From June 20th, worth another go around...
My views are not very different from comments back in February and possibly March (not sure if those were in my own head or actually shared..)
Much of what took (and is taking) place is not surprising, shocking or otherwise unexpected. Stuff happens in this field and if not for anything else, my input from a year + back was strong about the risk and competition, as well as how the field is shaping up to pretty much converge on PDx products and synergistic combo partners - all driven by 3-4 major players. Go it alone is not a reasonable option in this field because of the fast cycles of innovation and the skew on knowledge expansion, resources and access to enabling services by the giants.
At the same breath, anyone who second guesses Peregrine's shot at chemo totally misses the boat and shows a fundamental lack of understanding of the field and what is possible and when. When Phase II was planned, and then started, none of the big players had their I/O drug available in the market, available for combo trials, or any interest to partner. There was no knowledge of how PDx alone will end up, let along a sliver of understanding into combining and its effects. Players did not know how their PDx worked (and most still don't), and Peregrine did not know how Bavi works (and is still learning). To move forward, Peregrine had only one option - proceed with something available and one that showed strong (lower than ideal stat significance but still very worthy) potential in the phase II. There could be 100 opinions on this - but no objective opinion would put one somewhere else. Learning how the product works and having a shot at a phase III and potential approval gave one option only. And they took it.
For those questioning why it was not stopped/evolved once the horizon changed with the visibility of I/O and combo searches - again lack of appreciation of what is possible and what is not. Once committed to a trial where terminally ill patients are participating, the only way to shut that down 'and change one's mind as a company' is through patients departing on their own, success of the trial, or failure of the trial. Since participants elected to join and by that forego possible alternative options, the company conducting the trials is committed to complete or stop for given set of reasons. There is nothing in their strategy that could or should have changed that.
It is for the same reasons that they had to pull the trigger for futility. Whether sub-groups show impressive efficacy and performance beyond average Chemo arm is irrelevant. Getting a recommendation to stop around late January 2016, and recognizing how options for patients have grown exponentially in terms of available clinical therapies and products, the only option was to go with the stoppage for futility. Even if they believed there was a chance for later separation among subgroups that would ultimately give them a better shot at positive results, especially coupled with a larger sample space (questionable) - only option was to stop. Give patients a choice, and do not get in the way of patient options such as joining a PDx trial.
While continuing the Chemo-Bavi trial, they certainly expanded strategy and aligned I/O exposure with AZN, MSK and NCCN - which is still ongoing.
Chemo combo analysis may produce worthwhile information (which I believe will happen) and that will drive significant but to-us invisible details about further trial design. While Chemo is not dead in oncology, and won't be for a while, the players who will determine how and when it will be used are PDx purveyors and companies with large Chemo product presence who may benefit from purchasing/combining with something novel that enhances chemo. But the leadership will come from I/O driving chemo not the other way around. Still, 2nd and 3rd line chemo, as long as it exists, will still channel a significant population of patients as nearly everyone will eventually progress from 1L with PDx and then require something else. For now.
I am very supportive of their current strategy for a number of reasons.
1. Fast signal seeking trials, combined with major advances in assessing early response, potential durability and even how cancer mutates/respond under the recently introduced PDx products, will provide a relatively fast go no-go decision point across multiple cancer types and from the sounds of it - multiple I/O therapy types.
2. This approach also aligns well with the partner vs. go it alone approach. That should not be a consideration on the whole, but may be a consideration based on geography/indication later on after some partnering (if it's ever worth it). Partner big first, take some scraps for yourself if it's worth your effort.
3. The fact that AZN is formally still in, with NCCN and MSK on the hook, publicly, for formal trials, signals efficacy that is worth while investigating. Any discussion about scientists just playing around if you pay them is total nonsense. The field is ultra competitive and institutions like MSK are far from starving. take a look at their endowments and large corporate sponsors. They can spit the pocket change they receive from Peregrine and never notice it was missing. Focus by those scientists on Bavi means they still see it as a worthwhile effort. Nothing guaranteed of course. Or it would be called Prove instead of Trial. But the engagement alone tells me they are geniunly interested. Results remain to be seen.
4. Fast trials will drive immediate interest by the laggards. That is primarily Roche and AZN. Many players out there but currently Merck and Bristol call all the shots. Everyone else will get scraps. Two other companies stand a chance at a slice or two from the pie - and those are AZN and Roche. Several others will make a few bucks but I'll venture that no other large players will ever recover what they have and will be investing in this field - as it stands for the current generation of experimental products. No one knows what 5 years from now will look like. A strong signal from small trials will get AZN or Roche to bite, as well as Merck and Bristol. The two big boys need differentiation, and the two late comers need a booster to get in. Without a major boost for AZN and Roche - those two will also likely never recover their tremendous investment in PDx products. They will have combos that will be successful - but will be too little too late and own a small chuck of the potential.
My take on outside-in strategy is AZN, BMY, MRK and Roche are the only companies that stand to gain the most, as is Peregrine and patients, from a working Bavi-I/O combo. They are best positioned for quick strike, known working products, and an operational sales channel. Merck or BMY can maintain domination, AZN and Roche can have a chance at a leapfrog with a broad-efficacy product that will put them ahead of the leaders. That is only if Bavi + PDx works in humans - and we DON'T KNOW THAT YET.
I used to think that GILD or other large players would make a good partner. I no longer think so - purely from a selfish perspective for both patients and share holders. PDx is leading the field and so far as I see - will form the baseline for most product combos going forward for a time to come. These companies by far posses the best knowledge and expertise in this dynamic field, are the one shaping it (everyone else is playing in their universe) and are the most equipped to recognize it, put it to use, and commercialize it. A GILD, as an example, stands little chance to call the shots as a combo product from their vantage point. PDx will have others to combine with - Bavi may combine with others but is likely to be most broadly leveraged with PDx. Fastest time to market, bar none, will be with someone who is shaping the field and creating the future for everyone else. There are four companies (2 + 2) currently doing it. That will also address the biggest elephant in the room - cost of combos. Two large separate companies (BMY-GILD as example) looking to cash in on their investment will never get away with $200K+ treatment course tabs. One large company that owns both and pays royalties can do it in a much more reasonable way and still maintain decent margins relative to development investment and buyout.
This is not a 6-7 year journey as many have called out. Positive signals are now visible in 6-9 months and registration trials can be build on Phase II population size. The FDA is also continuing to change it's response times and will react if proof is presented. Once there is an ability (taking shape now) to take as proof, that certain early signals actually translate, without a doubt, to a long term effect (OS, PFS, etc.) - there will be faster efforts to process and approve. I can see a path to 3 year approval, or faster if there is any chance Bavi gets 200% improvement on RR. FDA will make new rules to get that through - the pressure is intense to get people cured and working meds to commercial availability.
Key is - be first or second. Third etc. with minimal improvement means no likelihood of approval and even with approval - a slim portion of the population.
I am hopeful the mechanism works and believe the right people are looking at it. With all due respect to scientists and investors on the board (me included) - none of us are qualified to take anything beyond a lottery-type shot at the mechanism and whether its appropriate. Unless one is an Oncology researcher and is actually using Bavi, and knows what they're doing and understand what they are seeing, all talk about targets, affinity, half life, target counts, etc. are entertainment at best. Some of the speculations may prove to be true - but strictly on the basis of a shot in the dark combined with luck.
I trust that as long as the folks in the institutions that work with Peregrine have their hands on the product, are continuing to evaluate it under various settings, and have not seen a reason to dump it, it communicates a simple message. If it is a worthy effort for their time investment in pursuit of a medical breakthrough, it is worthy of consideration for us investors.
Best,
MH
