Introduction to the "SPA basket"

I have spent some time thinking about diversifying my portfolio with some very long term horizon trading ideas.  I don’t always have time to watch the markets daily so need to augment my short term positions with something less labor intensive.  I came up with the “SPA (Special Protocol Assessment) basket” concept; a collection of long term speculative positions. 

A SPA is a written agreement between the sponsor and the FDA providing comments on a proposed phase 3 study design.  Once FDA accepts a phase 3 protocol, the sponsor proceeds with greater assurance; if the prospectively defined efficacy criteria are met, the ensuing NDA submission will be sufficient for the proposed efficacy claim. This in theory reduces the surprise factor that a positive phase 3 study may be insufficient for approval if the FDA does not agree with the study design. The SPA does minimize risk, but does not guarantee approval. Case in point from 2012: Ariad Ridaforolimus in advanced sarcoma. This sponsor had a SPA in place, the clinical trial had a statistically significant outcome, but on review, the FDA rejected the application questioning the overall clinical benefit and safety risk profile for a maintenance indication.  This underscores the need to study the totality of an NDA submission package and understand regulatory precedents for approval before taking a position.

In 2012, looking across at positive pivotal studies that had a SPA in place, they definitely seem to have a higher approval rate compared with standard submissions that did not.  I compiled a list of companies with currently ongoing phase 3 SPA agreements, and decided to start a new portfolio with these stocks, and hold them for a minimum of 3-8 years.  (Anyone looking for a run-up play or short term strategy should click away now).  Why the SPA basket?  One example, Amarin (AMRN) traded at ~$1.25 when they announced their SPA agreements back in 2009.  The drug went on to gain full approval in 2012 and has seen heady heights of above $19 in the year prior to approval. I plan to hold stocks for an extended period of time and see how the whole basket fares.  This does not mean that I won’t trade in and out of the same positions based on market conditions and key catalysts.

So what’s in the SPA basket?

First up, Galena Biopharma

Love it or hate it, Galena Biopharma (GALE) is an interesting trading idea for biotech junkies.  I have received multiple questions and comments since posting a recent tweet declaring an initiation of a long position in this stock.  A lot of comments directed me to Adam’s series of articles on NeuVax™ (E75 peptide vaccine with GM-CSF adjuvant) suggesting this is a complete scam and you can read them here and here.  Here are my thoughts covering its’ appeal and some general cautions:

What is this vaccine?

Human Epidermal growth factor Receptor 2 (HER2/neu) is a proto-oncogene, and its protein product is highly expressed in many epithelial-derived cancers such as breast, prostate and ovarian cancer. The HER2/neu protein has been found to be an immune-recognized tumor-associated antigen and several immunogenic peptides recognized by cytotoxic T lymphocytes (CTLs) have been described from the HER2/neu sequence. E75 has become the most studied HER2/neu-derived peptide both in vitro and in vivo and has been found to induce a peptide-specific, CTL-mediated immune response.

Peptide-based vaccination techniques involve inoculating patients with immunogenic epitopes from tumor-associated antigens, typically given with an immunoadjuvant, to stimulate proliferation of peptide-specific lymphocytes. Peptide-specific lymphocytes then identify and eliminate tumor cells presenting the vaccine-targeted epitope (in this case the HER2). Peptide-based vaccines are attractive immunotherapeutic options because they have no malignant potential, have low toxicity profiles, are simple and inexpensive, are easily monitored and studied, and eventually will be easily exportable to the community. Additionally, the peptide-specific immunity must be maintained at sufficient levels over an adequate duration to accomplish the clinical objective.

NeuVax consists of the E75 peptide derived from HER2 combined with the immune adjuvant granulocyte macrophage colony stimulating factor (GM-CSF).  Unlike dendritic cell based vaccines, this is an off-the-shelf vaccine which can be mass produced. The GM-CSF component is administered at a sub-therapeutic level. Treatment with NeuVax stimulates cytotoxic (CD8+) T cells in a highly specific manner to target cells expressing any level of HER2.  NeuVax is given as an intradermal injection once a month for six months, followed by a booster injection once every six months.

The company states on its website, that according to the National Cancer Institute, over 230,000 women in the U.S. are diagnosed with breast cancer annually.  Of these women, about 75% test positive for HER2 (IHC 1+, 2+ or 3+).  Only 25% of all breast cancer patients, those with HER2 3+ disease are eligible for Herceptin® (trastuzumab; Roche-Genentech) which had revenues of over $5 billion in 2010.  NeuVax targets the remaining 50%-75% of low-to-intermediate (also known as HER2-Negative, not eligible for Herceptin) who achieve remission with current standard of care, but have no available HER2 targeted adjuvant treatment options to maintain their disease free status. NeuVax is being developed as an adjuvant immunotherapy for women with early-stage breast cancer at high risk (node positive, HER2 IHC 1+/2+) for recurrence. In early studies, after screening for eligibility criteria, patients with NPBC were enrolled into the studies and then HLA typed to determine their HLA-A2 status, because E75 binds this specific HLA allele found in approximately 40% to 50% of the general population.

How does it work?

In simple terms, breast cancer cells that express HER2 behave more aggressively with poorer clinical outcomes compared with breast cancer cells not expressing HER2.  The vaccine contains part of the HER2 protein that is recognized by the body’s own natural killer cells (CTL’s) and it stimulates the body to clone more and more of these killer cells.  When these circulating killer cells come across other cells in the body that express HER2, an immune response is triggered resulting in the death of the HER2+ cancer cells.

Why would this work in mild disease but not in more advanced/aggressive disease?

The same reason why you wouldn’t treat someone suffering with fulminant tuberculosis with a BCG inoculation.  The body’s immune system can fight against certain levels of antigenic challenge, but it can be overpowered.  This is why healthy adults can still get sick with flu and common infections.  It wouldn’t make sense to try to treat a patient with advanced metastatic disease with a vaccine as the immune response just would not be sufficient to overpower the cancerous cells.  NeuVax is instead aimed at treating patients with no evidence of disease (following breast cancer resection, chemotherapy and radiation therapy) where there is minimal residual disease.  Even if cancer is not visible on scans, there is a chance that there are microscopic cancer cells circulating in the body.  It is these cells that NeuVax is targeting, using the body’s natural defenses.

Why isn’t it working in HER2 3+ disease?

I have not actually found any study looking prospectively at the use of NeuVax this group of patients.  It would be extremely difficult to conduct a randomized trial in the HER2-positive (3+) adjuvant setting because of the availability of approved agents –it’s unethical in my opinion to randomize patients to an investigational therapy so we may never have this question answered.

What do I think of the Phase 2 results?

A quick search on E75 or breast cancer vaccines will provide an abundance of literature on pubmed.  A lot of the publications and poster presentations out there focus on the combined results of two phase 2 studies which were conducted to establish safety and correct NeuVax dosing , in node-positive and node-negative HER2 1+/2+ breast cancer patients.  As the company is proceeding with a pivotal phase 3 study in node positive patients, I have looked at published results specific to node positive patients.

A phase1/2  study in this population was originally published in J Clin Oncol. in 2005- a credible, peer-reviewed journal. J Clin Oncol. 2005;23(30):7536-7545.

Here is a breakdown of the patient demographics in the study for those vaccinated (n=24) and the controls (n=29). Table 

Prognostic Factors in Node-Positive Breast Cancer-Vaccinated Versus Control Groups

	Vaccinated, HLA-A2+ (n = 24)	Observed, HLA-A2− (n = 29)	P
Median age, years	54	53
Range, years	30-73	33-80
Race
White, %	87	73
Black, %	13	27	.14
Tumor size
T1, %	37	59
T2-T4, %	63	41	.12
Histological grade
I-II, %	42	62
III, %	58	38	.14
Median + nodes	2.5	2.0
Range	1-15	1-25
ER-negative/PR-negative overall, %	33	14	.09
No XRT, %	33	24
No chemoprevention, %	37	17	.09

As can be seen, of the patients in the active arm, a greater proportion had larger size tumors, worse histologic grade, more were ER/PR negative and fewer received XRT and chemoprevention.  These factors would actually suggest a worse overall prognosis for the active arm.

Survival and Recurrence Rates for the Vaccinated and Prospectively Observed Control Groups of Patients With Node-Positive Breast Cancer

Median Follow-Up*	Vaccinated, HLA-A2+ (n = 24) (%)	Observed, HLA-A2− (n = 29) (%)
Overall survival	100	93
Disease-free survival	85.7	59.5
Recurrence rate	8.3	20.7

• ↵* Median follow-up was 22 months (range, 6 to 48 months).

Despite a preponderance of negative prognostic factors in the active arm, at ~2 years, there was a trend towards improved disease-free survival and lower recurrence rates in the patients who received the vaccine.

As with any vaccine, immunity wanes over a period of time, and this too was observed in the follow-up period of early studies.  Additional studies were conducted to establish the efficacy of the vaccine with initial as well as booster doses to evoke a sustained immunologic effect.  These studies included SN-33 in node positive patients and SN-34 in node negative patients, the results of which are available on the company website.

The following results are reported for a group of patients who were deemed adequately boosted with vaccine and who were followed for 60 months. In my opinion these would seem to be consistent with the original phase 1/2 JCO publication in patients that were not boosted which is a positive.

What about the phase 3 program?

The company has a Special Protocol Assessment (SPA) for the phase 3 program, the schema for which is shown below:

The SPA in place means that Galena is armed with sufficient information about the development requirements for NeuVax that if positive, could support regulatory approval. The end point in this study is DFS at 36 months (same regulatory benchmark as Herceptin for the adjuvant indication).  Of note, the Herceptin adjuvant indication studies enrolled >3000 patients and with a mixed population of node positive and negative patients.  The indication that NeuVax would be seeking would  be different from a straight adjuvant indication. They are seeking an indication to prevent recurrence in early stage patients with node-positive disease with low-to intermediate HER2 expression, that would be used following standard of care.  I would state that I want to see more information about how this phase 3 study is powered and what effect size it is looking to detect, based on what projected event rate. At this point I do not have a reality check on the study design.

In the last series of investigator communications, Galena has indicated that they have opened 37 sites in the United States, and by Thanksgiving, they will have 80 sites open globally. The company is targeting 100 sites in total ~7-10 patients per site.  I like to look at how often records are updated on Clinicaltrials.gov for trials that I am following.  The history of changes show that they are fairly good at keeping the records relating to study sites current in the public domain which I think is a good sign.  It's usually a red flag if a study page has not been updated or verified for long periods of time. They have also communicated that they are targeting an aggressive completion of enrollment by mid-2013, and a pre-planned interim safety analysis after the first 70 events (expected by end of 2013). 

So ultimately, what do I like about $GALE as a long position in my SPA basket?

·         Plausible scientific rationale and proof of concept studies, albeit with small number of patients. I think the results so far suggest a definite signal in node-positive patients when followed for a sufficient period of time (60 months)

·         Plethora of supportive scientific literature in the peer-reviewed press

·         SPA in place for pivotal P3 program reduces regulatory uncertainty around study design

·         Credible Principal Investigator in Elizabeth Mittendorf, MD from MD Anderson Cancer Center.  She has authored over 100 articles on breast cancer vaccines and immunotherapy so I would consider her a Key Opinion Leader in this area. You can read her bio here:  Credible PIs from MDACC go along way in trial completion and regulatory discussions at ODAC (Oncologic Drug Advisory Committee meetings). A good example is Talon Marquibo and their successful partnership with Susan O’Brien as PI on phase 2 and phase 3 studies

·         Credible Scientific Advisory Board including Hope Rugo, MD and Gabriel Hortobagyi, MD- a past President of ASCO.  Highly respected breast cancer key opinion leaders.  In my opinion, such experts are far too busy and successful to be involved in questionable ventures

·         2 potential albeit soft “catalysts” in 2013; completion of P3 enrollment, interim safety event analysis n=70

·         Company sufficiently funded to complete enrollment in my opinion by 2H13. Currently have ~19 MM plus ~4MM to call on. 

·         Good IP position: Issued a key patent from the U.S. Patent and Trademark Office for NeuVax™ (nelipepimut-S or E75). The patent covers the use of NeuVax, a HER2/neu peptide vaccine, for inducing immunity to breast cancer recurrence in HER 2 negative patients (low-to-intermediate IHC levels of 1+ or 2+ and a FISH rating of less than 2.0). This is the patient population targeted for Galena’s ongoing Phase 3 PRESENT trial. The patent provides NeuVax exclusivity for this indication until 2028, not including any patent term extensions

What am I concerned about in the short term as it relates to my position?

·         N=700 patients in the P3 program, are the numbers sufficient to detect a difference in DFS at 36 months?  What effect size has been agreed upon in the SPA? Can the sites enroll patients quickly?

·         Company will definitely need to raise cash to complete the P3 study, when will they need to raise and how much?

·         What happens if they run out of money to complete the study?

·         Any recurring CMC issues that could interfere with the supply of study medication and compromise the protocol

I am hoping to attend some investor meetings and get some of these questions answered in the future.

As a final note, the contents of this article are not intended as investment advice.  All views expressed are my own.  Please conduct your own due diligence before acquiring or selling securities.

More posts on the SPA basket to follow...