Biotech Investors Eye the Explosive PD1 Oncology Opportunity (MRK, OTLC, BMY, RHHBY, BGNE, GMAB)

The PD-1 blocker market has exploded into place as one of the most important and promising major biopharma oncology markets yet to appear. Immuno-oncology drugs that block the checkpoint PD-1 have been some of the most successful stories in the industry over recent years, launching blockbuster drugs like Opdivo and Keytruda – central assets from Bristol Myers Squibb Co. (NYSE:BMY) and Merck & Co. Inc. (NYSE:MRK), respectively.

The blossoming of this category has been rapid and remarkable, and fueled by a real and tangible need, resulting in the emergence of what is now estimated to be a $23 billion market.

For investors interested in this explosive space, there are a few interesting angles evolving this year that could provide fresh fireworks. With that in mind, we take a closer look at a handful of related stories that may offer interesting opportunities related to the PD-1 blocker theme.

Merck & Co. Inc. (NYSE:MRK) has been in the driver’s seat in the PD-1 blocker marketplace since it introduced Keytruda.

The company engages in the provision of health solutions through its prescription medicines, vaccines, biologic therapies, animal health, and consumer care products. It operates through its Pharmaceutical, Animal Health, and Other segments. The Pharmaceutical segment includes human health pharmaceutical and vaccine products. The Animal Health segment discovers, develops, manufactures, and markets animal health products, such as pharmaceutical and vaccine products, for the prevention, treatment, and control of disease in livestock and companion animal species.

Merck & Co. Inc. (NYSE:MRK) recently announced new data from studies evaluating KEYTRUDA, Merck’s anti-PD-1 therapy, at the Society for Melanoma Research (SMR) 2021 Congress. Presentations demonstrate the company’s scientific expertise and continuing commitment to delivering meaningful advances for patients with melanoma. Key data include exploratory 7-year follow-up from KEYNOTE-006, the pivotal trial that supported the indication for KEYTRUDA in advanced melanoma, and updated findings from the KEYNOTE-716 trial that is evaluating KEYTRUDA as an adjuvant treatment for patients with resected stage IIB or IIC melanoma. These data were both selected for inclusion in plenary sessions at the SMR 2021 Congress.

“The seven-year data for KEYTRUDA in advanced melanoma is a significant milestone for the field of melanoma research and for patients,” said Dr. Roy Baynes, senior vice president and head of global clinical development, chief medical officer, Merck Research Laboratories. “Just ten years ago, the median survival for patients with metastatic melanoma was less than a year and only 10% of patients could expect to survive more than five years. We are incredibly honored to present these new long-term survival data in advanced disease at this year’s SMR 2021 Congress, as well as updated findings in stage IIB and stage IIC melanoma.”

Even in light of this news, MRK hasn’t really done much of anything over the past week, with shares logging no net movement over that period. Shares of the stock have powered higher over the past month, rallying roughly 8% in that time on strong overall action. 

Merck & Co. Inc. (NYSE:MRK) managed to rope in revenues totaling $13.1B in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of 4.7%, as compared to year-ago data in comparable terms. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($10B against $23.7B, respectively).

Oncotelic Therapeutics Inc (OTC US:OTLC) is an artificial intelligence driven immuno-oncology company with a robust pipeline of first in class TGF-β immunotherapies for late stage cancers such as gliomas, pancreatic cancer and melanoma. This is the most speculative play in the space, but wheels are clearly turning, and it could be a dark-horse PD-1 star in the making.

OT-101, the lead immuno-oncology drug candidate of Oncotelic, is a first-in-class anti-TGF-β RNA therapeutic that exhibited single agent activity in relapsed/refractory cancer patients. OT-101 also has shown activity against SARS-CoV-2 and has completed a phase 2 trial against COVID-19, with data cleaning and evaluation and datalock ongoing. 

Oncotelic Therapeutics Inc (OTC US:OTLC) most recently announced an update of its ongoing OT-101/IL-2 combination Multi-center, Open label, Phase Ib clinical trial to evaluate the safety, tolerance, and efficacy of TASO-001 (“OT-101”), a TGF-β targeting anti-sense oligonucleotide, in combination with recombinant interleukin-2 (Aldesleukin, “IL-2”), in patients with advanced or metastatic solid tumor cancer (ClinicalTrials.gov Identifier: NCT04862767), which has now successfully completed the safety evaluation of its safety cohort, allowing for further expansion of its clinical program into phase 2 clinical trials and higher doses.

OT-101 is a first-in-class anti-TGF-β ribonucleic acid therapeutic that has exhibited single agent activity in relapsed/refractory cancer patients in multiple clinical trials. OT-101 has also demonstrated activity against the SARS-CoV-2 virus, the virus that causes COVID-19, and is currently being evaluated in the Company’s C001 clinical trial against hospitalized severe COVID-19.

In the safety cohort treated during the Trial, the standard dosage of 140mg/m2 of OT-101was well tolerated in combination with IL-2, which has allowed for ongoing dose escalation to 190 mg/m2. The 140 mg/m2 dose was shown to be the optimal dose for OT-101 in the prior trial targeting pancreatic cancer, melanoma, and colorectal cancer. In the P001 trial, the maximum tolerated dose was not reached even at 330 mg/m2. Therefore, the Company believes that increasing the dose above 140 mg/m2 should further enhance the clinical activity of OT-101.

Oncotelic Therapeutics Inc (OTC US:OTLC) CEO, Dr. Vuong Trieu, noted in the release, “We are excited to see this clear demonstration of safety for the OT-101/IL-2 combination. Unlike other common treatments, such as chemotherapy, IL-2 has the potential to bring about long-lasting responses and even cures in about one in 10 patients with metastatic kidney cancer and metastatic melanoma. Our analysis to date suggests that the OT-101/IL-2 combination could further improve the cure rate of these cancers. We look forward to updating shareholders as we gain further insights with additional data.”

Roche Holding AG ADR (OTC US:RHHBY) is one of the most interesting names in the space. The company operates as a research healthcare company. It operates through its Diagnostics and Pharmaceuticals segments.

The Pharmaceutical segment refers to development of medicines in the field of oncology, immunology, ophthalmology, infectious diseases, and neuroscience. The Diagnostic segment refers to diagnosis of diseases through an in vitro diagnostics process. The company is levered to the PD-1 blocker theme through Tecentriq, a blocker developed by Genentech in 2016 – Genentech was acquired by Roche in 2009.

Roche Holding AG ADR (OTC US:RHHBY) recently announced that the US Food and Drug Administration (FDA) has approved Tecentriq (atezolizumab) as adjuvant treatment, following surgery and platinum-based chemotherapy, for adults with Stage II-IIIA non-small cell lung cancer (NSCLC) whose tumors express PD-L1≥1%, as determined by an FDA-approved test.

“Tecentriq is now the first and only cancer immunotherapy available for adjuvant treatment of NSCLC, introducing a new era where people diagnosed with early lung cancer may have the opportunity to receive immunotherapy to increase their chances for cure,” said Levi Garraway, M.D., Ph.D., Roche’s Chief Medical Officer and Head of Global Product Development. “Today’s landmark approval gives physicians and patients a new way to treat early lung cancer that has the potential to significantly reduce risk of cancer recurrence, after more than a decade with limited treatment advances in this setting.”

It will be interesting to see if the stock can break out of its recent sideways action. Over the past week, the stock is net flat, and looking for something new to spark things. RHHBY shares have been relatively flat over the past month of action, with very little net movement during that period. 

Roche Holding AG ADR (OTC US:RHHBY) managed to rope in revenues totaling $30.7B in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of 0.8%, as compared to year-ago data in comparable terms. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($8B against $25.2B, respectively).

Other key stocks in the space include BeiGene Ltd. ADR (Nasdaq:BGNE) and Genmab A/S ADR (Nasdaq:GMAB).

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Published by Alan Masterson

Alan has over 25 years of trading experience in the U.S. equity markets. He began his career in finance working on a program trading desk specializing in over-the-counter stocks. His career progressed from that point to his current position as senior trader on an institutional trading desk. In the evenings, Alan teaches economics at a local community college. He has contributed articles to various publications over the last six years, including feature articles for an economics magazine and various financial blogs. You may contact Alan via his email (alanmasterson@wallstreetpr.com) or his Google+ page (https://plus.google.com/103338576216002376250).

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