Among therapeutic indications, there are few garnering more attention right now from drugmakers than oncology. There's a good reason for it, too, considering that researchers aren't entirely sure why cancer occurs in one person but not another with similar risk factors, and also taking into account that there are essentially no foolproof cures to cancer.
Cancer immunotherapies in focus
Last year, global oncology drug sales hit $100 billion for the first time ever. This worked out to about 10% of global pharmaceutical sales, based on IMS Health's data. Moving forward, cancer drugs are expected to total anywhere from $117 billion to $147 billion in sales by 2018. With such rapid sales growth expected, and the number of cancer patients rising as the world's population rises, the need for superior medicines in terms of efficacy and quality of life deem that new pathways be explored.
One of the newest treatment pathways is the use of cancer immunotherapies as either a monotherapy or, as is most often the case, as a combination treatment with existing chemotherapies or other immuno-oncology products. Immunotherapies work by making your immune system more efficient. By reducing the ability of cancer to hide from the immune system and/or enhancing the search capacity of T-cells to destroy foreign cells, immunotherapies have demonstrated early signs of prolonged progression-free survival and even overall survival in certain instances.
The two best examples are Bristol-Myers Squibb's Opdivo and Merck's Keytruda, which are both approved to treat BRAF V600 mutation-positive metastatic melanoma and non-small cell lung cancer. These checkpoint inhibitors are critical to removing the immunosuppressant quality of cancer cells, which alerts the immune system to attack these cells once they're exposed.
However, a relatively new entrant made waves in the cancer immunotherapy space last week. It's a company you may have heard of a few times before that currently boasts a $205 billion market valuation and is playing a bit of catchup in the pharmaceutical space to its peers. The company in question is none other than Pfizer (NYSE:PFE), and the experimental immunotherapy that's been making noise is avelumab.
The newest cancer immunotherapy player is a giant
Last November, Pfizer entered in a global licensing agreement with Merck KGaA (NASDAQOTH: MKGAY) to jointly develop anti-PDL1 therapy avelumab for more than a dozen different cancer types. Pfizer, trailing its peers in immuno-oncology development, paid a small fortune to gets its share of avelumab. The deal included $850 million in an up-front payment to Merck KgaA, $2 billion in potential milestone payments based on regulatory and commercial milestones, and even a co-promotion agreement for Pfizer's Xalkori in a few markets.
But what Pfizer gets in return could be equally worthwhile. Last week, Pfizer and its partner announced that avelumab was granted the fast-track designation as a treatment for metastatic merkel cell carcinoma, an aggressive form of skin cancer that doesn't currently have an effective treatment option in advanced stages. A fast-track designation allows for more frequent interaction with the Food and Drug Administration that could allow avelumab to expedite its appearance on pharmacy shelves for the indication in question.
Yet, it's not just merkel cell carcinoma where avelumab is turning heads. In a phase 1b open-label study involving non-small cell lung cancer (NSCLC) patients that had progressed after a platinum-based therapy, 25% that were administered avelumab demonstrated an objective response, with 50.5% of patients exhibiting disease control (i.e., stable disease or a partial/complete response). Median overall survival was 8.4 months in the study, and roughly three in eight patients were still alive at the 12-month mark.
This data is more or less similar to what we've seen from the likes of Keytruda and Opdivo in NSCLC. Given the strength of this data, Pfizer and its collaborative partner moved avelumab into a phase 3 study.
Avelumab has also demonstrated promise in treating patients with recurrent or refractory ovarian cancer. Despite many patients being heavily pretreated, in a phase 1b open-label study avelumab led to an objective response rate of 11%, and a 55% disease control rate. What's worth noting is that the time to response was relatively fast -- a median of nine weeks -- and the duration of response if the patient was among the 11% was a whopping 21 weeks. Remember, these are heavily pretreated patients, so any durable response is noteworthy.
Can Pfizer effectively play catchup?
The big question that's left to be answered is whether Pfizer will effectively be able to play catchup to its peers despite entering the cancer immunotherapy scene much later.
To this end, there's still some uncertainty, although the data would appear to suggest that Pfizer has a better-than-average shot at success. Pfizer and Merck KGaA's phase 1b NSCLC data's overall response rate matches up nicely with FDA-approved and still experimental immunotherapies.
In addition, since the cancer immunotherapy market could be worth $35 billion or more by 2023, there appears to be ample room for a half-dozen or more key immunotherapies. Also, since immunotherapies are such a new form of treatment, drug developers and even the FDA have been cautious about giving them an expansive early-stage role. Early-stage indications are where the big bucks are to be made for drug developers since the patient pool is much larger, meaning Pfizer isn't exactly left in the dust just yet.
Obviously, the big question marks are whether avelumab will translate its early clinical success into late-stage success and other cancer types beyond NSCLC and ovarian and whether Pfizer overpaid to get its hands on avelumab once the aforementioned question is answered. Personally, I believe the price inclusive of contingencies was very steep, and it could be quite a while before Pfizer's shareholders or Wall Street have a viable reason to boost Pfizer's stock price considering the size of the carrot it needed to dangle to get Merck KGaA to play along.
In sum, I'd suggest keeping Pfizer's avelumab high on your list of drugs in development worth watching, but I wouldn't go so far yet as to proclaim the deal with Merck KGaA to be a win for Pfizer and its shareholders over the long run just yet.