This week’s Annual Meeting of the American Society of Hematology (ASH) will highlight new treatments, new indications, new pathways and new ways of engineering cancer-treating compounds. News from the conference will affect a number of biotechnology and pharmaceutical companies both large and small. Many of the most anticipated presentations this year look at treating diseases in the elderly and very ill – two populations that have been historically excluded from clinical studies and who make up a large and growing portion of hematology patients.
Medical conferences, such as ASH, provide a forum for medical professionals, investors and others to learn more about clinical trial results, upcoming clinical trials, and potential side-effects (both positive and negative). The markets use this information to determine the sales and profit potential for new and existing compounds.
Blood Basics – Hematology 101
Hematology is the study of blood and blood disorders. It includes problems with the red blood cells, white blood cells, platelets, blood vessels, bone marrow, lymph nodes, spleen, and the proteins involved in bleeding and clotting (hemostasis and thrombosis).
Red blood cells (RBCs or erythrocytes) carry oxygen to cells and tissues from the lungs. White blood cells (WBCs or leukocytes) help fight infections. Platelets (thrombocytes) are small parts of cells and help with clotting. Plasma is the liquid portion of blood.
Common disorders and disease affecting RBCs include different types of anemia. Anemia occurs when the RBCs cannot deliver adequate oxygen to the body’s tissues. Anemia can be caused by nutritional deficiencies (such as insufficient iron), a genetic condition (sickle-cell anemia), and as a result of another disease (such as kidney/renal disease). These disorders can be short-lived (acute) or chronic. Treatments range from simple, such as a change in diet or blood transfusions, to complex (bone marrow transplants).
Plasma and platelet diseases and disorders involve too much or too little clotting. Hemophilia, perhaps the best known clotting disorder, is a genetic condition that prevents patient’s blood from clotting normally. Hemophilia is quite rare, affecting some 20,000 people in the U.S. More common is von Willebrand disease, an inherited condition that results when the blood lacks von Willebrand factor, a protein that helps the blood clot and also carries another clotting protein, factor VIII. It is usually milder than hemophilia, and in its mildest form often goes undiagnosed. It is estimated that as many as 1 in 100 or as few as 1 in 10,000 people have some form of von Willebrand disease.
Diseases affecting white blood cells (WBCs or leukocytes) include various forms of blood cancers such as lymphoma, leukemia, myelodysplastic syndrome and multiple myeloma. All four primary types can be treated, and the first three can occasionally be cured. There is no cure for multiple myeloma, so treatments focus on slowing the disease progression.
Investment Issues in Hematology
The markets value new medical treatments by assessing both the size and likelihood of future product sales. Investors tally up the total market potential for a new treatment by combining: (1) the number of patients who might be helped by a particular treatment; (2) the length of treatment; and (3) price of the treatment. Investors then adjust the total market potential to reflect (1) the number of existing or potential competing treatments; (2) the pros and cons of each type of treatment and (3) for new drugs, the likelihood that the drug will receive regulatory approval.
The key investment theme at ASH is likely to be how companies will grow addressable markets. All drugs, but particularly complex cancer therapies, are expensive to discover, develop and manufacture. In addition, many of these therapies are targeted at very specific types of cancer and, increasingly, at patients with specific genetic makeups. Targeting makes therapies potentially much more effective; however, it also limits addressable market size. The combination of high costs to develop and manufacture the drugs along with increasingly specific compounds accounts for the exceedingly high prices for certain therapies. At the same time, the high fixed costs associated with producing these drugs also means that incremental (additional) sales are highly profitable. Therefore, the markets will be very interested in how the clinical data and other presentations at ASH will affect product sales.
A number of highly-anticipated presentations at this year’s conference look at clinical trials that involve elderly and/or very ill patients. This population has a high prevalence for blood-based cancers but may not be able to tolerate current therapies or are ineligible for stem cell therapies. Celgene (CELG) will present a phase 3 trial in multiple myeloma patients who are not eligible for stem cell transplant. This study looks at the option of using Revlimid and low-dose dexamethasone in the elderly/ill population instead of the standard treatment of melphalan, prednisone, and thalidomide. Revlimid will be much more expensive than the standard treatment; however, the data suggest that it can be effective and tolerated in elderly/ill patients, increasing the market opportunity for CELG.
Other presentations will focus on studies demonstrating efficacy/safety in new indications. An example is a study of Gilead’s (GILD) idelalisib in combination with rituximab in chronic lymphocytic leukemia, or CLL. Idelalisib is currently awaiting FDA approval for the treatment of refractory indolent non-Hodgkin’s lymphoma, but the company is also planning to file for its use in CLL on the basis of this trial.
It’s also useful to pay attention to early stage studies that address basic issues in cancer treatment. While these studies may not be immediately “actionable” from an investor’s point of view, the studies may be the source of identifying important future trades. Two early stage studies that deserve investor attention look at the identification of a genetic cause of lymphoma – which may lead to targeted treatments for this disease (Abstract LBA-1 and LBA-2). Other studies looks at potential new processes for reengineering stem cells to make them better targets to fight disease. (Abstracts 67, 151 and others).
Specific Companies to Watch
There will be a significant amount of news coming out this year’s ASH conference. Below are several companies/studies that we have written about in the past few weeks, as well as late-breaking abstracts.
- Celgene: Celgene’s Revlimid added an FDA approval for Mantle Cell Lymphoma in June, 2013, supplementing existing approval for use in multiple myeloma and myelodysplastic syndromes. On December 3, 2013, we wrote about CELG’s deal to partner with OncoMed (ONCO) to develop several new drugs, most notably, the stem-cell treatment, Demcizumab (also known as OMP-21M18 Anti DLL4). OMP-21M18, is a monoclonal antibody optimized to block Delta-like ligand 4 (DLL4) in cancer stem cells. OMP-21M18 demonstrated single-agent activity in a Phase 1 study in heavily-pretreated solid tumor patients. Demcizumab is currently finishing phase 1b studies in first-line advanced pancreatic cancer, and OMED has two additional phase 1b trials underway.
- Novartis: On December 6, 2013, Novartis announced results of an early study of its multiple myeloma drug, LBH-589. -589 represents a new class of treatments for the still-incurable multiple myeloma. If approved, the drug would offer competition to CELG’s Revlimid and Millennium Pharmaceutical’s Velcade. While the results were too early to present at this year’s ASH meeting, full results are expected at a later conference.
- Geron (GERN): Geron’s shares have risen sharply in recent weeks on positive data from a Mayo Clinic study of imetelstat in myelofibrosis (MF). While the early data is quite interesting and warrants further study, the drug does not appear to be a cure, but may add to survivability.
- Gilead (GILD): On December 8, Gilead announced positive data from a study looking at idelalisib for treatment of refractory indolent non-Hodgkin’s lymphoma (NHL). The study is noteworthy because idelalisib represents the first new treatment mechanism for difficult cases of NHL in over a decade. If approved, the drug could significantly expand the treatment options for certain patients who have exhausted other therapies.
