A few months ago, DelMar Pharmaceuticals (NASDAQ: DMPI) caught our attention as a mischaracterized turn-around story in the making. After digging I found that much of DelMar’s competition have failed in the race to develop a therapy capable of beating the standard of care (SOC) regimens (Radiation + TMZ followed by Avastin) for Glioblastoma Multiforme (GBM). This includes big pharma names such as Bristol-Myers Squibb (NYSE: BMY) whose flagship immunotherapy Opdivo failed to increase overall survival in combination with radiation. Soon after, AbbVie’s (NYSE: ABBV) antibody drug-conjugate (ADC) Depatux-M, failed to provide a survival benefit in a phase 3 study. The most recent to falter was Tocagen (NASDAQ: TOCA). In September 2019 TOCA plummeted 80% after its retrovirus (Toca 511) failed to boost survival rates in phase 3. Considering DelMar’s share price is down 82% YTD one might think that VAL-083’s performance mirrored that of Toca 511. However, as I argue in this article the bull case for DelMar has become strengthened by new phase 2 clinical data presented at the Society for Neuro-Oncology 2019 Annual Meeting (SNO). Moreover, it appears that the 60%+ of GBM patients with an unmethylated MGMT gene might finally have a more effective treatment option. As the Key Opinion Leaders (KOL) reaffirmed at SNO, these patients are routinely treated with the SOC despite statistical evidence repeatedly showing a lack of efficacy.
For a drug to succeed it needs to demonstrate a satisfactory treatment benefit relative to its safety profile and that of already approved treatments. At SNO, DelMar’s Chief Scientific Officer (CSO) Dr. Dennis Brown explained that decades ago researchers at the National Cancer Institute (NCI) identified VAL-083’s potential to treat cancer. Dr. Brown and his colleagues realized that certain traits of VAL-083 made it uniquely suited to test in unmethylated GBM. These include a differentiated mechanism of action from TMZ, an affinity for brain tissue, and potency in penetrating the blood brain barrier (BBB). As we saw with AbbVie and Bristol-Meyers Squibb, sexy, modern approaches like immunotherapy, ADC’s, and CAR-T’s have failed to overcome these challenges. At the end of the day what doctors value most is patient survival outcomes and quality of life. Thus, they are very excited about VAL-083’s performance in Newly-Diagnosed and Recurrent unmethylated GBM settings as seen at SNO on November 29th.
As you can see in Table 1 below, over three data updates in 2019, VAL-083 has demonstrated the potential to rival TMZ as the SOC chemotherapeutic for GBM. The first round of data came at the 2019 American Society of Clinical Oncology (ASCO) annual meeting in June. Over half of the patients in the Newly-Diagnosed arm of the ongoing open-label phase 2 study had a complete response (CR). Forty-one percent achieved stable disease (SD) while six percent unfortunately progressed (i.e. their tumors grew). At the next update in August these response rates were reiterated, and we learned 80% of patients were still alive. The most recent patient assessment presented at SNO further supports these findings.
|VAL-083 2019 Performance|
|2019 Data Update||CR||SD||PD||Alive|
|ASCO (June)||53% (9/17)||41% (7/17)||6% (1/17)||N/A|
|August||53% (9/17)||41% (7/17)||6% (1/17)||80% (16/20)|
|SNO (November)||47% (9/19)||42% (8/19)||10% (2/19)||70% (16/23)|
Table 1: Response and survival rates for newly-diagnosed unmethylated GBM patients. Data found on DelMar’s website.
Bears would point out a limited patient population size and the absence of a control group. I would argue that with each data update where VAL-083 demonstrates a consistent efficacy and safety profile the probability of the response rates being “real” increases. Over the six-month period between ASCO and SNO the percentage of patients classified as complete responders decreased 6% (53% to 47%). Similarly, the percentage of patients still alive at these time-points decreased 10% (80% to 70%). These results are on par with previous studies evaluating radiation therapy + TMZ in GBM and suggest VAL-083 has a durable treatment effect. Furthermore, Progression Free Survival (PFS) data revealed at SNO indicated that VAL-083 may offer a significant survival benefit over TMZ as a front-line treatment.
PFS is the length of time it takes for disease progression to occur (i.e. the tumor to grow). The historical benchmark for this metric set by TMZ is 6.9 months. As you can see in Figure 1, VAL-083 is on track to surpass TMZ in this regard. As of the cut-off date (November 2nd, 2019) two of the three dosages (30 mg/m2 and 40 mg/m2) achieved PFS rates greater than 6.9 months. In particular, the intended treatment dose of 30 mg/m2 separated itself by 3.5 months with a PFS of 10.4 months. The Kaplan-Meier analysis also seen in Figure 1 further reinforces the preliminary PFS findings.
Additionally, overall survival (OS) data in the recurrent trial showed that the 30 mg/m2 dose achieved an OS of 10.6 months as of the data cut-off (November 15th, 2019), 3.4 months greater than the historical average of 7.2 months for Lomustine.
Despite a robust rally into the conference, the stock price has declined 43% from a high of $1.15 to $0.63. At a time like this it’s good to reflect on the initial investment thesis. In our case it is that VAL-083 may provide a clinical benefit over TMZ and Lomustine, and if so, can compete in a multi-billion-dollar market. In light of the SNO data this thesis has only been strengthened. The data illustrates a robust and consistent treatment effect in newly-diagnosed and recurrent GBM patients. Given the historical PFS rates for TMZ and OS rates for Lomustine, VAL-083 could potentially replace them as the SOC. Heading into 2020 I will continue my coverage of DelMar starting in April with AACR followed by ASCO in May and then SNO in November. At each event investors can look forward to additional data updates. In the meantime, I’ll stay in touch with Mr. Zarrabian in an effort to stay abreast on the company’s progress and new developments.
I am/we are long DMPI.
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