by Julia Gro, Euro on Sunday
Standing ovations for a drug are extremely rare, even in specialist circles. But at the world’s largest cancer congress, ASCO, in Chicago in early June, hundreds of doctors, scientists and investment bankers applauded for minutes after seeing the presentation of a breast cancer trial of Enhertu, a drug from Astrazeneca and Daiichi Sankyo.
Certain patients with metastatic tumors, for whom there are otherwise few treatment options, were given infusions of the drug. Compared to standard chemotherapy, the period in which her disease did not get worse increased by 50 percent. The risk of death fell by more than a third. For this group of patients, these are sensational numbers: “Traditionally, we have offered patients in this setting palliative chemotherapy. Now there is the possibility that they will receive a treatment with a much better effect and a survival advantage,” says Physician Shanu Modi of Memorial Sloan Kettering Cancer Center, which led the study.
New therapy standard
Such results are not only pleasing for patients. The data will initiate a paradigm shift in treatment. As a result, Astrazeneca and Daiichi Sankyo should earn significantly more with Enhertu. Analysts at investment bank Jefferies expect annual revenues of up to $2.5 billion from the new patient target group alone. Overall, Enhertu could bring in up to $6.6 billion annually for the pharmaceutical partners.
Figures like these electrify the industry. Interest in the drug class to which Enhertu belongs has skyrocketed, with developers of what are known as Antibody Drug Conjugates (ADCs) receiving increased attention. That should also be the case with the intention reported by the “Wall Street Journal”. Merck & Co. to take over the US company Seagen will play an important role. Seagen is considered a pioneer of technology. The acquisition would be the second-largest in oncology since 2015, with a transaction volume likely to be well over $30 billion.
ADCs are often compared to guided missiles. They consist of two parts: The antibody, a large protein molecule, selectively recognizes surface features of cancer cells. In his luggage he has a toxic agent that is up to 1,000 times more potent than the usual chemotherapy drugs. However, because the cell toxins are transported to the tumor by the antibody and do not spread throughout the body, patients can cope with this dose. When the antibody docks onto its target, the poison enters the cell and kills it.
This probably also works with neighboring cells, and this is the novelty of Enhertu, which apparently shows this so-called bystander effect to a particularly large extent. Because the drug actually controls the well-known breast cancer receptor Her-2, which, however, is only strongly expressed in 15 to 20 percent of all tumors. Enhertu (which also has Her-2 in its name) is already approved for this patient group, along with a whole range of other targeted therapies such as Roche’s Herceptin and Kadcyla.
The new study has now shown that, unlike the other drugs, Enhertu is also effective when only a few Her-2 receptors are present. If this feat of large effects can be transferred to other types of cancer despite having fewer target molecules, the field of application of ADCs could expand significantly. The forecast market volume of 15 billion dollars in 2030 would have to be corrected upwards.
Advantage for Daiichi Sankyo
But not all ADCs have this potential. Other drugs in the category, such as Gilead’s Trodelvy, have not been nearly as convincing. A few days ago, Roche CEO Severin Schwan also expressed skepticism about the new ADC enthusiasm: the in-house research and development program had fallen short of expectations.
At Daiichi Sankyo you are naturally much more confident. The Japanese have four more ADCs in the pipeline, only one of these product candidates (datopotamab) has already been partnered – also with Astrazeneca. Daiichi apparently wants to develop and sell the remaining three to market maturity itself without having to share the proceeds. The next results from the portfolio are expected in the first half of 2023, from a phase 3 study of datopotamab in lung cancer. If this is also successful, it should drive Daiichi’s share price up again. Analysts from Berenberg forecast annual sales of up to ten billion dollars for datopotamab.
These dimensions also explain the interest in Seagen, after all the Seattle group already has four approved products, three of which are ADCs. In addition, there are a good dozen candidates in early clinical development, mainly antibody-drug conjugates, of which only one has been partnered so far – with Merck & Co. The pharmaceutical giant therefore appears to be the most obvious buyer, but it cannot be ruled out that other financially strong ones will also be interested Corporations dare to take cover or even a bidding war ensues. Seagen co-founder and CEO Clay Siegall was resigned in May after allegations of domestic violence were made against him. This made Seagen a takeover target from the point of view of many industry experts, even though the price slump as a result of the Siegall scandal has long since been overcome. Only the announcement by the American antitrust authority FTC that it will take a particularly close look at pharmaceutical deals in the future dampens the euphoria of the Brsians.
Competitive concerns may not be an issue for corporations interested in smaller ADC specialists. Companies such as Mersana from the USA, the Swiss company ADC Therapeutics and Heidelberg Pharma from Germany are feeling the increased interest in their technology. Mersana’s share price, for example, has risen more than 60 percent since mid-June. The company’s most advanced project is an ADC against ovarian cancer, which will soon enter the final phase of clinical testing.
In the focus of Big Pharma
In contrast, ADC Therapeutics already has a drug on the market with Zylonta. The Swiss have just presented very good study results for another product candidate, with which they want to apply for approval. The disappointing share price development could attract M&A-willing bargain hunters.
The first clinical studies using Heidelberg Pharma’s ADC technology have only just begun. The company uses amanitin, which is found in the amanita mushroom, as a toxic active ingredient component – and thus has a unique selling point. “Because the mechanism of action of Amanitin, unlike other ADC chemotherapeutic agents, works independently of cell division, we assume, based on the preclinical data, that we can also destroy dormant tumor cells,” says CEO Jan Schmidt-Brand. If the first meaningful clinical data are available by mid-2023 at the latest, larger pharmaceutical companies should take a very close look.
INVESTOR INFO
The Big Profiteers
The pharmaceutical companies Daiichi Sankyo and Astrazeneca were the winners of this year’s US cancer congress. Astrazeneca is one of the most attractive pharma stocks thanks to many relatively new cancer drugs. Daiichi scores with a strong ADC pipeline, which the company intends to market primarily on its own. Seagen has already increased significantly as a result of the takeover rumors, so that the upside potential here seems limited. Only a few analysts still see a good ten percent room for improvement.
Small ADC specialists
Investors willing to take risks can invest in small ADC firms. The Swiss company ADC Therapeutics has dedicated itself entirely to technology, and the results to date are impressive. Mersana’s ovarian cancer drug is at the point in development that big drug companies are keen to grab. Heidelberg Pharma, on the other hand, is still in its infancy – the German company’s active ingredient has unique properties.
Great progress has repeatedly been made in the fight against cancer in recent years – the pharmaceutical and medical technology companies are flushing substantial profits into their coffers. Healthcare stock expert Rudi van den Eynde relies on Candriam Equities Oncology Impact for companies whose products significantly improve the diagnosis and treatment of cancer. His top positions currently include Astrazeneca, Merck & Co. and Roche.
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Image sources: Fernando Madeira / Shutterstock.com
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