Scott Matusow

About the Author Scott Matusow

StockMatusow.com is Scott Matusow; Team Leader, co-owner and founder of StockMatusow.com and Dan Cohen, co-owner, and independent investor/scientist/inventor/trader and lead contributor at stockmatusow.com. Scott is an independent investor/writer/trader and team leader of StockMatusow.com. He has have about 20 years of stock market experience which include trading, investing, and managing his family’s trust as well as his personal account. Scott has had the most success in trading/investing in smaller cap growth companies. Because Scott is not 'officially trained' in the markets, he see things outside the box, using his experience to provide clarity and alpha. Scott uses his ability to read situations, emotion, charts, times and sales, historical data, and macroeconomic and other market forces to predict stock price movements, in both short and longer terms situations. Using these acquired allowed for him to completely divest his own and family's money near the top of the market before the 2008 financial crisis. Dan Cohen is an entrepreneur in the fields of biotech, nanotechnology, medical diagnostics, and energy storage - Dan is also a Scientist and inventor. He has 7 years of experience investing and trading biotechnology focused equities with a specialty in identifying under-appreciated value in small caps. Dan utilizes his experience reading and reviewing scientific literature to evaluate prospects for success. His work with diagnostics development give him a strong background in immunology which is leveraged in evaluating immunology focused approaches. As well Dan has 5 years trading futures, specializing in E-minis and Treasury products. He utilizes a combination of technical analysis, deep scientific research, and macro views to generate alpha for the team. Places you can follow Scott are: www.stockmatusow.com http://www.twitter.com/StockMatusow @StockMatusow http://www.facebook.com/TheScottMatusowShow Places to follow Dan are: https://twitter.com/biosleuth and www.stockmatusow.com

Calithera Biosciences Inc: A Growing Player in the Immune System (Part II)


Written by Dan Cohen and Scott Matusow

After consistent disappointments in the development of agents to treat metastatic triple-negative breast cancer (TNBC), novel immuno-therapeutic approaches may offer a new hope to patients. A hallmark of TNBC is of course the lack of receptors for the targeted approaches that have improved outcomes in other breast cancer subsets. As a result, there is no established standard of care for TNBC.

Newly diagnosed patients are typically given a combination of two chemotherapeutic class of drugs in the neo-adjuvant (prior to surgery) setting, taxanes and anthracyclines. However, about ⅓ of these patients suffer from disease progression within 3 years at which point the prognosis grows increasingly grim.

Although The U.S. Food and Drug Administration (FDA) has approved multiple therapies targeting the human epidermal growth factor receptor 2 (HER2), estrogen receptor (ER), and progesterone receptor (PR), there have been relatively few new options afforded to TNBC patients.

Tumors which are refractory to the front-line chemotherapies typically develop resistance mechanisms through a number of potential pathways. As a result, medical practitioners have few alternative therapeutic options if a patient progresses after surgery and first-line chemo. Once a patient falls off from disease stabilization, common practice is to administer high doses of platinum and/or chemotherapeutic agents – often without much success.

Historical response rates to chemo in metastatic TNBC range around 15-20%, which currently leaves us with a significant unmet medical need. This poor efficacy combines with the tendency for TNBC to metastasize.

However, as we highlighted in our last article, PD-1/L1 targeted antibodies may afford a new path-forward, acting as a cornerstone for therapy in many difficult-to-treat settings like TNBC. Indeed, there has been some early progress made to this end with mono agent PD-1 checkpoint inhibitors (CPIs), demonstrating comparable efficacy to single chemo agents.

In December of 2014, Merck (NYSE:MRKannounced data from its KEYNOTE-012 study evaluating Keytruda (a PD-1 inhibitor) in TNBC. The data showed an overall response rate (ORR) of 18.5% in the 27 evaluable patients and a six-month progression-free survival (PFS) of 23.3%. As well, Genentech’s Tencentriq (PD-L1 inhibitor) demonstrated an ORR of 19% in 21 evaluable patients, the majority of whom having four or more prior lines of therapy.

While these agents did show some level of activity, Genentech had noted a rather significant amount of patients who demonstrated what is described as “pseudoprogression”. Although the CPI was infact active and durable in patients, it was apparent that the disease was progressing faster than the drug was working. Patients who did progress did still yield some level of benefit in terms of increased survival or more prolonged tumor shrinkage. This had led the company to explore options which hastened time to response in order to buy the CPI more time to work.

In a Phase 1b trial where Tencentriq was combined with Celgene’s (NASDAQ:CELG) Abraxane (a taxane class of chemo), an ORR of 38% was demonstrated. Interestingly, Genentech demonstrated a better prognostic outcome in patients who had a higher proportion of tumor infiltrating lymphocytes (TILs). This is now being further explored as a potential biomarker in a phase III trial evaluating Tencentriq + Abraxane vs Abraxane as a single agent in front-line TNBC.

Not all taxanes are created equal. In 2010, Celgene elected to acquire Abraxis, the former developer of Abraxane, for $2.9B for its potential drug platform in an array of breast cancer settings.

Roche’s (OTCMKTS:RHHBY) choice to persue the combination study with Celgene’s Abraxane as opposed to Bristol-Meyer-Squibb’s (NYSE:BMY) Paclitaxel is key for strategic positioning in TNBC moving forward.

In a head-to-head study evaluating the two taxane-class therapies in the neo-adjuvant setting for HER2+ early breast cancer, Abraxane demonstrated a notably higher response rate (38% vs 29%). However, this does come with the drawbacks of a lesser safety profile as peripheral sensory neuropathy grade 3-4 events saw a statistically significant increase in the Abraxane group.

The ball is now in Bristol-Myers-Squibb’s court to muster a meaningful response to Roche and Celgene’s positioning in breast cancer.

Considering the more benign safety profile of Paclitaxel, we feel that there is room for additional tack-on therapies which can open new pathways for Bristol-Myers-Squibb. The establishment of new biomarkers in difficult-to-treat settings such as TNBC is crucial for the success of novel combinations, affording these larger pharmaceuticals significant leverage when a key subset shows remarkably improved response.

It is paramount for these companies to establish a subset of potent response in order to maintain the business viability of their approaches. If Genentech manages to establish a foothold in TNBC with Tencentriq, many of the other PD-1/L1 developers will be in a largely de-levered position in this space. Along these lines, companies which are working on alternative biomarkers such as our featured company, Calithera Biosciences (NASDAQ:CALA), may hold the key to unlock more value and additional business leverage.

Calithera’s glutaminase-1 (GLS1) inhibitor (CB-839) has already shown efficacy data from the initial look in combination with Paclitaxel (another Taxane class of chemotherapy) in TNBC at the American Society for Clinical Oncology (ASCO) this year. The company demonstrated a 37.5% ORR at the dose level of 600mg+ twice daily, which Calithera intends to pursue further in a phase II design.

GLS1 is an enzyme used by many cancer cells to process Glutamine, a key amino acid for proliferating tumor cells under hypoxic conditions. Glutaminase is particularly an interesting target for this subset of metastatic breast cancer, as a recent study demonstrated that TNBC and HER2+ breast cancers showed the greatest expression of GLS1. It was also reported in a separate study that glutamate, the direct byproduct of glutamine metabolism by way of GLS1, directly correlates with breast cancer patient outcomes.

In combination with a taxane, CB-839 has the potential to reverse a tumor’s resistance to the chemotherapeutic agent. Though the mechanism as to how this happens is not fully understood, Calithera has preclinical modeling data suggesting that resistance to taxane therapies may function by means of glutamine transporters. In a different study, this theory was further bolstered by the findings that taxane-resistant cells upregulated GLS1.

By knocking out GLS1 with siRNA, the TNBC cultures were re-sensitized to the taxane agent. There was strong evidence of this resistance reversal for the responders to therapy in the Phase I trial. All three partial responders were administered some form of taxane therapy higher up in the lines of treatment. We can see the patients’ treatment history in the table below, courtesy of Calithera’s ASCO poster.

Calithera plans to update the status of these patients as well as new patients enrolled at the higher, more active dose-levels at the San Antonio Breast Cancer Symposium on December 10th of this year.

Of particular interest to us is the Patient A who saw a dramatic 55% tumor reduction at only 1.8 months into this study. After the tumor began to progress following treatment with Letrozole, she went through each line of therapy without much success, exemplifying the problem with the current FDA approved courses of therapy.

However, upon the addition of CB-839 to Paclitaxel, disease progression quickly stopped. We are excited to get a progress update on this particular case as it has the potential to demonstrate a complete response (CR) upon follow-up, something that is very rarely achieved in metastatic TNBC in a salvage setting. If this patient shows to be a CR (80% tumor reduction or greater) or close to it, this would be substantial news which should spark a significant rally in Calithera’s stock.

The responses here are even more interesting when considering the relatively benign safety profile of CB-839. The drug has been shown to only have minimal penetration into the CNS where GLS1 is actively used in neural transmission.

By selectively inhibiting GLS1, the alternative isoform GLS2 which is used by immune cells and the liver, is unaffected. Early data suggests that the majority of severe adverse events (sAE) were taxane related, making CB-839 an interesting candidate as a tack-on therapy.

As we discussed in our last piece, CPIs have the potential for a highly synergistic mechanism of action (MoA) with CB-839 due to the liberation of glutamine for T-cell consumption in the tumor microenvironment (TME). Indeed, CB-839 is being evaluated in a number of settings in combination with Bristol-Meyers-Squibb’s PD-1 inhibitor Nivolumab, better known commercially as Opdivo.

Considering the initial success from Genentech’s trials evaluating Tencentriq with Abraxane and the rapid advancement into a Phase III design with an exploratory biomarker, the pressure is on Bristol-Myers-Squibb to answer quickly if they wish to remain competitive in the TNBC space.

If Calithera can continue to confirm CB-839’s ability to re-sensitize cells to taxane, we feel that a strategic partnership or even an outright acquisition of Calithera may in fact be in Bristol-Meyers-Squibb’s best interest best interest.

There is certainly room for a triple combination approach to this stubborn disease consisting of CB-839, Opdivo, and Paclitaxel given what has been demonstrated thus far. A common theme lately in the medical oncology field is the need to make tumors ‘hot’ before targeting with an immuno-therapeutic agent such as a CPI.

To achieve this, a number of tumor cells must die (apoptosis) in order to present antigens and novel targets to the immune system. This mechanism wakes up the immune cells to the diseased target, now potentiated with CPI. However, based upon the resistance built up by the tumor in this refractory setting to chemo agents, simply administering Abraxane may not be the most broadly effective approach to achieve this.

Adding in CB-839 to the therapeutic regimen may enable more sensitivity to chemo, thus making therapy more immunogenic. This asset can give Bristol-Myers-Squibb a key edge over Genentech in TNBC because of the increase in potential responders to CPI’s.

For competitive purposes, Bristol-Myers-Squibb should take note of Celgene’s partnership with Agios Pharmaceuticals (NASDAQ:AGIO), another developer of small-molecule cancer therapeutics targeting tumor metabolism.

In 2010 when Agios was still in the pre-clinical stage, the company received in a collaboration with Celgene an $130 Million upfront payment + future milestones. The initial scope of the partnership covered Isocitrate dehydrogenase mutant (IDHm) inhibitors as well as a pyruvate kinase M2 (PKM2) program.

Even 6 years ago we can see that big pharma was willing to shell out significant cash in collaboration with developmental pharmas for valuable pre-clinical assets. These days, big pharma seems more than willing to flat out acquire companies in the pre-clinical stage as noted by Celgene’s recent acquisition of EngMab for $600M. This could bode well for Calithera investors if its’ data trends continue to be positive here.

In addition, in April of this year Agios and Celgene established a new collaboration agreement with a fresh upfront payment of $200M, additionally agreeing to split the cost’s and profit sharing an equal 50/50 in regards to Agios’s metabolic immunooncology programs. Agios certainly seems to be on the right track here as it continues to grow its’ collaboration with Celgene.

Although Agios’s programs are primarily focused on development in the settings of Acute Myeloid Leukemia (AML) and other hematologic malignancies, they are exemplary of the value that metabolic regulators bring to larger-cap biopharmas seeking to maintain an edge in oncology.

Investors should also take note of the pending data for the trial evaluating CB-839 + Novartis’s (NYSE:NVS) Everolimus in renal cell carcinoma (RCC). Everolimus is an mTOR inhibitor which blocks the tumors ability to metabolize glucose. Calithera reasons that by combining the two agents, it could act as a one-two punch in addressing cancer metabolism more effectively.

Currently as of ASCO 2016, Calithera has demonstrated a 100% disease control rate in clear cell and papillary cell carcinoma. This disease control may be attributed to an inactivated von Hippel-Lindau (VHL) gene, which blocks oxidative metabolism, creating a pseudo-hypoxic environment where the tumor is dependent on glutamine.

When CB-839 is administered, preclinical data shows that starving cancer cells down-regulate mTOR and slow proliferation. Calithera will update the status of the RCC trial at the triple meeting (EROTC-NCI-AACR) in Munich this year on November 30th, thus providing investors with an additional potential value-driving catalyst event before the updated TNBC data is revealed Dec.10th.

Following the transitory drought of meaningful new deals, it appears that the larger developers are pivoting back to the nature of deal making we saw in the early stages of the biotech bull market in 2010.

Both within and outside of oncology, we are seeing a significant uptick in large pharmaceutical interest in early R&D assets, especially as the pipelines of the larger players continues to thin out. We feel that this shift in capital allocation back to the smaller players developing innovative solutions is indicative of a new biotechnology cycle that will propel us to new highs in the space.

As we discussed in our last article, immunooncology is a budding field desperate for meaningful combination approaches to offer patients more robust targeted solutions. The development of a set of therapies which target the TME and support immunologic response to the tumor should offer a unique edge for many players in this space.

As a result, we feel that Calithera is ripe for a meaningful partnership and/or acquisition at this time. In our next piece, we will discuss in-depth the future of Calithera and perhaps their biggest value driver, the arginase inhibitor program CB-1158.

Disclosure: I am/we are long CALA.

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