ESMO has very exciting updates for investors And patients – cancer is something we look to conquer one day and every year, we are getting closer.
One of key focus areas for pharma investors was CodeBreak 200 data – a global phase 3 study for relapse/refractory NSCLC patients – testing Lumakra/sotorasib vs. docetaxel. Docetaxel was used as a comparator arm because it is the current standard of care.
Amgen stock has been volatile, but has held up relatively well – with the stock up +4.8% YTD after today’s decline – so the stock was up ~10% YTD coming into the data (stock was down -4% on Lumakras data).
Investors have flocked to AMGN because it was generally viewed as a safe haven – among other large US pharma companies, such as JNJ or MRK.
Amgen actually is also plagued with significant loss of exclusivity in the back half of the decade with key blockbuster products losing patent expiration across significant portion of its blockbusters (highlighted in yellow below) – WHOA, THAT IS A LOT OF PRODUCTS LOSING PATENT PROTECTION!!
However, investors were not worried because AMGN put out long-term guidance that gave assurance to investors that AMGN has key growth drivers in the bag – and they flagged Tezspire and LUMAKRAS during their LT guidance update in February 2022.
Green curve in the below is the expected contribution from Tezspire, Lumakras, and other pipeline. Given that Tezspire rights are split with AstraZeneca and “other pipeline” is generally a plug, investors assumed that Lumakras will become a mega-blockbuster to drive “long-term value” – AMGN effectively levered its equity story to Lumakras.
Therefore, it is natural that investors look for clues to figure out how significant Lumakras revenue could be and the first true test was this weekend at ESMO with CodeBreak200 data.
AND IT WAS A DISAPPOINTMENT – LUMAKRAS IS LIKELY TO BE A GREAT DRUG FOR SOME PATIENTS, BUT IT WON’T BE THE BLOCKBUSTER THAT AMGEN NEEDS TO SAVE ITS GROWTH STORY.
I lay out my rationale for below:
Efficacy is good and statistically significant, but it is not groundbreaking
PFS benefit was only 1.1 month for Lumakras (sotorasib) over docetaxel – generally physicians look for 2 months or more of benefit to be clinically meaningful because 1 month delta could be driven by chance. and could be part of “noise”.
More importantly, there was no OS benefit and OS trended WORSE for Lumakras (sotorasib) with HR = 1.01. It is disconcerting that patients receiving docetaxel lived ~1 month longer than those on Lumakras. Docetaxel patients were allowed to switch to Lumakras on progression – therefore there could be noise in the data. However, this could mean sequencing to extend patient survival.
If Lumakras gets positioned after docetaxel as physicians look to maximize survival (which they should), it would be worse for commercial opportunity because patients will stay on Lumakras for shorter amount of time.
COMBINATION POTENTIAL IS GOING DOWN MORE THAN EVER
Moving to earlier line is critical to developing a blockbuster drug because moving to earlier lines means compounded growth of revenue by three levers:
- There are more patients in earlier lines – unfortunately, we lose patients through treatment as some patients perish or lose interest in pursuing additional therapies.
- Earlier line patients respond better – overall response rate tends to be higher in earlier lines – you have more patients receiving the drug for extended period of time.
- Earlier line patients respond longer / stay on drug longer – they are healthier and can tolerate drug for a longer time.
However, Amgen management is taking about combining Lumakras with chemotherapy – instead of PD-1. the mega trend is swapping out chemotherapy with immune-oncology drugs, like Keytruda or Opdivo. Many earlier line therapies are moving with I-O without chemotherapy.
Unfortunately, Lumakras has fairly high liver toxicity rate – which also makes combinability tough with other agents.
Combination is critical because it tends to increase response rate and PFS – all of which are drivers of revenue – which Lumakras has failed to show with Lumakras data.
CONCLUSION
Lumakras will be an important part of oncologists’ toolbox to give optimal care for patients. for example, many patients developing resistance to Tagrisso have KRAS G12C mutation as driving mutation for tumor and Lumakras gets used for those patients.
WW patient opportunity of 27K patients sets Lumakras as a rare cancer indication – far from a blockbuster opportunity.
It will be a precious drug for those select patients as a niche market product – however, it will be challenging for Lumakras to become a major drug to carry AMGN to growth land in 2030.
This weekend (9/10) is a tough weekend for AMGN – BMY’s deucra approval will take AMGN’s Otezla’s lunch (current earnings), and today’s CodeBreak200 cost them future blockbuster (future earnings). I talked about BMY’s deucra/Sotyktu approval and its implication for AMGN’s Otezla in below link
https://biotechforfire.tech/?p=1308
As of today, AMGN is still trading at 13x 2023 P/E while BMY is trading at 9x 2023 P/E and ABBV is trading at 12x 2023 P/E.
I think I have a good pair trade even among those companies.
Happy Investing!
*not investment advice
