The Life Sciences Report: You last spoke to us before the 2014 American Society of Clinical Oncology (ASCO) meeting, where you predicted that immuno-oncology would be the biggest hit for investors. You certainly got that right. What does the investment landscape look like going into 2015?
Stephen Dunn: At ASCO, the buzz surrounded the anti-PD-1 (programmed cell death protein-1) immune checkpoint inhibitor drug space, where Merck & Co. Inc.’s (MRK) Keytruda (pembrolizumab) looked like it would be the first anti-PD-1 to get U.S. Food and Drug Administration (FDA) approval. In September, the company received accelerated approval in second-line melanoma patients. Shortly after that, in December, Bristol-Myers Squibb Co.’s (BMY) Opdivo (nivolumab) received accelerated approval, also for melanoma. With Bristol-Myers Squibb’s anti-CTLA-4 Yervoy (ipilimumab) approved in 2011, we now have three approved checkpoint inhibitors, and they are all approved for melanoma. In 2015, the focus of the checkpoint inhibitor space will be on additional cancer types, beyond melanoma, as well as on collaborations and combinations.
TLSR: What should investors expect to see after these melanoma successes?
“Investors should keep a close eye on Cellular Biomedicine Group Inc. during 2015.”
SD: After melanoma, the next battleground will be in non-small cell lung cancer (NSCLC). Bristol-Myers Squibb already scored a victory a few weeks ago with Opdivo versus docetaxel in second-line squamous cell NSCLC. The survival results were so strong the company’s CheckMate-017 trial was stopped early. While not entirely unexpected, the trial did show, for the first time, a survival benefit, and we expect FDA approval by late summer. Merck is expecting to file Keytruda in NSCLC during the summer, with FDA approval expected in Q4/15. The dark horse in 2015 would be Roche Holding AG’s (RHHBY) anti-PD-L1 (the ligand side of the PD-1 pathway) drug MPDL3280A in NSCLC.
I believe the ultimate market winner here will be determined by the final labels each receives. Finally, look for Bristol’s CheckMate-057 data for Opdivo in non-squamous NSCLC, possibly by late 2015.
TLSR: With all the investor enthusiasm in this space, are there any hidden hurdles?
SD: Clinically, I believe focus on the anti-PD-1/PD-L1 pathway will continue to prove a significant benefit to cancer patients. However, there is an undercurrent of concern for the future economics in this drug class. With both Opdivo and Keytruda costing up to $150,000 ($150K) for 12 months of treatment, and Yervoy $120K for four cycles, payers are already signaling some pushback. For example, it makes sense for Bristol-Myers to combine Yervoy with Opdivo. But does it make sense to believe payers will accept a price tag of $270K? Even as a monotherapy there has been some saber-rattling, as the CEO of Express Scripts Inc. (ESRX) indicated he may use formulary exclusions to force companies to lower their prices—done recently with the new hepatitis C drugs—even though the new drugs are effectively a cure for those patients.
