Avid Bioservices Inc (CDMO)

[Protector]

Are BMY and Merck in first O-I fight?

PPHM's Bavituximab is one of the first immuno drugs that, in 2012, could have been on the market if it wasn't that J. Bleecker switched dosage arms as she testifies in the lawsuit between PPHM and CSM, the Fargo CRO where JB ruined our clinical trial, that was ultimately salvaged by management and got FDA PIII design approval and Fast Track.

Since bavi is an immune system activating (by blocking immune suppression) drug in general it is also de facto a player in the sub category onco-immuno or in short I-O. Furthermore it is an UPSTREAM agent.

Currently a new category of O-I drugs is emerging with BMY and Merck being two advanced players with others such as Roche-Genentech, AstraZeneca, Pfizer, etc. They work around what I have called the anti-XYZ (PD-1, PDL-1, CTLA-4, etc) and are DOWNSTREAM players.

A few weeks ago BMY started a lawsuit against Merck in a first big dispute related to PD-1/PDL-1 IP. BMY's Yervoy, a CTLA-4 drug, is already combined in a PI clinical trial with Bavituximab for melanoma. PPHM seemed to have plans for a clinical trial where bavituximab would be combined with a PD-1 player, also for melanoma. We have no idea if this is with BMY or Merck's candidate but for sure, BMY with Opdivo, has now two early stopped clinical trials for squamous and for non-squamous NSCLC while Merck still seems to limb behind and has its two equivalent trials expected in the summer. Will the lawsuit between both mentioned BPs have an impact on PPHM's choice of combo?

For all BP's entering this new category of O-I drugs based on the anti-XYZ is/was a costly adventure. The BP's pipelines where drying up because of end of IP protection in taditional chemo, radio and many others and the generic drugs could come take a position in the chemo and radio markets and cream of revenue of BPs. Drugs like Sanofi's Docetaxel and Bayer's Sorafenib have such generics but the problem is the same for all BPs. They needed new blood in their pipeline and the new onco-immuno drugs seem to be it.

With this new category of anti-XYZ they have IP protection again and, for that sub-set of patients that respond to these new drug, they have revenue outlook again. BMY has more the 40 clinical trials running on anti-XYZ and the other BP's are also heavily invested.

But the lawsuit between BMY and Merck is important. Not only has this to do with direct competitions to keep each other of the market, but it may also have side effects.

As I have explained in other posts it will be very important for BP's to get the SOC (insurance mostly has no problem with SOC prescription and many Doctor just prescribe SOC if applicable in the US) in an EARLY stage because EVERY competitor will have to beat their new SOC and it is expected that ALL anti-XYZ of a same category (say PD-1) will put down results that will be VERY CLOSE to each other because they exploit exactly the same mechanism which should result in the same kind of effect.

So if your competitor puts down a 10 month SOC you must beat that with a comparable drug that will very probably perform in the same range. Beating it may become a matter of luck or bad luck with randomizing as PPHM may have noticed in pancreatic.

BMY had, several weeks ago now, an early stop on its Opdivo for squamous NSCLC clinical trial. For what we know about Opdivo its results where not impressive. Not because it doesn't work well, or even better, on responders but because, just like the other anti-XYZ the footprint of responders is VERY SMALL. It is very probably, yet not sure, that the non-squamous results of Opdivo in the CT that they just stopped will suffer the same footprint problem.

For BMY this is a threat, because as said any other BP's results of anti-XYZ CT could just by chance beat down their results because of randomizing luck/bad luck. If drugs perform close to each other then there is not much needed to move the needle left or right.

The BMY lawsuit will therefore have side effects other then the final verdict. Will PPHM adventure in a PD-1 or PDL-1 adventure with Merck when there is an intrinsic risk that Merck may be kicked out or in a better case would be the more expensive solution because of BMY license to pay? Even if Merck would in the summer show good results too as with melanoma?

What if Merck or BMY get their hands on Bavituximab. Could it block Opdivo or Keytruda in most conditions because Bavi boosts chemo, and although to be confirmed, way behind the anti-XYZ? BMY or Merck would have to compete against GENERICS+Bavi promoted by another BP that has the spinach to make it happen. That could be a serious hit on return to investment. Furthermore Bavi the agent that can increase the footprint of the anti-XYZ responders would be held by the company they want of the market with their lawsuits.

That makes Bavi sound like 'change' for whoever gets its hands on it first. We've seen Glaxo buying into Merck's PD-1 instead of developing their own anti-XYZ. What impact will the BMY vs Merck have on that deal? The odds for Merck may be VERY high here. Yet they didn't loose. BMY's lawsuit could just be a SLOW-DOWN manoeuvre, a trial they know they will loose but in the mean time the field of competitors cannot ignore it and other alliances may be influenced from it.

As the UPSTREAM agent in all this Bavituximab is in an excellent position because in all scenarios they can run CT's with however wins this as well as put down SOC's for NSCLC, Breast and Liver with traditional chemo's such as Docetaxel and Sorafenib. And that last mentioned leg could be a PITA for BP's that very probably will not achieve comparable results on there own with an anti-XYZ alone.

But Bavituximab, and hence PPHM, also qualify as a strategic asset in the fight for the Onco-Immuno market because they can make the difference.

This is how Reuters phrased it.

Opdivo, whose chemical name is nivolumab, competes with Merck & Co's Keytruda, a PD-1 inhibitor that is approved to treat melanoma and which is also being tested against NSCLC. Merck, which aims by midyear to seek U.S. approval of Keytruda for both squamous and non-squamous NSCLC, must now contemplate the likelihood of Bristol-Myers eventually competing in both arenas.

The rival drugs are also in trials against a variety of other cancers.

AstraZeneca Plc, Pfizer Inc and other drugmakers are developing their own PD-1 inhibitors, or similar drugs known as PD-L1 inhibitors. Wall Street expects the products to generate combined annual sales of more than $30 billion by 2025, with lung cancer seen as the most lucrative potential use.

Data from several trials of the promising new family of cancer drugs is slated to be released over the coming week at the annual meeting of the American Association for Cancer Research (AACR) in Philadelphia.