit 4. In our view, a comparable deal of note is the worldwide licensing agreement signed in 2020 between Roche and Nykode worth up to $715m in upfront and milestone payments for the Scandinavian biotech’s personalised cancer vaccine, VB10.NEO. At the time of the agreement, VB10.NEO was in the Phase I portion of a Phase I/II basket trial that included patients with advanced or metastatic melanoma, non-small cell lung carcinoma, clear renal cell carcinoma urothelial cancer or squamous cell carcinoma of the head and neck. The study is ongoing, and Roche will assume full development responsibilities after the conclusion of the Phase I arm of the trial. However, we acknowledge the upfront payment of $200m received by Nykode is at the upper end of the industry average.

In our view, should vididencel continue to demonstrate positive results in the clinic it may significantly enhance the asset’s value and potential deal value that could be commanded from future licensing opportunities. Additionally, vididencel is being investigated in ovarian cancer and the broader application may add further value to the asset in the eyes of potential licensing partners.

As we had previously anticipated, in May 2023 Mendus drew down the remaining SEK15.0m shareholder loan (6% interest) from Van Herk Investments, meaning the company has now utilised the full SEK50m financing facility. As part of the new loan agreement, the end dates of the previous loans, the initial SEK10.0m two-year loan and subsequent SEK25.0m one-year loan, have been amended and the entirety of the SEK50m loan is now due by end-FY23. While refinancing of the loan could be a potential option, in the absence of additional funding opportunities, Mendus may need to further access the SEK195.0m convertible debt facility from Negma Group to pay off the outstanding current debt. This may provide an immediate source of financing for the company; however, we note that the convertible debt facility has the potential to be highly dilutive for shareholders. Mendus had previously accessed the Negma facility for an amount of SEK13.7m; however, subsequent conversions between 27 January 2023 and 4 April 2023 saw the company’s stock price fall by c 60% over this period.

Our forecasts and valuation, described in our prior note, are unchanged.