We believe that in 10 years immunotherapy will likely form the backbone of 60% of all developed world cancer management regimes, driven by a paradigm shift in the overall improvement in survival rates in responsive patients. This represents a potential revenue opportunity for the biopharmaceutical industry in excess of $35 billion by 2023 — exceeding the peak market value of previous mega-blockbuster classes, such as cholesterol-lowering statins. We anticipate the emergence of these new immunotherapy molecules will have an equal or even greater impact on the management of many cancers than drugs such as Herceptin and Rituxin have had on breast cancer and B cell malignancies, respectively.
Importantly, the market is currently not reflecting the likely breadth of cancer indications addressable with these new immunotherapeutic approaches. Investor awareness of immunotherapy is largely limited to melanoma and renal cancer, and more recently non-small cell lung cancer (NCSLC) given recent reports with promising new data. However, we believe tumours traditionally not thought of as treatable with immunotherapy can likely become treatable through the co-administration of pro-immunogenic therapies, or priming agents, designed to increase antigen release from the cancer cell — effectively mimicking the actions of a vaccine. Potential priming agents for immunotherapy include chemotherapy (traditional or TK1), monoclonal antibodies such as Erbitux, Herceptin and Rituxan, radiotherapy, and even cryotherapy.
What is cancer immunotherapy?
Immunotherapy leverages the patient’s immune system to eliminate or slow the growth of cancerous cells. The use of immunotherapy dates back to 1850 when German physicians noted that occasionally tumors would shrink if the tumor became infected. Older biologic agents such as interferon alpha2b and Proleukin for melanoma were used with some effect in the 1990s but had limited impact given high toxicity and limited patient responsiveness in only select tumor types.
But advances in tumor biology are enabling the development of newer T-cell mediated therapies that prevent the tumor from evading detection by the immune system and also have a manageable safety profile. Experimental T-cell immunotherapies are being developed by different biopharmaceutical companies in multiple forms — including checkpoint inhibitors (BristolMyers Yervoy and nivolumab), therapeutic vaccines (GlaxoSmithKline’s MAGE-A3, Amgen’s T-Vec and Vical’s Allovectin), bispecific antibody-based approaches (Amgen’s blinatumomab), small molecules (Incyte’s IDO inhibitor) and cell-based therapies (Dendreon’s Provenge and Novartis CTL-019/CART-19).
Of these different forms, we believe the modality with the largest potential to “cure” cancer are checkpoint inhibitors Unlike other immunotherapies or cancer vaccines that work by strengthening the immune system or training it to attack tumour cells, checkpoint inhibitors work to defeat the cancer resistance mechanism which causes immune cells to see tumour cells as “self ”. Once this veil, or “brake”, is lifted, the immune system response may be enough to defeat the cancer cells on its own or in combination.
T-cells are immune cells that the body ordinarily activate s in response to cancer cells in order to seek and destroy them. They have a regulator switch on their surface (a PD-1 receptor) that stops their destructive activity once the target cancer cells are gone. This acts as a failsafe device to stop T-cells from destroying healthy tissue — hence, the origin of the term “immune checkpoint”. However tumor cells have adapted to this regulator switch by producing both a ligand (called PD-L1 ) and a small molecule ( PD-L2 ) on their surface. This naturally produced ligand binds with the PD-1 receptor on the T-cell and trips the shutdown switch, stopping the T-cell from attacking the tumor. The objective of checkpoint inhibitors is to come between the receptor and the ligand, turning the switch back on and freeing the T-cells to attack the cancer.
Separate from the checkpoint inhibitors (“the brakes”), there is a second class of checkpoint mediated molecules in development called checkpoint agonists or stimulators. These agents are akin to effectively depressing the “accelerator ” or gas pedal on the T-cell. Having the T-cell bind with the natural ligand or therapeutic antibody is potentially a more powerful, broader immune response. There is also evidence that checkpoint agonists are powerful agents in inducing T-cell memory to tumor antigens thereby improving immuno-surveillance and potentially reducing the risk of recurrence.
Market underestimates combination use in checkpoint potential
We think the market is dramatically underestimating the potential of checkpoint inhibitors. Published estimates of the sales potential for the checkpoint agent class of about $7 billion are highly conservative as we anticipate that the market for checkpoint agents alone could reach $24 billion driven by:
* High adoption rates in Western countries given immunotherapies have a largely well-tolerated side effect profile compared with conventional chemotherapy (excluding cell therapy);
* A material expansion in the number of usage months per patient for immunotherapy treatment due to improved progression-free survival rates with immunotherapy, the use of multiple lines of therapy during the time a patient has the disease and an increase in maintenance usage;
* An increase in the unit price for immunotherapy molecules associated with migration to checkpoint combination therapy and the assumption that the U.S. will allow additional sales for a second immuno-modulator to be used in combination with the primary PD-1 inhibitors;
* The likely use of a repeat immunotherapy-based approach in patients who lose their partial response, given the well-tolerated side effect profile and mechanistic rationale; and
* The use of immunotherapy in combination strategies with existing cancer therapies and combinations of checkpoint inhibitors with other active immunotherapies which we estimate will increase the percentage of immunotherapy addressable cancers to at least 60% over the next 10 years.
In addition to these factors, we forecast a two-year reduction in development time for immunotherapy drugs as the dramatic efficacy benefits of these agents within a pre-selected population allows for smaller, shorter and less expensive clinical trials. Separately, the increasingly supportive FDA continues to look for novel development programs to accelerate time to market and is clearly indicating its intent to approve novel immunotherapies on the back of significant differences in overall response rate compared with standard care coupled with interim analysis of progression free survival rates.
