The fast-emerging branch of therapies – immuno-oncology (IO) – works by equipping the body’s immune system with the tools to kill cancer cells.
Britain’s FTSE 100 giant AstraZeneca and rival pharma conglomerates, including America’s Merck & Co and Bristol-Myers Squibb (BMS), Switzerland’s Roche and Germany’s Merck KGaA are in a race to develop the most effective IO therapies.
When they work, the body learns to fend off cancer as it would a virus, developing a long-term memory for killing off tumours in the process.
They are already transforming lives, with tens of thousands of patients around the world benefiting from first generation IO treatments, which can extend lives for months or years longer than chemotherapy and radiotherapy with fewer debilitating side effects.
It’s this “long-term benefit” and “curative potential” that excites Stuart Farrow, director of biology at Cancer Research UK’s commercial arm Cancer Research Technology, which is partnering with industry on developing IO treatments. “It is the biggest breakthrough in oncology R&D for 20 years, possibly even since chemo,” he says.
As well as providing potential life-changing medical benefits, effective IO treatments bring big commercial rewards. IO drugs sales hit $8bn (£6.3bn) last year, led by blockbuster forerunners Keytruda and Opdivo, produced by Merck & Co and BMS respectively.
But analysts say the potential prize is much larger – a $50bn a year market if the future pipeline of IO drugs realise their full potential. That’s because there are still substantial gaps to plug in the market, both for Merck and BMS and its international rivals playing catch-up, including AstraZeneca. Only around 25-30pc of patients have been responsive to the early IO treatments. They also haven’t been approved for every type of cancer, with lung cancer remaining the largest – and largely unmet – potential market opportunity, worth up to an estimated $10bn a year. It is also the biggest cancer killer, responsible for more than 1.6m deaths each year.
So the race is on, with pharma companies increasingly turning to trials of combinations of drugs to try to boost response rates.
Two such closely watched trials are due to report by the end of the year – AstraZeneca’s Mystic this summer and BMS’s CM-227, both of which are phase three lung cancer trials that will go some way to demonstrating the medical and commercial potential of IO treatments.
They are also likely to be big market-movers. AstraZeneca investors expect a positive result in Mystic would lead to a 17pc jump in the company’s share price, while a negative result would send them crashing 12pc, according to an average of responses to a Credit Suisse survey.
David Cook, analyst at Panmure, cautions: “Everyone is watching Mystic to see what happens. If it’s a failure the reaction will likely be severe. With clinical trials the market tends to punish you when it goes wrong.”
Meanwhile, BMS shareholders will be hoping the company’s combination of Keytruda and Opdivo will garner positive results, after a failed lung cancer trial last August sent shares nosediving. They are still more than 20pc down since the news, slashing its market capitalisation by more than $30bn to $92bn.
For AstraZeneca, Mystic can go a long way to validating CEO Pascal Soriot’s decision three years ago to rebuff American rival Pfizer’s £69bn takeover approach in order to focus on its drugs pipeline, and on oncology R&D in particular. Since then AstraZeneca has doubled its spending on oncology R&D to around $2.6bn, almost half its total $6bn spend. A group of 1,118 patients in 17 countries are taking part in the Mystic trial, which combines IO drug durvalumab, commercially known as Imfinzi, with antibody tremelimumab.
For its part AstraZeneca insists Mystic should not be seen as the “binary” market event some investors are making it out to be.
Robert Iannone, head of IO at AstraZeneca, stresses “there’s quite a bit of optionality” built into the Mystic trial, as it will capture data for a variety of types of patients, as well as produce further “more robust” overall survival data in 2018.
Nor is AstraZeneca a one-horse stable when it comes to cancer drug development. Mystic is one of seven late stage cancer drug trials the firm is working on, while it has another seven outside the cancer space.
Imfinzi has already generated positive headlines for AstraZeneca this year, boosting investor confidence ahead of Mystic, by winning US approval for use by some bladder cancer patients and producing positive trial results in a separate group of lung cancer sufferers.
Elsewhere, fellow FTSE 100 firm GSK has largely vacated the oncology market after selling its cancer drugs portfolio to Novartis in 2015, but it retains an oncology R&D operation that investors will want to keep an eye on.
Yet the IO drugs space is not just the domain of massive conglomerates. A whole host of innovative start-ups are investing in developing IO therapies, including UK firms working in partnership with Britain’s world-leading bioscience universities.
Smaller firms working in IO include Crescendo Biologics, Cell Medica, e-Therapeutics, F-star, Targovax, ANGLE, IGEM and Scancell.
“IO is a huge opportunity for UK plc,” says Cancer Research’s Mr Farrow. “We have an incredibly vibrant science community here.” The fierce race among big pharma companies to become IO market leaders means even small firms with limited clinical data can be candidates for takeovers or successful IPOs, industry insiders say.
But companies working in this cutting-edge field still face big challenges. IO drugs are known to produce significant side-effects for some patients, including the immune system mistakenly attacking normal organs and gut problems such as severe diarrhoea.
Then there’s the cost, put at around £150,000 a year per patient for a typical IO treatment. Will the NHS and other country’s health services be willing to pay this?
Scientists in the field say the potential for side-effects and the high costs make it more crucial than ever to identify which patients stand to get the best outcomes from particular treatments, by identifying biomarkers that make them most suitable and through more targeted treatments.
IO nonetheless offers up huge potential, with scientists estimating the approach may be able to address 60pc of all cancers through combinations of drugs within five years.
Dr David Berman, head of oncology innovative medicines at MedImmune, part of AstraZeneca, is bullish for the future of his field: “This is a golden age for patients and an exciting time.”
