The annual American Society of Hematology (ASH) conference has historically been fertile ground for revolutionary advances in the treatment of blood disorders and cancers. This year was no exception. Among the thousands of presentations at the conference, a number of groundbreaking advances were reported, including impressive results in multiple myeloma, beta thalassemia, acute myeloid leukemia, hemophilia, and chronic lymphocytic leukemia. Will these indications be transformed by new treatment options? In this episode of The Motley Fool's Industry Focus: Healthcare, Shannon Jones is joined by Todd Campbell to break down ASH 2019's most important stories, including:
- A horse race in BCMA-targeting CAR-Ts for multiple myeloma;
- A big advance in beta thalassemia and sickle cell disease;
- The massive post-ASH rally in a little-known, small-cap biotech targeting myelodysplastic syndromes (MDS);
- A promising update on a one-and-done hemophilia drug;
- A $2.7 billion acquisition that could pay off big in chronic lymphocytic leukemia.
Listen in to learn more about the top stocks that could benefit from these developments, including Johnson & Johnson (NYSE:JNJ), Bristol-Myers Squibb (NYSE:BMY), bluebird bio (NASDAQ:BLUE), Forty-Seven (NASDAQ:FTSV), and uniQure (NASDAQ:QURE).
To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. To get started investing, check out our quick-start guide to investing in stocks. A full transcript follows the video.
This video was recorded on Dec. 17, 2019.
Shannon Jones: Welcome to Industry Focus, the show that dives into a different sector of the stock market every single day. Today is Wednesday, December the 18th, and we're talking Healthcare. I'm your host, Shannon Jones, and I am joined by healthcare guru Todd Campbell. Todd, how's it going?
Todd Campbell: I'm doing great. How are you?
Jones: I am doing well. Can't complain. I know we have a jam-packed show today. So many updates coming out of last week's, really one of the biggest medical conferences that everybody watches. If you don't know, that is none other than ASH. And we'll talk in a minute about what exactly ASH is and what that means if you're not familiar. But just know it's one of the most anticipated medical conferences of the year. I'm talking about investors, patients, physicians.
Today, we're going to cut through all of the noise, all of the hype. Trust me, this is a conference where it's literally thousands of presentations. We're going to give you the most notable highlights and the companies behind those highlights as well. We're going to breeze through a lot of updates quickly. Hang on to your hats. We'll tell you what you should be watching heading into 2020.
Todd, before we dive into updates, though, what exactly is ASH?
Campbell: I'd say it's one of the three most influential conferences that is held for biotech investors every year. The first being JP Morgan, which happens in January. That's coming up. People, pay attention! Then we have ASCO in June. And then, of course, the American Society of Hematology's annual conference, which happens every year in early December. Actually, this was the 62nd annual conference. People may be asking, what the heck is hematology? It's billed, obviously, as the world's most comprehensive hematology event of the year. Hematology is basically the science or the study of blood, blood-forming organs, and blood diseases. So things like hemophilia and blood cancers like multiple myeloma.
Jones: Yes. There's been so much focus in the blood cancer space, particularly multiple myeloma, and the next generation of CAR-T treatments. That, of course, stands for chimeric antigen receptor T cell therapies, which is basically a fancy way of saying, we're going to take your immune system, supercharge it to fight cancer.
Coming into this year's ASH, there have been a lot of questions about, what's the next generation of CAR-T treatments going to look like? We really have a picture of what that could look like and just how competitive this space is. Todd, I think we should start off this segment by talking about probably the one data release that I think has blown the lid off of most other data releases, and that is none other than Johnson & Johnson, ticker symbol JNJ, with their Chinese partner named Nanjing Legend. Todd, what can you tell us about the data coming out of ASH this year for J&J?
Campbell: It was pretty much a home run, Shannon. Investors should probably know that multiple myeloma is one of the biggest indications in hematology. In 2023, the estimates are that it's a $22 billion market. We've made tremendous progress over the last decade in developing drugs to treat multiple myeloma, but more work needs to be done. That's simply because most patients who develop multiple myeloma will indeed relapse, and have to require another line of therapy. The good news is that all of these developments are allowing these patients to live longer. But the bad news is, once you've exhausted five, six, seven different treatments, your treatment options become increasingly more limited. One of the things you're seeing is these companies focusing on -- including Johnson & Johnson -- developing drugs for these later lines of therapy because it also provides a faster pathway through the FDA. The FDA recognizes there is an important need there.
In Johnson & Johnson's trial, they enrolled 29 patients. 100% of those 29 patients had a response to their JNJ-4528. That is remarkable. What was really interesting about those trial results is that 69% were complete responses. 69%!
Jones: I think what's really remarkable -- of course, the data in and of itself is remarkable -- but when you actually look back at last year's ASH, there was this mystery Chinese company, Nanjing Legend, that presented really stellar data. But what you actually saw with the presentation they presented for this drug was basically a lot of scrutiny. There were a lot of questions that I think the particular Chinese presenter couldn't adequately respond to. It was a little almost awkward at times. So there were a lot of question marks about, can we trust the data? And really, what we have seen, and I think what this data really presents, is a validation of what Nanjing Legend has been doing. J&J has partnered with Nanjing Legend. Actually manufactured here in the U.S. and started running trials.
Now, the stellar data we saw last year, we're seeing it this year. And one of the other questions is, why J&J's drug? They're not the only CAR-T BCMA treatment out there. Why are they posting such impressive stats? And one of the hypotheses right now is that basically, they've got two targets on their CAR-T treatment, their CAR-T drug, rather than one. That potentially makes it more potent but also potentially more durable as well.
But, again, they're not the only ones in the space. We had some other companies present data -- of course, not nearly 100% overall response rate. But we had some other companies present some really impressive data, too.
Campbell: Yeah. You have to remember that Johnson & Johnson's trial only was in 29 patients. It's not like five patients, but 29 isn't necessarily, I'd say, enough patients to be able to say you're going to be able to maintain a 100% overall response rate when you have trials with hundreds of patients.
Now, Bristol Myers, thanks to its acquisition of Celgene, and bluebird also presented data for their BCMA targeting CAR-T, bb2121, which they're calling ide-cel. Their trial enrolled patients that had to have undergone already a median of three prior treatments. The high dose, there was an 81.5% response rate. The complete response rate was 35%. So 8 out of every 10 responding. And this is after you've already had at least three prior treatments. That's pretty darn good. Actually, that's good enough for Bristol Myers and bluebird to say that they're going to plan to file for FDA approval of bb2121 in the first half of next year, potentially bringing this late-line multiple myeloma therapy onto the market as early as, depending on the timeline, either the end of 2020 or early 2021.
Jones: Yes. J&J, they have a phase 2 study they're planning to read out by the end of 2020. But I think, even coming out of ASH, and I believe this came out, was it yesterday or earlier this week? GlaxoSmithKline. That's right, GSK could potentially be the first to approval in this exact same space. Todd, tell us about GSK.
Campbell: Yeah, this is kind of crazy, came-out-of-nowhere news. GlaxoSmithKline is working on an antibody drug conjugate called -- I'm just going to call it Bella, Shannon. [laughs]
Jones: Close enough.
Campbell: These names are crazy long, so I'm just going to call it Bella. They were evaluating Bella in patients who had undergone a median of seven prior lines of treatments -- so, even further in the treatment paradigm than either J&J or Bristol Myers was evaluating. What they found is that 31% of these very, very late-line patients responded, including 19% who had a very good response or even better than that. That has prompted them to already file an application with the FDA for approval. It's like, when did that happen?! That filing means they could very well leap-frog into the late-line therapy, winning approval ahead of both bb2121, and, of course, later on down the road, J&J's drug.
Jones: Of course, as we know, getting to the approval finish line first is just one key piece. At the end of the day, it's going to be, is this safe and is it effective? If you look across the board, of course, these aren't head-to-head studies, so you really can't compare. But if you look across the board, and even though it's still very, very, very early for J&J, and we do have to see more patients exposed to the treatment, it really does make you wonder if J&J and Nanjing could be the long-term winners here.
But so much to watch in this space. These are just three companies. There are a lot more that I suspect will join the race as well. But, of course, lots to watch, especially heading into 2020.
Campbell: Before we jump on that, I want to piggyback on something you said there. It's incredibly important for investors to be paying attention to. When it comes to safety, that could be what differentiates all of these drugs. Investors are going to want to pay attention, as they dig through the information that comes out of these companies going forward, take a look at the rates of cytokine release syndrome, or CRS, which is a-life threatening thing that can occur in some of these patients who are given these CAR-Ts. I think, if you can develop a high-response-rate CAR-T with a low incidence rate of cytokine release syndrome, then maybe that'll be your winner.
Jones: Yes, such a good point. I'm so glad you brought that up, Todd. A lot to watch on the safety profile. CAR-T, of course, has been plagued with the cytokine release syndrome issues. We'll have to wait and see what happens there.
I do want to go back to bluebird bio. It wasn't just bluebird and CAR-T. They also brought some new data about LentiGlobin. What did we hear from them?
Campbell: All right, bluebird bio is evaluating LentiGlobin in two indications that are -- well, one of them already has crossed the finish line in the E.U., and that's beta thalassemia. The other one is sickle cell disease. At the conference, they had new data to share with everybody in both of those indications. Specifically, they shared data from the Northstar trial, HGB-204, showing that 8 of 10 treated patients without a certain subtype that's harder to treat achieved transfusion independence for up to 51 months -- 51 months, over four years of durable ability to address beta thalassemia. They also shared results from the Northstar 3 trial, HGB-212, which was evaluating it in the harder-to-treat mutation form of this disease. They found that 9 out of 11 patients with at least six months of follow-up had not had a transfusion for at least the three months previous.
What's interesting and important for investors to take away from this is that you have a potentially one-and-done gene therapy for beta thalassemia that could be available for not only use in the easier-to-treat subtype but also in the more difficult-to-treat subtype. As I mentioned, already approved in the E.U., and filing for approval in the FDA. I think rolling submission is going to be started before the end of this year.
Jones: Yeah, that sounds about right. So, yeah, LentiGlobin, right now already approved in Europe as Zynteglo. Of course, all eyes right now on this potential expansion of their market. This data from bluebird, very impressive.
If Johnson & Johnson made headlines for stellar data out of ASH, there's another company that is making headlines, and it's really because the stock has skyrocketed since ASH, and really even before ASH, going back to October. Todd, what can you tell us about this company called Forty Seven?
Campbell: Forty Seven, the symbol there is FTSV. Boy, do I wish I owned it! Unfortunately, I missed this one. Yeah, it's recently traded around $33 per share. That's up from $6 in October. If you look at what happened after they reported data on their cancer drug at ASH, shares have risen by about 84%. An amazing run up for this relatively unknown player, Forty Seven. It's all tied to a monoclonal antibody that targets checkpoint CD47, called magrolimab.
Jones: We'll call it Mag for short here. I think what's really interesting with Forty Seven and even other companies in this space, Trillium is another one, the CD47 actually gained a lot of prominence several years ago as the don't-eat-me signal. It was believed, like many potential targets in oncology, that this could be the Holy Grail of getting especially to any sort of solid tumor opportunities.
But there's been a lot of starts and stops. Forty Seven though, I think it's not even with Mag but it's also, too, with their preconditioning regimen that has really made headlines across the board. You talked about how much the stock is up since ASH. If you actually go back to their low in October, Todd, the stock is up almost like 468% just this year, which is pretty remarkable. But yes, it all comes down to Mag.
Campbell: Yeah. I think what's interesting about this -- well, you can't go wrong with these results, right? They were evaluating it in myelodysplastic syndrome, MDS, and treatment-naive acute myeloid leukemia. In MDS, there was a 92% overall response rate, including a 50% complete response rate. There was 100% disease control rate, which meant if you include the patients who also had stable disease. That's a really impressive finding in a market that's worth about $1 billion per year, and where no new therapies have been approved in 13 years. The data in AML, not as good, but still very good: 64% overall response rate, with a 41% complete response rate.
Jones: Yeah, very impressive. When you combine Mag with another opportunity, that's FSI-174, investors have been really interested in this space. Investors and physicians are looking basically at the conditioning aspect that's required for things like bone marrow treatments, treating autoimmune diseases, and even many of the gene therapies that are starting to really take off. The hope is, with a combination such as Forty Seven is presenting, that you can actually eradicate the bad cells -- these are the disease-causing stem cells in the bone marrow -- while also still preserving the transplanted cells. Right now, when you're trying to precondition patients for these gene therapies, bone marrow treatments, you're basically giving them chemo, which pretty much obliterates everything. The side effects, as you can imagine, are pretty toxic and pretty hard to tolerate.
One of the things coming out of ASH, and I believe it was a quote that I read from, I think it was a CEO or physician who said, basically, in order for us to see the uptake in things like gene therapy, even gene editing, to some degree, you have to optimize the conditioning treatment. That's ultimately what Forty Seven is attempting to do, combining Mag with FSI-174. This gives the company some optionality aside from Mag itself. It also, too, allows it to ride this wave as we move forward into more and more gene therapies and gene editing options, too.
Campbell: Yeah, I think, for investor perspective, look for more data in 2020. They're going to start a registration trial next year in at least one of those indications. There should also be some data available with a combination trial with Rituxan in diffuse large B cell lymphoma, and that's a $1 billion to $2 billion market in the late-line setting as well. There's more news that should be coming in 2020 that could cause the stock to pop or drop.
Jones: Exactly. And this is the company that has a research collaboration with bluebird bio as well. We'll get more details on that moving forward.
But let's keep going, because the updates keep on coming, Todd. Next up on the list is none other than uniQure, and that is ticker symbol QURE. We've talked about gene therapy a little bit, but this company is hoping to get to approval not in hemophilia A, which we've talked about on the show before, but in hemophilia B. What can you tell us about their efforts?
Campbell: So far, so good. Gene therapy could revolutionize treatment in hemophilia B. That's a multibillion-dollar indication, because patients with hemophilia have to take prophylactic treatments that can range in cost from $500,000 to $750,000 per year. So the idea behind being able to provide a one-and-done-style-type treatment for that disease could be incredibly disruptive.
At the one-year mark, all three patients that were dosed with its gene therapy sustained factor IX activity of 41% of normal. It's important to remember that it doesn't sound like a lot when you say 41% of normal, but clinically speaking, if you're above 12% or so, high single digits, low double digits, you're probably not going to be exposed to the risk of uncontrolled bleeding events. So that is very, very good news. They also showed some durability data from a trial for a first-generation version of this gene therapy, showing that even if you stretch out a few years, four years, you saw some pretty stable or solid production of the missing protein that they need to be able to clot their blood.
So this is a very intriguing company with a drug for hemophilia B that could make it to the market as soon as maybe 2021, 2022.
Jones: That's right. They do have some competition, primarily from Pfizer in this space. They're developing their own hemophilia B therapy. If you recall, this is what they licensed, actually, back from Spark Therapeutics. I think they've got a phase 3 study that started in July. They'll be reading out in 2021 as well. A lot to watch in the space. uniQure, one I've had my eye on for a few years now. Interesting to see them moving into the hemophilia B space. Hemophilia A, of course, which is more common, you do see BioMarin Pharmaceuticals holding the lead there. That, of course, is also with Pfizer, Sangamo, and Spark. But, a lot to watch in this space.
And, Todd, of course, it would not be right to close out a show on a medical conference without giving some M&A news. We definitely got some M&A news. This time, Merck, that's ticker symbol MRK, announced it would be acquiring a company known as ArQule, a precision medicine company, for $2.7 billion. Basically $20 for every ArQule share. Shares were actually trading at $9.66 last Friday. So you're looking at almost a 100% premium. Todd, what can you tell us about this deal?
Campbell: What's interesting about this deal is, we've talked about on the show previously about Imbruvica, which is a BTK inhibitor. Incredibly successful, multibillion-dollar drug already, with potential to be a double-digit billion-dollar-per-year-sales drug. Used in things like chronic lymphocytic leukemia. The problem is that patients are developing BTK resistance to those first-gen BTK inhibitors, including Imbruvica. So what ArQule has is, it's developed a second-generation one that appears to be effective in people who are resistant to these traditional BTKs. If that's the case, wow, they could have a blockbuster drug on their hands. Still have to do, of course, more trials, more testing, and everything. But, yeah, a really interesting development. I think Merck is positioning themselves well to get involved in BTK.
Jones: Yeah, and if you think about Merck, of course, Merck's bread and butter and really their biggest growth driver has been Keytruda. Looking back, Keytruda had sales of $55 million in 2014. That jumped up to $7.2 billion in 2018. That now makes Keytruda about 17% of sales for Merck. So there's been a lot of questions about, where can Merck start to diversify, not be so reliant on Keytruda? This drug, ARQ 531, precision medicine opportunity may be just that. You mentioned Imbruvica. This is a company, I believe it brought in about $3.6 billion for AbbVie last year. Really, even if you pan out and look at this space, these kinase inhibitors have been at the center of a number of different acquisitions.
Of course, AbbVie acquired Pharmacyclics for $21 billion back in 2015. And then, of course, Eli Lilly and their acquisition of Loxo Oncology about a year ago for $8 billion. This is a really hot space. Even hotter, I think, with the BTKs. But it's interesting, if you look at ArQule, this is a company that's actually been around for 20 years. It's probably had more than a dozen different partnerships with a lot of big pharma companies. It's kind of nice to finally see them get bought out, and bought out for an opportunity that I think could be a multibillion-dollar opportunity and hopefully give some relief to these patients that don't respond any longer to drugs like Imbruvica.
Campbell: Right. That was a phase 1 trial, so there's still more trials that need to be conducted, enrolling more people. There were only nine people in the trial, but eight of the nine did have a partial response to their ARQ 531. Seven of eight of those responders harbored the BTK mutation.
The other thing that investors are going to want to pay attention to when future data is released is whether or not there are any cases of atrial fibrillation. Now, fibrillation has been associated with some patients taking Imbruvica. In this trial, there were no cases of atrial fibrillation observed. Maybe there's a safety advantage they can parlay at some point, too, for earlier lines, not just used in the mutant or the resistant population.
Jones: Yep. So a lot to watch there. They're expecting this deal to close in the first quarter of 2020.
As for us, Todd, you and I have covered pretty much everything coming out of ASH that is at least notable. This is certainly not an exhaustive list, because there was much that came out of ASH. But we do want to thank all of our listeners for tuning in, particularly as we attempt to cover so much in so little time. Really, on behalf of the entire Industry Focus team, we just want to thank you for being very loyal listeners every single week.
I will encourage you to tune into a very special holiday edition of Industry Focus airing next week. We've got all Industry Focus hosts together in the studio putting a nice bow on the end of the year. We're also going to be giving some predictions for 2020. You want to make sure that you do not miss those episodes. We're also going to be sharing some really big announcements, some changes coming to Industry Focus in the next year as well.
But as for Todd and I, that'll do it for Industry Focus: Healthcare this week. As you know, people on the program may have interest in the stocks they talk about, and The Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. The show is being mixed by Austin Morgan. For Todd Campbell, I'm Shannon Jones. Thanks for listening and Fool on!