$ADAP Increasing competition and complex
therapy: downgrade to Underperform
Rating Change: UNDERPERFORM | PO: 5.00 USD
Complex therapy with niche market potential
ADAP’s lead SPEAR T cell platform takes a subject’s own T cells and genetically alters
them to better attack and destroy cancer cells. Personalized therapy requires patients to
have both the required HLA (human leukocyte antigen) type and tumor antigen
expressed before treatment. Manufacturing of T cells takes about 3-4 weeks and the T
cells are given back intravenously after a lymphodepleting pre-conditioning regimen with
cyclophosphamide (Cy) and fludarabine. ADAP has previously reported no objective
responses in synovial sarcoma and ovarian cancer patients with Cy alone. Increased
competition containing easier to administer therapies threatens the company’s money
making opportunities. We reduce our rating from Neutral to Underperform with a $5 PO.
Multiple myeloma is a crowded market
While CELG remains the market leader in multiple myeloma (MM) with blockbusters
Revlimid and Pomalyst, Genmab/JNJ’s Darzalex (anti-CD38 antibody) with Velcade will
continue to gain market share in 2L/3L patients. Multiple therapies are under clinical
development and present commercial risk for NY-ESO TCR, which likely will be used in
quad-refractory MM. Specifically, we believe BLUE/CELG’s bb2121 (anti-BCMA CAR-T)
and MRK’s Keytruda (anti-PD-1 antibody) in combination with Revlimid have
demonstrated encouraging response rates in the relapsed/refractory patients. We
believe NY-ESO-1 is likely to be a niche product in a crowded MM market with many
available therapies. We reduce peak sales from $834M to $357M.
In NSCLC, checkpoint inhibitors remain assets to beat
MAGE-A10 is ADAP’s wholly owned asset for treatment of non-small cell lung cancer
(NSCLC) and other solid tumors. Multiple checkpoint inhibitor combination studies
presented at the European Society for Medical Oncology (ESMO) early October and
recent FDA approval of Roche’s Tecentriq (anti-PDL1 antibody) reiterate that checkpoint
inhibitors are the benchmark to beat in NSCLC. Due to complexity of ADAP’s program,
we believe wide commercial penetration on the heels of immuno-oncology combinations
is challenging. We estimate only 15% of NSCLC patients express the necessary HLA and
tumor antigen for treatment. We reduce peak sales from $848M to $339M.
bofaml

Reply · Report Post