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RealMoney.comAntigenics' Pipeline Looks Like a No-GoBy Pamela BassettSpecial to RealMoney.com6/14/2005 8:11 AM EDTURL: http://www.thestreet.com/pom/pomrmy/10227803.htmlThis column was originally published on RealMoney on June 13 at 1:04 p.m. EDT.
I do not see a viable future business for Antigenics (AGEN:Nasdaq) with its current late-stage product pipeline. Yet the stock continues to trade in the $6-$7 range with a market cap just under $290 million; both the stock price and market cap are at risk, because prospects for an approvable lead product candidate appear slim.
The company's Oncophage product is in phase III clinical trials for metastatic melanoma and renal cell carcinoma. Antigenics does not expect to submit a biologics license application, or BLA, to the Food and Drug Administration for the melanoma indication. Even if Antigenics does submit a BLA for the renal cell carcinoma indication, I do not believe the product can be competitive.
As a result, my target price for the stock is $3 as news is released in the September-October time frame about the company's phase III clinical trial and manufacturing practices.
Here then, is the rationale for why I think this stock remains overvalued, despite its already steep percentage decline year to date and low absolute price (remember, "cheap" stocks can get cheaper):
Antigenics' lead product candidates are based on the autologous cancer vaccine business model -- the "non-drugable" business model -- which does not utilize standard biologics manufacturing and is fraught with more risk than potential reward. Autologous cancer vaccines involve removing cells from the patient, altering the cells or extracting cellular components to create the vaccine, then returning them to the patient -- an individualized product.
While this sounds like a great idea, it may not be, for several reasons -- not the least of which is that product processing logistics are challenging, margins lower and distribution channels nonstandard. As a result, securing a commercialization alliance with a major pharma company, a move that is usually accomplished by phase II clinical trials for other therapeutics, is difficult.
In pharma/biotech, manufacturing is scaled up for commercial production to a highly automated process that can be closely monitored to produce a standardized product that enables the company to use existing distribution channels. What Antigenics offers in its lead product candidate, Oncophage, is more like a service than an off-the-shelf product. Antigenics' second product is also a personalized vaccine, HSC-858. The production process for this type of product does not lend itself to creating the same cost efficiencies as standard biologics manufacturing of today's protein therapeutics, monoclonal antibodies or conventional vaccines.
Many companies began developing vaccines in the early-to-mid 1990s using cells collected from cancer patients. These patient-specific or autologous cell-based vaccines were less costly to develop and had shorter development lead times. Antigenics produces its Oncophage vaccine by harvesting tumor cells from the patient and then shipping the cells to Antigenics' facility. Using the company's proprietary process, Antigenics isolates the heat shock protein gp96 and its associated peptides. After extraction, purification and sterilization via filtration, the autologous product is put in a vial, frozen and return-shipped for administration by injection to the patient.
On Sept. 2, 2003, a clinical hold was placed on Antigenics' phase III clinical trials of Oncophage in both renal cell carcinoma and metastatic melanoma. The hold was placed because of inadequate data to support specifications for product purity, identity, potency and pH, or the degree of acidity or alkalinity of a solution.
Antigenics responded on Oct. 22, 2003, and the FDA lifted the hold on Nov. 24, 2003. But the company did not conclude discussions regarding the FDA's response to the validation package for the qualified potency assays that was submitted during 2004 until the first quarter of 2005. Assay validation is used to establish the robustness and reproducibility of the assays and to demonstrate that the potency assays work consistently under various conditions. This is part of the FDA's standard requirements for acceptance of manufacturing under good manufacturing practices (GMP).
According to its 10-K filing for 2004, Antigenics plans to continue its development of Oncophage as a therapy for renal cell carcinoma; however, the company does not believe its phase III clinical study of Oncophage in metastatic melanoma will qualify for submission to support regulatory registration. Antigenics states that the vaccine could not be produced for about 30% of the patients in its phase III study.
In Antigenics' first-quarter conference call, the company stated that it plans to test vaccine vials from its phase III part I renal cell carcinoma trial retrospectively to determine whether it can prove that the vaccines were in fact well-characterized -- a general regulatory requirement that means the product components and their amounts are known -- during the trial. After meetings with the FDA during 2004, Antigenics was informed that submission of data from its phase III part I renal cell carcinoma trial would be insufficient to support a BLA and the company initiated a phase III part II clinical trial in renal cell carcinoma in February 2005.
Currently, Antigenics expects that the final analysis of its phase III part I clinical trial in renal cell carcinoma could be triggered in August or September 2005, and that within six weeks the company would be able to make public disclosures. After the final data analysis, Antigenics' management stated that it will decide whether or not to file with regulatory authorities in the U.S., Canada and Europe for Oncophage treatment of post-operative renal cell carcinoma patients (adjuvant therapy indication).
Antigenics ended the first quarter with $114 million in cash and cash equivalents after its private placement in January 2005. Management stated that launch plans are under way for Oncophage. If the company does file for an Oncophage biologics license in the U.S., Canada and/or Europe, the best chances for product acceptance will be in Europe, where regulations regarding the use of personalized therapies differ substantially from those in the U.S.
Should Antigenics pursue a regulatory filing in Europe, Oncophage may be challenging another autologous cancer vaccine, Reniale, which LipoNova GmbH anticipates launching in early 2006 for renal cell carcinoma. In addition to facing competition, Antigenics will face a fragmented market compared with that of the U.S., along with more restrictive reimbursement pressures in Europe that often require substantial discounting.
June 15, 2005
THE BLAST: Antigenics' Proof of PrincipleBy David Lashmet
Cancer vaccine company Antigenics (Nasdaq: AGEN) is in a tail spin. Why?
[1] A new report from Prudential says that no other cancer vaccines have ever worked. Therefore, Antigenics' Oncophage vaccine is likely to fail.
[2] The Street.com chimed in. Its report said, even if Antigenics DOES succeed, it faces significant competition.
Now, what kind of competition could there be if cancer vaccines don't work?
It turns out that a Germany group has ALREADY succeeded with a very similar cancer vaccine in the same kind of cancer. These results were published in the top British medical journal, "The Lancet," back in 2004.
There are still questions about making the vaccine and selling it. This is a whole new approach in biotechnology. Then again, so was making protein drugs 15 years ago. Today, these are commonplace. Amgen (Nasdaq: AMGN), Genentech (NYSE: DNA), and Johnson and Johnson (NYSE: JNJ) sell over $10 billion worth of antibodies and other specialized proteins every year.
I'm not afraid of selling a new technology, especially if I think it works. In Antigenics' case, there's a powerful proof of principle experiment. This wasn't mentioned at all in the Prudential report, but I think it speaks volumes for Antigenics' chances for success.
Check it out:
In February 2004, Dr. Dieter Jocham and colleagues from 55 cancer centers in Germany reported results of a cancer vaccine trial in 379 kidney cancer patients. The five-year progression-free survival rate was 77.4%, versus 67.9% if you didn't get the vaccine.
That 9.5% difference translates into a p ratio of .02 -- there's less than 2% this effect was caused by chance. In fact, if you ran the trial 100 times, it appears that getting the vaccine is ALWAYS good for you. And it could more than double your progression-free survival time.
I know that's technical jargon, but it's also common sense. "Progression-free survival" means your cancer doesn't come back. And as Dr. Jocham explained in May 2004, the people in this study were very high-risk. In fact, the folks who got vaccine were even more high-risk than folks who did not based on the size of the tumor.
As for statistical significance, doctors use a short cut. P values less than .05 are valid, P values higher than .05 are not. This study was way below the threshold. It had double the statistical power that you need to prove your point.
Now let's turn to Antigenics. Its cancer vaccine is a more refined version of what the Germans tried. Antigenics uses just the heat shock proteins (and their cargo) from your tumor.
Put simply, that's the danger signal your immune system needs, along with up to 50 changes unique to your cancer. That's how Antigenics doubled survival time for people with skin cancer and colon cancer.
Nobody can tell you exactly how this will work in kidney cancer. For this, we'll just have to wait to see. But we already know that a weaker vaccine by someone else was successful in Phase III trials. We also know, for ANY cancer, your immune system works the same.
Even if these results are lack-luster, there's something else you should know: Antigenics is looking for boosters and compatible treatments for its cancer vaccines. And, just like the first generation hydraulic diggers were no threat to steam shovels -- how many steam-powered shovels have you seen in the last 50 years?
Technological innovation happens. And it's good to invest in winners, and buy more in the dips. I'm keeping Antigenics (Nasdaq: AGEN) a "Strong Buy" in the Diligence portfolio, because I trust cancer doctors a lot more than Wall Street analysts.
Last year, all the researchers, the peer reviewers and even the commentators for Britain's top medical journal thought a vaccine for kidney cancer was a coming reality. And you should know your immune system works exactly the same on this side of the pond.
RealMoney.comAntigenics' Pipeline Looks Like a No-GoBy Pamela BassettSpecial to RealMoney.com6/14/2005 8:11 AM EDTURL: http://www.thestreet.com/pom/pomrmy/10227803.htmlThis column was originally published on RealMoney on June 13 at 1:04 p.m. EDT.
I do not see a viable future business for Antigenics (AGEN:Nasdaq) with its current late-stage product pipeline. Yet the stock continues to trade in the $6-$7 range with a market cap just under $290 million; both the stock price and market cap are at risk, because prospects for an approvable lead product candidate appear slim.
The company's Oncophage product is in phase III clinical trials for metastatic melanoma and renal cell carcinoma. Antigenics does not expect to submit a biologics license application, or BLA, to the Food and Drug Administration for the melanoma indication. Even if Antigenics does submit a BLA for the renal cell carcinoma indication, I do not believe the product can be competitive.
As a result, my target price for the stock is $3 as news is released in the September-October time frame about the company's phase III clinical trial and manufacturing practices.
Here then, is the rationale for why I think this stock remains overvalued, despite its already steep percentage decline year to date and low absolute price (remember, "cheap" stocks can get cheaper):
Antigenics' lead product candidates are based on the autologous cancer vaccine business model -- the "non-drugable" business model -- which does not utilize standard biologics manufacturing and is fraught with more risk than potential reward. Autologous cancer vaccines involve removing cells from the patient, altering the cells or extracting cellular components to create the vaccine, then returning them to the patient -- an individualized product.
While this sounds like a great idea, it may not be, for several reasons -- not the least of which is that product processing logistics are challenging, margins lower and distribution channels nonstandard. As a result, securing a commercialization alliance with a major pharma company, a move that is usually accomplished by phase II clinical trials for other therapeutics, is difficult.
In pharma/biotech, manufacturing is scaled up for commercial production to a highly automated process that can be closely monitored to produce a standardized product that enables the company to use existing distribution channels. What Antigenics offers in its lead product candidate, Oncophage, is more like a service than an off-the-shelf product. Antigenics' second product is also a personalized vaccine, HSC-858. The production process for this type of product does not lend itself to creating the same cost efficiencies as standard biologics manufacturing of today's protein therapeutics, monoclonal antibodies or conventional vaccines.
Many companies began developing vaccines in the early-to-mid 1990s using cells collected from cancer patients. These patient-specific or autologous cell-based vaccines were less costly to develop and had shorter development lead times. Antigenics produces its Oncophage vaccine by harvesting tumor cells from the patient and then shipping the cells to Antigenics' facility. Using the company's proprietary process, Antigenics isolates the heat shock protein gp96 and its associated peptides. After extraction, purification and sterilization via filtration, the autologous product is put in a vial, frozen and return-shipped for administration by injection to the patient.
On Sept. 2, 2003, a clinical hold was placed on Antigenics' phase III clinical trials of Oncophage in both renal cell carcinoma and metastatic melanoma. The hold was placed because of inadequate data to support specifications for product purity, identity, potency and pH, or the degree of acidity or alkalinity of a solution.
Antigenics responded on Oct. 22, 2003, and the FDA lifted the hold on Nov. 24, 2003. But the company did not conclude discussions regarding the FDA's response to the validation package for the qualified potency assays that was submitted during 2004 until the first quarter of 2005. Assay validation is used to establish the robustness and reproducibility of the assays and to demonstrate that the potency assays work consistently under various conditions. This is part of the FDA's standard requirements for acceptance of manufacturing under good manufacturing practices (GMP).
According to its 10-K filing for 2004, Antigenics plans to continue its development of Oncophage as a therapy for renal cell carcinoma; however, the company does not believe its phase III clinical study of Oncophage in metastatic melanoma will qualify for submission to support regulatory registration. Antigenics states that the vaccine could not be produced for about 30% of the patients in its phase III study.
In Antigenics' first-quarter conference call, the company stated that it plans to test vaccine vials from its phase III part I renal cell carcinoma trial retrospectively to determine whether it can prove that the vaccines were in fact well-characterized -- a general regulatory requirement that means the product components and their amounts are known -- during the trial. After meetings with the FDA during 2004, Antigenics was informed that submission of data from its phase III part I renal cell carcinoma trial would be insufficient to support a BLA and the company initiated a phase III part II clinical trial in renal cell carcinoma in February 2005.
Currently, Antigenics expects that the final analysis of its phase III part I clinical trial in renal cell carcinoma could be triggered in August or September 2005, and that within six weeks the company would be able to make public disclosures. After the final data analysis, Antigenics' management stated that it will decide whether or not to file with regulatory authorities in the U.S., Canada and Europe for Oncophage treatment of post-operative renal cell carcinoma patients (adjuvant therapy indication).
Antigenics ended the first quarter with $114 million in cash and cash equivalents after its private placement in January 2005. Management stated that launch plans are under way for Oncophage. If the company does file for an Oncophage biologics license in the U.S., Canada and/or Europe, the best chances for product acceptance will be in Europe, where regulations regarding the use of personalized therapies differ substantially from those in the U.S.
Should Antigenics pursue a regulatory filing in Europe, Oncophage may be challenging another autologous cancer vaccine, Reniale, which LipoNova GmbH anticipates launching in early 2006 for renal cell carcinoma. In addition to facing competition, Antigenics will face a fragmented market compared with that of the U.S., along with more restrictive reimbursement pressures in Europe that often require substantial discounting.
June 15, 2005
THE BLAST: Antigenics' Proof of PrincipleBy David Lashmet
Cancer vaccine company Antigenics (Nasdaq: AGEN) is in a tail spin. Why?
[1] A new report from Prudential says that no other cancer vaccines have ever worked. Therefore, Antigenics' Oncophage vaccine is likely to fail.
[2] The Street.com chimed in. Its report said, even if Antigenics DOES succeed, it faces significant competition.
Now, what kind of competition could there be if cancer vaccines don't work?
It turns out that a Germany group has ALREADY succeeded with a very similar cancer vaccine in the same kind of cancer. These results were published in the top British medical journal, "The Lancet," back in 2004.
There are still questions about making the vaccine and selling it. This is a whole new approach in biotechnology. Then again, so was making protein drugs 15 years ago. Today, these are commonplace. Amgen (Nasdaq: AMGN), Genentech (NYSE: DNA), and Johnson and Johnson (NYSE: JNJ) sell over $10 billion worth of antibodies and other specialized proteins every year.
I'm not afraid of selling a new technology, especially if I think it works. In Antigenics' case, there's a powerful proof of principle experiment. This wasn't mentioned at all in the Prudential report, but I think it speaks volumes for Antigenics' chances for success.
Check it out:
In February 2004, Dr. Dieter Jocham and colleagues from 55 cancer centers in Germany reported results of a cancer vaccine trial in 379 kidney cancer patients. The five-year progression-free survival rate was 77.4%, versus 67.9% if you didn't get the vaccine.
That 9.5% difference translates into a p ratio of .02 -- there's less than 2% this effect was caused by chance. In fact, if you ran the trial 100 times, it appears that getting the vaccine is ALWAYS good for you. And it could more than double your progression-free survival time.
I know that's technical jargon, but it's also common sense. "Progression-free survival" means your cancer doesn't come back. And as Dr. Jocham explained in May 2004, the people in this study were very high-risk. In fact, the folks who got vaccine were even more high-risk than folks who did not based on the size of the tumor.
As for statistical significance, doctors use a short cut. P values less than .05 are valid, P values higher than .05 are not. This study was way below the threshold. It had double the statistical power that you need to prove your point.
Now let's turn to Antigenics. Its cancer vaccine is a more refined version of what the Germans tried. Antigenics uses just the heat shock proteins (and their cargo) from your tumor.
Put simply, that's the danger signal your immune system needs, along with up to 50 changes unique to your cancer. That's how Antigenics doubled survival time for people with skin cancer and colon cancer.
Nobody can tell you exactly how this will work in kidney cancer. For this, we'll just have to wait to see. But we already know that a weaker vaccine by someone else was successful in Phase III trials. We also know, for ANY cancer, your immune system works the same.
Even if these results are lack-luster, there's something else you should know: Antigenics is looking for boosters and compatible treatments for its cancer vaccines. And, just like the first generation hydraulic diggers were no threat to steam shovels -- how many steam-powered shovels have you seen in the last 50 years?
Technological innovation happens. And it's good to invest in winners, and buy more in the dips. I'm keeping Antigenics (Nasdaq: AGEN) a "Strong Buy" in the Diligence portfolio, because I trust cancer doctors a lot more than Wall Street analysts.
Last year, all the researchers, the peer reviewers and even the commentators for Britain's top medical journal thought a vaccine for kidney cancer was a coming reality. And you should know your immune system works exactly the same on this side of the pond.
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