Looking at the Winners and Losers on Wall Street after ASCO

The American Society of Clinical Oncology (ASCO) annual meeting, which ran from June 3-7 in Chicago, is always closely watched by analysts and investors alike, and favorable data presented at the event can advance a company's stock valuation significantly. Equally, candidate cancer therapies that do not live up to expectations will see their developers face the ire of investors.

Looking back at a snapshot in time, immediately post-ASCO (and pre-Brexit vote), this article examines the winners and losers among the public biopharmaceutical companies that reported updates on the clinical development of cancer therapies at the meeting.

BIOWORLD CANCER INDEX

To gauge the overall market response to this year's event, we selected 34 public biotech companies developing cancer therapies, and presenting at ASCO, for the new BioWorld Cancer Index. It does not include big pharmaceutical companies such as Bristol-Myers Squibb Co., Pfizer Inc. and Merck & Co. Inc.; rather the main selection criterion was that a firm's pipeline had to consist of candidate cancer therapies in development.

The price weighted index fell almost 7 percent for the period from the end of May until June 10. (See BioWorld Cancer Index, below.)

The leading gainer in the group was Tel Aviv, Israel-based VBL Therapeutics Inc., which saw its shares (NASDAQ:VBLT) jump 33 percent during the ASCO period. Investors were impressed with the presentation of updated results from a phase I/II trial of VB-111 in the treatment of patients with recurrent platinum-resistant ovarian cancer. Data demonstrated a median overall survival of 810 days in the VB-111 therapeutic dose arm vs. 172 days in the low-dose arm, a result that was statistically significant. There was also a durable doubling in the response rate, as measured by a reduction in the CA-125 biomarker, compared to historical rates of Avastin (bevacizumab, Roche AG) plus chemotherapy in ovarian cancer.

Joseph Pantginis, analyst, Roth Capital Partners, said in a research note that "the updates at ASCO underscore VB-111's potential in multiple tumor types known to be driven by angiogenesis by also adding an immunotherapy component. Next steps for the program in the indication include an end of phase II meeting with the FDA, that could occur by year's end."

The company took advantage of the spike in its share price by raising $24 million in gross proceeds from a registered direct offering.

On the other side of the coin, shares of Mirati Therapeutics Inc. (NASDAQ: MRTX) tumbled a whopping 55 percent. Concurrent with the ASCO conference, the company released top-line results for lead drug glesatinib, in which the response rate was 27 percent in patients with target MET/Axl alterations (3/11).

During the course of the phase 1b trial, the majority of the non-small-cell lung cancer patients (nine of 11) experienced dose reductions and/or dose interruptions. Those events, the company noted, may have resulted in decreased exposure levels needed to fully inhibit MET throughout the treatment cycle.

In response to the dose reductions the company said a new formulation of glesatinib is being implemented in the ongoing phase II trial to reduce dose reductions and interruptions and to optimize exposure levels throughout the treatment regimen.

Just prior to the ASCO meeting, Jazz Pharmaceuticals plc announced a $1.5 billion buyout of Celator Pharmaceuticals Inc. to take ownership of its lead product Vyxeos for high-risk (secondary) acute myeloid leukemia. Jazz, of Dublin, agreed to pay $30.25 per share, a 72 percent premium to Ewing, N.J.-based Celator's most recent closing price, in order to claim Vyxeos, a liposomal form of cytarabine and daunorubicin that emerged from the latter's Combiplex delivery platform based on liposomes and nanoparticles. A new drug application for breakthrough-designated, fast-tracked Vyxeos is expected in the next quarter, with marketing authorization in Europe to be sought in 2017. (See BioWorld Today, June 1, 2016.)

It has been a wild ride in 2016 for index group member Celator, whose shares zoomed 173 percent in June alone.

Disappointing results

Shares of Pronai Therapeutics Inc., of Vancouver, British Columbia, were hit hard, down 68 percent, following disappointing interim results from its Wolverine phase II trial of PNT2258 for the treatment of relapsed or refractory diffuse large B-cell lymphoma (DLBCL). Although modest efficacy was observed, the company's president and CEO, Nick Glover, said, "we do not view these results as robust enough to justify continued development of the drug in DLBCL."

Immunomedics Inc. saw its shares dive 37 percent as June progressed. The company didn't even get to present at ASCO after it was informed that the presentation was being dropped, apparently because officials believed the dataset had been made public earlier, violating the premier cancer meeting's embargo policy. (See BioWorld Today, June 6, 2016.)

Overall, our analysis found that 73 percent of the index companies presenting at the ASCO meeting saw their share prices decrease in value over the period. While there is strong evidence to suggest that investors are still generally bullish on the progress being made by companies developing cancer therapies, the data show that they are paying close attention to both the release of the meeting abstracts and the subsequent poster and oral presentations at the meeting.

The excitement about the sector is undoubtedly fueled by developments in immuno-oncology and, like last year, the subject was certainly a dominant factor at the event. For example, delegates packed the room to hear about the potential impact of anti-PD-1/PD-L1 therapies, known for their abilities in blocking the protein programmed death receptor-1 used by tumors to avoid immune system defenses. (See BioWorld Today, June 8, 2016.)

Perhaps that factor has weighed on companies involved in other approaches to the treatment of various cancers. Overall the BioWorld Cancer Index was down 26 percent since the beginning of the year.

To explore more about this topic in our BioWorld Insight issue, please click here.