WINTER 2015/16

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Car-T cell therapylooking beyond the hype!

Reprinted from Drug Discovery World Winter 2015/16

Therapeutics

The advent of immuno-oncology is currentlyshaking up the pharma world both clinical-ly and commercially, spearheaded by the

successful launch and clinical expansion of check-point inhibitors (PD-[L]1 and CTLA-4). Playersthat did not have the vision (or luck) to developsuch an asset in their pipeline are spending bigmoney on competitor’s programmes to partner orto in-license.

Another modality that has created breakthroughdesignation-like data and has stirred up significantindustry, but also public interest, are ChimericAntigen Receptor T-cells (CAR-T). In spite offront-runner programmes producing early but stel-lar clinical response data in B-cell malignancies,several open questions regarding their applicabilityremain to be addressed.

However, investors, both return-oriented andstrategic from the biopharma industry understandthat they might be dealing with another potentialgame-changer, driving up valuations of leadingplayers such as Juno Therapeutics or Kite Pharmainto the multi-billion dollar range and deals areannounced almost on a weekly basis.

Whether these investments will pay-off in a fewyears depends on many unpredictable factors – socrystal ball gazing or gut feelings often dominatethe discussions.

Systematic historical analysis of the clinical andcommercial adoption of novel therapeutic modali-ties can lead to a number of relevant insights for

the CAR-T investment case. To do so, Catenion, aboutique consultancy focused on biopharma strat-egy, has adopted the boom and bust cycle of noveltechnologies that was popularised in the IT field bythe Gartner Group as the ‘hype cycle’, to the adop-tion of therapeutic modalities and novel scientificapproaches in the biopharma world.

Not surprisingly, a similar boom and bust cyclewas observed. Even though it should not be per-ceived as a strictly predictive pattern, the ‘hypecycle’ approach appears to be a valuable tool whendiscussing the prospects of novel modalities, tech-nologies and approaches, before making invest-ment or partnering decisions.

An interesting example is that of monoclonalantibodies that are hugely successful today(approximately $75 billion global sales in 2014and forecasted $125 billion by 2020), characteris-tics of a ‘Plateau of Productivity’ phase in the ‘hypecycle’. Between being ‘hyped’ as ‘magic cancer bul-lets’ severe toxicities in trials and disappointingsales lead the field into a depression and the firstcommercially successful antibodies (rituximab andinfliximab 1997/98) were launched years after firstapproved muronomab (1985).

A similar pattern can be observed for almost allnewly introduced technologies/drug formats withthe caveat that the timelines may be different(Catenion has reviewed 13 technologies so far, datanot shown).

The hot field of CAR-T in immuno-oncology

By ChristophOldenburg,

Dr Markus Thuneckeand Dr John

Herrmann

CAR-TLooking beyond the hype

While CAR-Ts have already demonstrated convincing efficacy in a specificsetting, the jury is still out on whether they are a ‘game-changer’ for oncologyas a whole and can justify current valuations and investor interest.

Reprinted from Drug Discovery World Winter 2015/16

Therapeutics

provides an excellent case study of an evolvinghype cycle, but before exploring this in more detaillet us quickly review a few fundamentals.

The use of T-cells to fight cancer is by no meansa new concept, but rather the evolutionary devel-opment of clinical applications that have beenapplied and fine-tuned for decades.

Edward Donnall Thomas received his Nobel Prizein 1990 for his work on allogeneic hematopoieticstem cell transplantation (allo-HSCT) dating backto the 1950s. Its application is based on a two-foldrationale: (1) the implant of stem cells into a patientafter lympho-depleting chemotherapy, and (2) theanti-leukaemic effect of T-cells that are co-infusedwith the stem cells. As these T-cells are allogeneic,they can recognise and fight leukaemic cells in thepatient. Efficacy is usually a trade-off against safetysince the graft-versus-leukaemia effect only the pos-itive side of the medal that is sometimes counterbal-anced by regularly-fatal graft-versus-host reactions.

The concept became more sophisticated aroundthe end of the 1980s when Dr Steven Rosenbergand his colleagues at the National Cancer Institute(NCI) experimented with the direct introduction ofTumor Infiltrating Lymphocyte (TILs) isolateddirectly from a patient’s tumour. Rosenberg’s teamexpanded TRIL’s ex vivo then reinfused into thesame patient often with recombinant humanInterleukin-2 (IL-2), a potent cytokine that modu-lated T-cell proliferation and cytolytic activation.In principal, this approach, while cumbersome,allowed more specific targeting of patient-uniquetumour associated antigens (TAAs), possiblyincluding ‘neoantigens’ expressed exclusively bycertain malignant cells.

Around the same time, Dr Eshar Zelig and hiscolleagues at the Weizmann Institute in Israelraised the T-cell therapy game to the next level.Not only were T-cells chosen for antigen specificitythat they had developed naturally, but the specifici-ty was manipulated artificially by introducing anti-body variable fragments (scFv) into alpha and betachains of their T-cell receptors (TCR).

Not much later, around 1993, these constructswere simplified into single-chain antibody frag-ments that were linked to the zeta-chains of a T-cellreceptor – the first reported generation of a func-tional CAR-T. The lack of efficacy of these cellswas overcome by introduction of an additional co-stimulatory domain that improved their activity.These constructs – the second generation – are thesame that are in the clinic today (most advancedproduct is Novartis’ CTL019 with an estimatedlaunch date of 2017).

Despite having been applied in the clinic formany years already, no trials applying CAR-Tbefore circa 2009 have produced truly excitingdata. In all these years – until 2009 – no specialisedbiotech was founded and industry practically neg-lected the topic. Instead different academic institu-tions continued to drive the scientific work.

Then, in 2012, newswires announced a newly-formed collaboration between Novartis and DrCarl June’s research team at the University ofPennsylvania that Novartis proudly announcedcould revolutionise the treatment of certain can-cers. At the time the research collaboration wassigned a ‘chimeric antigen receptor’ (CAR) T-celltherapy targeting the CD19 antigen had only beenused in three patients with advanced leukaemia.

Figure 1CAR-T ‘hype cycle’: Valuationof companies focused onCAR-T

Reprinted from Drug Discovery World Winter 2015/16

Therapeutics

With that deal, the field exploded, with noveladvances and biotech/pharma alliances beingannounced almost on a weekly basis. Arguably, thehype also heated-up.

The first evidence of media frenzy was a coverstory entitled “Will this man cure cancer?” aboutNovartis CEO Joe Jimenez, appearing in ForbesMagazine in June 2014.

Backed by excited investors, biotechs were builtbased on programmes of various academicresearch institutions – such as JunoTherapeutics/SCRI, MSKCC and Fred Hutch,Kite/NCI. Other companies licensed in academicCAR-T programmes – such as Bluebird Bio andIntrexon – and biotechs with relevant capabilitiessuch as gene editing announced and started pro-grammes such as Cellectis and Transposagen.Following this inflow of talent and capital, severallarge pharma companies – namely Pfizer, MerckKGaA, Celgene and Amgen – also joined the CAR-T partnering arms race.

The resulting CAR-T hype is reflected by thefirst two capital rounds of Juno summing up to$310 million as well as the IPO valuations andsteep increases in market caps of the major CAR-Tfocused biotechs (Juno, Kite, Cellectis and others)within the past 24 months.

Based on Catenion’s consulting in support of

clients, we believe there is no boardroom or execu-tive committee overseeing major oncology businessunits with R&D efforts that has not grappled withthe question of whether or not to invest in thistechnology. And, if so — ‘how?’ in respect of howrapidly the field is evolving.

Typical for a developing hype is the influx of‘naïve money’ that drives up valuations. Super-heated valuations can often create conditions thatincrease the risk of over-reactions to any new data(whether supportive or negative) sometimes lead-ing to wild fluctuations in share prices.

Naïve in this context means that some investorswill not understand the difference between a genet-ically modified T-cell product and an antibody andthe slogan ‘harnessing the power of the immunesystem to fight cancer’ that circulates may beenough to convince some that they know enoughto spot a winner. Similarly, these investors remainnaïve to competitive pressures of similar technolo-gies applied to the same target. For example, manynaïve investors are unlikely to be capable of dis-cerning which companies are among the handful offront-runners with CAR-T’s platforms directed toCD19+ B-cell malignancies and which will be bothclinically and commercially successful.

Even though the complexity of what Zelig Esharhad first achieved – replacing parts of endogenous

DIMENSION TODAY NEAR FUTURE REMOTE FUTURE

Cell type • Autologous• Allogeneic (TCR+)• Selection for certainratios of subtypes ofCD4/CD8

• Allogeneic (TCR-) • Universal donor

Target/antigen • Haeme tumours: CD19,CD22, NK2DG• Solid tumours: L1CAM,EGFRvIII, GD2, c-Met,mesothelin, HER2

• Haeme tumours:CD123, CD44v6• Solid tumours: ROR-1,MUC-16, CD38, CS1,PSCA• Targeting HLA-presented antigens

• Neoantigens

Transfection • Viral (expensive)• Non-viral (inefficient)• DNA/RNA

• Gene editing• Non-viral (efficient)• Viral (cheap)

Construct • Type and # ofcostimulatory domains• Suicide switches• Modular CAR-Ts

• Armoured CAR-Ts• Safety switches (induce,titratable)

• Multi-specific CARs(either-or)• Bi-specific CAR-Ts (and, not-if)• Safety switches (cont. progress)

Table 1: Technological developments in different dimensions that will define future waves of products

Reprinted from Drug Discovery World Winter 2015/16

Therapeutics

TCRs with scFvs of antibodies – was already sub-stantial and laid the foundation even for today’sclinical programmes, this is merely the beginningcompared to the complexity of what is envisionedby scientists who are continuously pushing theboundaries of cell engineering.

During the first 25 years of development of thisclass of products, the major structural changewithin CAR-T constructs was the introduction of a‘costimulatory domain’ – that differentiated thefirst from the second generation. The third genera-tion products incorporating two costimulatorydomains have been tested clinically already, but theadditional activity has caused lethal toxicities.Currently, it seems that the type and number ofcostimulatory domains is not the major differentia-tor for future products.

Instead, the characteristics (and thereby the suc-cess) of future CAR-T products will be determinedby a large number of factors that each still have toprove their relevance and practicability. In order tokeep track of the vast variety of approaches, wehave introduced the concept of ‘dimensions’ togroup the most important features such as cell typeor target antigen (see Table 1).

While CAR-Ts have already demonstrated con-vincing efficacy in a specific setting, the jury onCAR-T as a game-changer for oncology as a whole– that would justify the current valuations andinvestor interest – is still out. So far, several trialshave created strong positive response data inCD19-positive hematological malignancies, mostlyin the true salvage setting – and as a bridge to allo-HSCT-settings. Unprecedented efficacy has beendemonstrated in Acute Lymphocytic Leukemia

(ALL), and to a lesser degree also in ChronicLymphocytic Leukemia (CLL) and Non-Hodgkin’sLymphoma (NHL). The initial salvage setting iscertainly suitable to demonstrate a strong proof ofconcept (PoC) in an area of very high unmet need,but it is commercially somewhat limited, as thereare only approximately 5,000 incident patients peryear in the seven major markets (7MM) and virtu-ally all advanced products target this segment.Commercial success will depend on expansion intoearlier lines of therapy, but this requires an accept-able safety profile, as patients still have other ther-apeutic options. The major safety challenge at themoment is the almost inevitable cytokine storm, anon-target effect of CAR-T. Although this can bemanaged with anti-IL6, it might still limit applica-tion in less advanced and sick patients. Even moreinteresting both clinically and commercially will bethe expansion beyond the CD19 antigen. Is CD19just a special case or are there other suitable targetantigens for CAR-Ts that will produce equally con-vincing clinical data?

The ultimate challenge and biggest prize forCAR-T lies in the area of solid tumours. Here, incontrast to replaceable B-cells, lineage-specificantigens cannot be targeted, while tumour-specifictestis antigens that are truly unique to the tumourare rare. Since the occurrence of a fatal toxicity ina colon cancer patient that was treated with a thirdgeneration anti-HER2 CAR-T (on-target, off tissuetoxicity due to low expression levels of HER2 inthe lung), only very low doses of CAR-T are usedin clinical trials that are solely powered for safety(the mantra is ‘dose low, go slow’). Hence, the realverdict is still out on the potential of CAR-T in

Figure 2Partnership relations ofselected companies in the fieldof CAR-T (black: Big Pharma,blue: Biotech)

Therapeutics

solid tumours. Solid tumour targeting is whereTCR-engineered T-cells may demonstrate someadvantages. TCRs (T-cell receptors), while HLA-restricted, are capable of redirecting T-cells tohighly tumour specific neoantigens. Numerousbiotechs are advancing platforms to design andevaluate TCR-engineered T-cells.

The evolving field of neoantigens may hold lotsof promise both for antibodies but also cellularproducts such as CAR-T, but this may require evenmore ‘personalisation’ due to patient-specificexpression patterns. Such a degree of personalisa-tion may pose additional logistical challenges forcellular products, and overall this area may be besttackled through easy-to-manufacture vaccines.

A way to overcome the antigen-related safetyissues is to engineer control circuitry into CAR-Tsthrough the activation or silencing of the intro-duced genes of interest. So called ‘safety switches’that are in the clinic today already allow cliniciansto kill off CAR-T as soon as dangerous toxicitiesoccur. The natural next step will be to induce CARgene expression in vivo and thereby allow for mod-ulation of intensity of activity.

One exciting development will be the introduc-tion of multi-antigen recognition. The aim wouldnot be to simply expand the scope of antigens thata cell will target, but to allow programmed deci-sion-making. That is, activation only if two anti-gens are recognised or recognition of one but notanother. Although this is currently only a concept,and clinical applicability is still far down the road,it would open up a whole new area of tumours thatdo not present unique antigens.

The immune-suppressive tumour microenviron-ment, that has rendered many immuno-oncologytherapies ineffective, will most likely also dampenthe efficacy of CAR-T in solid tumour indications.Also for this challenge, an exciting mix-and-matchapproach is already tested in the labs of severalCAR-T pioneers, eg the introduction of cytokinerelease functions into CAR-Ts (Juno) – they aretermed armoured CAR-Ts or TRUCKs.

The significant complexity of the involved cellengineering and required capabilities are often notcovered by a single company. As a consequence,interesting partnership networks of different play-ers – such as oncology biopharma leaders, cell ther-apy specialist, gene editing pioneers and others –have emerged.

From a scientist’s point of view, these are trulyfascinating and have nearly limitless possibilities.For regulatory functions and authorities, on theother hand, these advances pose significant chal-lenges. Already the basic question of what to

define as active pharmaceutical ingredient (API) insuch a ‘cyborg cell’ is a matter of much debate, andcould lead to some sleepless nights in regulatoryagencies.

Imagine what you would have thought 15 yearsago – shortly after the tragic death of patient JesseGelsinger in a trial for gene therapy – if someoneconfronted you with the concept of a cell productwith a number of genetic mutations in order toenable T-cells to make decisions based on the com-position of arbitrary antigens on human tissue‘armoured’ with a cytokine release function, all ofwhich is modifiable in vivo by administration of anoral drug. “The times they are a-changing!”

Another important stakeholder group, thatmay not share the unlimited enthusiasm about theprospects of CAR-T, are payers. They will cer-tainly appreciate the clinical benefits for patients(especially in those hard-to-treat salvage settings),but the cost of therapy could easily turn out to bea major issue, if CAR-T therapies were successful-ly expanded into much broader groups. The costsof goods sold (COGS) has been one of the neck-breakers for the first cellular therapeutic that hasbeen approved in the US, Dendreon’s much-dis-cussed sipuleucel-T, could turn out to be a ‘Swordof Damocles’ for T-cell-based approaches. Ofcourse, the expertise and technologies haveimproved since 2010 when sipuleucel-T wasapproved by the FDA and it is no co-incidencethat Dendreon’s COO, Hans Bishop, is now CEOof Juno, and Novartis acquired Dendreon’s man-ufacturing plant. But the first estimates point tovery expensive therapies, eg Kite suggested a priceof around $150,000. It is no wonder that somelook towards allogeneic products that can be pro-duced off-the-shelf as an elegant solution for theCOGS problem, and the leader in this field, Paris-based Cellectis, aims at COGS of $10,000 perpatient.

Another complication for the manufacturers isthat the high envisioned list prices of CAR-T aredue to actual COGS (explained by significantprocess complexity and supply chain), unlike forsome other premium-priced drugs that justify theirprices only on health-economic grounds. Hence,only limited negotiation headroom for patientaccess schemes or rebates may be available.

CAR-T is not the only approach that aims at re-directing T-cells to tumour tissues, another compet-ing therapeutic modality are bispecific T-cell engag-ing antibodies (essentially sharing the same MoA asCAR-T, leading to T-cell redirection). Like otherantibodies, bispecifics can be produced much easierand hence cheaper than cellular therapeutics.

Reprinted from Drug Discovery World Winter 2015/16

Reprinted from Drug Discovery World Winter 2015/16

Therapeutics

Approval of blinatumomab, Amgen’s anti-CD19/CD3 bispecific, by the FDA in December2014 was based on a Phase II 32% completeresponse rate (CR) and 31% minimum residualdisease negative (MRD-) CRs with a safety profilethat was dictated mainly by on-target effects – thetypical cytokine storm. Using the early data thathas been published from various trials for compar-ison, CAR-T has a very similar safety profile, butthe response rates are much higher – regularly 90-100% CRs and MRD- CRs and also in blinatu-momab refractory patients. Even if this quantita-tive difference was replicated in larger head-to-head studies, many questions regarding the relativemerits of the two competing T-cell engagingapproaches will still remain:

l Will bispecifics be preferred by clinicians due tothe greater convenience and existing experiencewith the modality? l Will next generations of bispecifics – the BITEplatform that blinatumomab is based on suffersfrom extremely short half-lives – overcome its lim-itations and improve efficacy? Is the short half-life,and therefore controllability, preferable overuncontrollable cellular products, especially in indi-cations that can only be targeted via antigens thatare shared by healthy tissues? l How will the suicide switches of cellular thera-peutics change the safety situation and perceptionby clinicians? Will the termination of activity set infast enough? l Will programmable CAR-T that can recogniseantigen compositions on cells make it from theconcept stage into clinical reality?l The price question may well have an influenceon the clinical application – will potentially moreexpensive cellular products only be applied in bis-pecific-refractory patients?

Trying to give answers to most of these questionstoday would be a speculative exercise.

While bispecific antibodies are the closest com-petitors to CAR-Ts in terms of MoA, there are sev-eral more modalities and approaches in immuneoncology such as TCR therapeutics (cellular andnon-cellular), vaccination approaches (especially incombination with checkpoint inhibitors) and –underlined by the recent approval of T-Vec –oncolytic viruses.

Coming back to the original question of how toassess the future perspectives of CAR-T in the lightof its own scientific maturity as well as the signifi-cant competition that we outlined above, it seemsthat one requires a very large crystal ball to take

into account the various influencing factors. Analternative is to review what can be learned fromthe adoption of other novel modalities over the last20 years (our hype cycle analysis).

Technologies usually suffer from setbacks afterinitial hypes and first-generation products so farhave always disappointed before a second-genera-tion roughly 10 years later finally overcame initiallimitations and fulfilled the initial promises.Considering all the different factors (as well as themany more that were not explicitly discussed inthis paper) we have simplified the option space andcreated two dominant scenarios for the future ofCAR-T.

While approval in the commercially-limited sal-vage CD19 settings seems very likely based on thedemonstrated efficacies, the expansion to broaderpatient segments will be decisive for commercialsuccess.

l In the positive scenario, the use of CAR-T can beexpanded to earlier lines of treatment and furtherto solid tumours quickly as technological advancesin additional dimensions that are about to enterthe clinics can already overcome the limitations insafety and applicability of the first wave of prod-ucts already in pivotal trials.l While in the negative scenario use will be con-fined to the initial segments and it will require theusual time for follow-up products (up to 10 years),the result being a slide into depression in the mean-time. CD19 CAR-Ts would be the muronomab-equivalent first approvals – they may bring signifi-cant clinical benefit, but they will be of limitedimpact commercially.

While the learnings from antibodies and othertechnologies make the latter scenario seem morelikely and private investors may be better off stick-ing to Sir John Templeton’s famous advice: The fourmost dangerous words in investing are: “this timeit’s different”, industry investors have the advantageof ‘riding the hype cycle’. The trick will be to avoidan overcorrection, as soon as first scientific/clinicalsetbacks scare away the naïve investors, such a situ-ation can be turned into a scientific leadership posi-tion for companies with unique insights/capabilitiesand perseverant management. DDW

Christoph Oldenburg is an Analyst at Catenion.He holds a Diploma in Chemistry fromHumboldt University of Berlin. His special inter-ests include cellular and gene therapies and how

Reprinted from Drug Discovery World Winter 2015/16

Therapeutics

the breadth of tools of New Biology can be com-bined to fundamentally impact the way we lookat medical treatment.

Dr Markus Thunecke is a founding Senior Partnerof Catenion. Dr Thunecke has more than 18 yearsof experience in strategy consulting and has helpednumerous clients around the globe in the pharma-ceutical and medical products industries improveR&D and innovation performance. Dr Thuneckehas a PhD in biochemistry from the University ofHeidelberg, Germany.

Dr John Herrmann is Expert Partner Oncology atCatenion. Dr Herrmann’s extensive experience inoncology and immune-oncology sources from hisnumerous academic (Assistant Professor at MDAnderson) and industry (CSO Eli Lilly GlobalExternal R&D Oncology, Executive DirectorSearch-&-Evaluation Oncology at Merck Seronoao) occupations.