The Upshot
An unexpected decision made by Roche Holding (NASDAQOTH:$RHHBY), a healthcare company based in Basel, Switzerland, has sent the shares of NewLink Genetics Corporation (NASDAQ:$NLNK), a biotech research company focusing on cancer treatments based in Iowa, United States, crashing down by 32%.
The decision was that Roche Holding has tapped out of its co-development deal on a new cancer drug with NewLink.
Why it Matters
Hope that the success of NewLink’s IDO-inhibiting cancer drugs could get its share price back on track — especially after a failed clinical trial in 2016 — was crushed today as Roche announced its decision to return the rights to co-develop GDC-0919.
Roche’s decision came as a surprise to many, as it the company had just presented data of a trial of GDC-0919 at the well-known American Society of Clinical Oncology (ASCO) annual meeting just this week. Taking a closer look at the data presented, however, Roche’s decision to leave its deal with NewLink becomes less of a surprise. While adding GDC-0919 to the healthcare company’s PD-L1 checkpoint inhibitor Tecentriq improved response rates, improvement was too small for Roche to continue research on the drug. Specifically, the total response rate in patients with various tumor cancers only reached 9%, and all responses were only partial responses.
Additionally, the response rate of a trial of Incyte’s (NASDAQ:$INCY) epacadostate, a drug that is similar to the GDC-0191, had further pushed Roche to discontinue research on GDC-0191. At ASCO, after combining epacadosate with Merck & Co.’s (NYSE:$MRK) PD-1 checkpoint inhibitor Keytruda, the overall response rate in patients with various cancers — including kidney cancer and non-small cell lung cancer — was a promising 30% to 35%.
What Happens Now
Roche’s decision was not the only disappointing news NewLink has unveiled this week. On June 2, the biotech researcher announced that indoximod, another IDO-inhibitor, had failed a mid-stage breast cancer trial. This has no doubt caused skepticism on whether or not IDO-inhibitors can be used outside of melanoma, where clinical trial results have been promising.
Additionally, some of the drugs the company has been developing has shown similar results to existing drugs. For example, NewLink recently announced that the combination of indoximod with Keytruda had resulted in an objective response rate of 52%, and a disease control rate of 73%. These numbers, while positive, is not much different from the result of combining epacadostat with Keytruda, which resulted in a 58% overall response rate in patients with advanced melanoma, and a disease-control rate of 74%.
While IDO-inhibitors do work, the result of the drug in treating all cancers may not be as strong as NewLink had previously hoped. This can put the projected peak sales for the drug at risk. For now, only time can determine the next step of NewLink Genetics now that it as full rights to both indoximod and GDC-0919 — it may be too early for investors to think that IDO-inhibitors will not make it to market. After all, the drug has shown promise.
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