Mark C. asks, "Do you think Dynavax Technologies can get going again? I think they have a good shot with the experimental hepatitis B vaccine Heplisav on the current Prescription Drug User Fee Act (PDUFA) date of Dec 15, 2016."
The essential question for Dynavax today: Will the FDA approve Heplisav, the company's hepatitis B vaccine by the prescribed deadline date of Dec. 15?
I don't know.
That's not a helpful response to Mark's question, but it's an honest one. There's a lot of confusion and very little visibility into the ongoing FDA review of Heplisav. I spoke with some longtime investor sources this week who've followed Dynavax closely and the feedback on the Heplisav approval question has been pretty much guesswork.
If you're a believer in a company's stock price as an accurate predictor of future events, then you're bearish on Dynavax's chances for a Heplisav approval. For the year, Dynavax's stock price was down more than 30% before the FDA announced on Sept. 1, the cancellation of a Heplisav advisory panel meeting that was scheduled for Nov. 16.
Since that Sept. 1 FDA announcement, the stock is down another 30% despite Dynavax trying to soothe investor fears.
Here's the FDA's statement cancelling the Heplisav advisory panel meeting.
The November 16, 2016 Vaccines and Related Biological Products Advisory Committee [VRBPAC] meeting, to discuss and make recommendations on the safety and efficacy of a Hepatitis B Vaccine manufactured by Dynavax, has been cancelled to allow time for the FDA to review and resolve several outstanding issues. The agency intends to continue evaluating and will schedule an Advisory Committee meeting in the future, as needed.
In response, Dynavax issued its own statement on the Heplisav panel cancellation:
During recent conversations between Dynavax and the FDA, the Agency communicated decisions to enable compliance with the current Prescription Drug User Fee Act (PDUFA) date of December 15, 2016. The Agency informed Dynavax that the VRBPAC meeting was cancelled and remaining questions will be addressed between Dynavax and the review team via the normal process. The FDA informed Dynavax that it plans to provide information requests related to remaining questions in the upcoming weeks. Dynavax is prepared to address these questions expeditiously in order to enable the FDA to complete its review as soon as possible.
There's two basic ways to interpret these statements:
The discouraging: There are too many unresolved issues with the Heplisav data to convene an advisory panel at this time.
The encouraging: Unresolved issues with the Heplisav data remain but they can be answered with email and phone calls, making an advisory panel unnecessary.
One last thought: I don't normally assign homework, but someone could look back to find all the instances where FDA cancelled previously scheduled advisory panel meetings, then check to see if the drug involved was approved or rejected. That might give you some additional insight into what will happen to Dynavax.
Ari S. asks, "Any thoughts on Puma Biotechnology?"
I predict FDA will reject neratinib, Puma's HER2-targeted breast cancer drug. In the extended adjuvant setting, a two percentage point reduction in disease-free survival is clinically meaningless, particularly relative to the 40% of neratinib-treated patients who experienced grade 3 diarrhea.
Grade 3 diarrhea is defined as more than seven stools per day over baseline.
It's important to remember the women treated in Puma's clinical trial were already in remission. They no longer have breast cancer. The goal of extended adjuvant treatment is to keep a breast cancer patient in remission for as long as possible. With neratinib, the benefit is small but the cost -- serious, life-interrupting diarrhea -- is great.
Puma claims that it can reduce the incidence of grade 3 diarrhea to 13-19% with large doses of antidiarrheal medicines. That's barely an improvement.
You can read a breast cancer patient's perspective on neratinib here.
Here's some mid-Mailbag breaking news on neratinib: The FDA informed Puma that the neratinib new drug application was accepted under a "standard review" timeline, meaning 12 months.
Puma hasn't made a public announcement yet about the review timeline for neratinib but a Puma spokesperson confirmed to me the standard review.
Typically, FDA reviews cancer drugs under a "priority" schedule of 8 months.
The FDA's decision to tack on an extra four months to the neratinib review doesn't mean the drug isn't approvable but it does suggest regulators have doubts about the pressing medical necessity for neratinib in the extended adjuvant setting.
Puma submitted the neratinib new drug application on July 21, so the FDA deadline for an approval decision will be July 21, 2017.
I expect FDA to schedule an advisory panel meeting to review neratinib prior to making an approval decision.
From what I can tell, the current Ariad Pharma investment thesis is based on the belief that a takeout is imminent. The problem I have with this view is Ariad's nearly $3 billion enterprise value.
At that valuation, the market is already baking in a very optimistic revenue forecast for its two main products -- the already approved leukemia drug Iclusig and brigatinib, a still-experimental lung cancer drug targeting the ALK mutation.
Brigatinib, in particular, is a niche drug because the number of patients diagnosed with ALK-positive lung cancer is small. Ariad's development of brigatinib is two years behind three other approved drugs in the same class from Pfizer, Novartis and Roche. Ariad bulls believe brigatinib could be the best of the bunch, but when you're the fourth drug to enter a small market, does that even matter?
Ariad has done a good job with Iclusig sales given the safety issues and label restrictions tied to the drug. But realistically, the drug will never be a blockbuster, nor will it approach the peak sales of its competitors Tasigna and Sprycel, particularly with the recent availability of generic Gleevec.
I concede takeouts at head-scratching valuations do happen in biotech. Perhaps there's a Japanese pharma company out there willing to overpay for Ariad. It could happen.
From the perspective of enterprise value/sales, however, Ariad already trades at a premium to many of its small and mid-cap cancer drug selling peers. Tack on a 25-50% takeover premium to Ariad's current enterprise value and you've got numbers which are really hard to justify.Ariad seems to attract takeover speculation on a regular basis. Nothing real happens but it's still been helpful to the stock price -- more than doubled this year.