As mentioned in our last report, Gritstone Bio (GRTS) initially applied its next-generation heterologous (virus/sa-mRNA) vaccine technology to fight cancer. The thesis articulated by the founding scientists in 2015 built on a discovery of Timothy Chan (co-founder) and Naiyer Rizvi in melanomas and non-small cell lung cancer (NSCLC). Their research demonstrated that patients responding to immune checkpoint inhibitors (ICIs) such as Merck’s blockbuster PD-1 inhibitor Keytruda (pembrolizumab) had reactive neoantigen-specific killer (CD8+) T cells at baseline. In other words, immune cells capable of recognizing and destroying mutated tumor cells that would otherwise evade immune surveillance.
Tumors of this nature are classified as immunogenic (also called hot) because they are detectable by the adaptive immune system (T cells). Patients with unresectable cold tumors, however, have a much bleaker outlook marking a huge unmet medical need. Building on this understanding GRTS theorized that the absence of neoantigen-specific CD8+ T cells was why patients with cold solid tumors did not respond to therapy with ICIs.
By providing the necessary biological substrate in a vaccine to drive a potent and specific CD8+ T cell response GRTS believed patients would respond to ICIs. Discerning which tumor mutations will become neoantigens is accomplished using GRTS’s proprietary EDGE artificial intelligence platform (Figure 1 shows work flow from sample collection to vaccine administration).
In this report, we focus on the market opportunity for GRTS in filling this treatment gap. Over the last ~5 years, ICIs (Keytruda as well as Yervoy, Opdivo, and Tecentriq) have revolutionized the treatment paradigm for hot solid tumors. Tumors of this nature mutate frequently acquiring defects such as mismatch-repair deficiency (dMMR). A higher mutation rate means it’s easier for the immune system to detect cancerous cells and thus tend to respond to ICIs.
Microsatellite stable colorectal cancer (MSS-CRC) is particularly unresponsive to ICIs, especially those with proficient mismatch repair (pMMR) status. About 95% of all colorectal cancers fall into this category. Clinical endpoints including objective response (ORR) rate, median progression-free survival (PFS), and overall survival (OS) observed in recent studies have been dismal (see table-1).
The Nivo + Rego combo in the REGONIVO study appeared somewhat efficacious. Results show an ORR of 33% across all MSS-CRC patients, significantly higher than 0-5% seen in most other studies. When stratified for liver metastasis, however, there was a clear separation in response rates. Fifteen percent (2/13) of patients with liver metastases responded to the duplet regimen compared to 50% (8/16) of those with lung metastases.
A subsequent Phase 2b study interrogating this combination yielded even worse outcomes. None of the MSS-CRC patients with liver metastasis had an ORR after treatment with Nivo + Rego whereas 7% and 31% of patients w/o liver metastasis achieved partial response (PR) and stable disease (SD), respectively. Furthermore, median PFS was nearly double in the latter subgroup at 3.5-months compared to 1.8-months in those with liver metastases.
GRTS co-founder and CEO Dr. Andrew Allen commented at the H.C. Wainwright Investment Conference on 9/13/21-MSS-CRC patients treated with checkpoint inhibitors do not fare better than those treated with standard of care in the third-line (mPFS= ~2=months, mOS= ~6-months). Based on data to-date from GRANITE (in MSS-CRC and other tumor types), including with liver metastasis, there are clear signs of clinical benefit. Importantly, these patients remain alive over a year out which itself is a huge achievement. Finally, these observations correlate with biomarkers like CEA and circulating tumor DNA (ct-DNA). There is particular emphasis among clinicians and biotech analysts on the ct-DNA correlation as its gaining traction as a predictive biomarker for clinical benefit.
Initially, we felt GRANITE may be eligible for accelerated approval in MSS-CRC 3L using ct-DNA as a surrogate endpoint, or survival benefit compared to historical data. To this point, one study published earlier this year in the European Journal of Cancer found ct-DNA to be a superior surrogate endpoint for efficacy than ORR. Among the 420 patients (with metastatic cancers including colorectal) there was a high correlation with median survival (R2 = 0.99) outperforming patient response at the first evaluation as well as ORR (R2 = 0.70 and 0.57, respectively). The authors concluded that ct-DNA has the potential to act as a surrogate endpoint for OS and noted the potential impact on drug development. Interestingly, a Phase 2 study conducted by MRK and the University of Toronto across the 94 patients with advanced solid tumors further supported the predictive value of ct-DNA. These two studies are by no means the only ones in the public domain indicating immense prognostic potential for ct-DNA. To our surprise, though, Dr. Allen answered this question for us during the KOL call on 9/17/21 explaining that FDA does not recognize ct-DNA as a surrogate endpoint.
The data released this morning 9/17/21 for GRANITE are even better than we had hoped with significant reductions in ct-DNA from baseline being correlated with clinical benefit. Specifically there was a 44% molecular response rate meaning that 9/12 patients had a 50% or greater reduction in ct-DNA. This exceeded our internal target of at least a 30-50% reduction. Moreover, one GEA patient had a complete RECIST response. The fact that this patient was negative for ct-DNA at baseline and radiologically observed decreases in tumor volume correlated with ctDNA levels adds to our confidence in the utility of this biomarker. GRTS is charging into Phase 2b/3 studies with registrational intent following discussions with FDA.
An injection of $55M in growth capital obtained through a PIPE with well-respected healthcare-focused institutional investors (Frazier Life Sciences and Redmile), as well as Gilead Sciences (GILD), who by the way is partnered with GRTS in HIV and owns the rights to blockbuster immunotherapy Yervoy, will support GRTS is this next phase of its development.
We look forward to following GRTS while it transitions into an early-stage biotech company to a late-stage one. While Dr. Allen did not agree with the strategy of seeking accelerated approval using ct-DNA, he did note that regulators and other stakeholders are watching the space closely indicating that this could change. Until then we are buyers of any weakness as the outlook for Gritstone Bio is increasingly promising and de-risked as we consistently see its platforms working as intended.
I am we are long GRTS