AKESO defeats the "Medicine King"

At the 25th World Conference on Lung Cancer (WCLC) held in San Diego on Sunday, highly anticipated phase III clinical data was released.

AKESO/Summit's dual-target drug Ivonescimab (PD-1/VEGF dual-target) in the treatment of non-small cell lung cancer (NSCLC) was compared head-to-head with the drug Keytruda, and the results showed excellent performance by Ivonescimab.

Patients treated with Ivonescimab had a progression-free survival (PFS, the time required for cancer to worsen after treatment) of 11.1 months, while the Keytruda group had a PFS of only 5.8 months. The head-to-head study results showed that Ivonescimab reduced the risk of progression or death by 49% compared to Keytruda (HR=0.51, P<0.0001), and achieved a median improvement of 5.3 months in progression-free survival, meeting the primary endpoint of the study.

The HARMONi-2 study randomly assigned 398 Chinese patients to receive Ivonescimab or Keytruda as initial treatment after diagnosis. These patients were all advanced NSCLC patients without EGFR mutations or ALK rearrangements, and with a PD-L1 tumor score of at least 1%.

Professor Zhou Caicun from Shanghai East Hospital, who led the study, stated: "The results of HARMONi-2 support Ivonescimab as a first-line treatment choice for PD-L1 positive advanced NSCLC patients."

AKESO also held a conference call promptly to interpret the data and express confidence in the future market prospects of Ivonescimab.

The capital market has shown great interest in this data, with analysts using terms such as "unprecedented," "far exceeding expectations," and "a new benchmark for first-line NSCLC PFS" to describe the results of the HARMONi-2 clinical study.

However, from the stock price performance perspective, the market seems to have already anticipated the company's success with this data, as Summit's stock price has fluctuated by over 270% in the past four months.

Twists and Turns in Ivonescimab Data

This year, investors have had a thrilling experience with their investment in AKESO/Summit, especially regarding Ivonescimab, which started in May.

On May 24th, AKESO's stock price plummeted by over 40% intraday due to market doubts about the clinical performance of Ivonescimab, which showed significant differences from previous phase II data.

On the same day, the management urgently held a conference call to clarify, emphasizing that everyone should focus on the HR data, "Our HR data is the best, which is the key to clinical success."

Almost simultaneously, AKESO announced that Ivonescimab had received approval from the Chinese regulatory authority for marketing, for the treatment of locally advanced or metastatic non-squamous non-small cell lung cancer (nsq-NSCLC) progressing after treatment with EGFR tyrosine kinase inhibitors (TKIs) However, the market response remains sluggish, and the stock price has not stopped falling.

It wasn't until May 31st that the situation finally reversed. Akeso announced that its PD-1 inhibitor, Envafolimab, had beaten Keytruda in a head-to-head clinical trial just days before the start of the largest cancer conference in the United States, the WCLC in Chicago. Although specific data was not disclosed at the time, the results were described as "historic" and "unprecedented."

As a result, Akeso's stock price soared by 37% that day, while Summit's stock price skyrocketed by 272%.

At the WCLC conference, Professor Zhou Caicun detailed the final data of this trial, confirming this top-line result. Envafolimab became the most dazzling star at the conference, shocking the oncology field.

The Dream of Beating K

Beating Keytruda is the dream of every oncology drug developer.

As Merck's revenue pillar, Keytruda not only ushered in a new era of cancer immunotherapy but also became a cornerstone of cancer treatment, gradually growing into one of the highest-selling drugs globally.

In the first half of 2024, Keytruda's global sales reached $14.2 billion, with an expected annual sales exceeding $30 billion, accounting for 45% of Merck's total revenue. Keytruda's success is attributed to its expanding indications, with approximately 40 indications approved to date.

However, despite the excellent performance of Envafolimab in the HARMONi-2 clinical data, there may still be key data gaps to obtain FDA approval for marketing.

Citigroup analysts pointed out that investors' main concern is whether the good PFS results of Envafolimab in HARMONi-2 can translate into significant OS benefits, as FDA typically relies on OS data for approval in relevant indications.

Dr. Xia Yu, CEO of Akeso, stated in a conference call that based on historical data of immunotherapy, the advantage of Envafolimab in PFS (5.3 months) is likely to translate into OS benefits, and the company is confident about this. Even before obtaining the final OS data, Envafolimab may be approved through the priority review pathway.

According to Citigroup's analysis, a good PFS HR (HR=0.51 announced this time) is likely to bring clinically meaningful OS benefits (OS HR<0.8). Positive OS data will also enhance market confidence in the ongoing global Phase III HARMONi-3 study (first-line squamous non-small cell lung cancer).

It is worth noting that the market had doubts about the performance of the Keytruda combined with Lenvatinib group in the LEAP-007 study. Although this combination improved PFS by 2.4 months (6.6 months vs. 4.2 months, HR 0.78), OS worsened instead (14.1 months vs. 16.4 months, HR 1.10).

Dr. Xia Yu explained why Envafolimab could translate PFS into OS data.

She said, "Envafolimab demonstrated high safety in all patient groups. Akeso's bispecific platform effectively addresses the hemoptysis and thrombotic side effects caused by VEGF in central squamous cell carcinoma, thereby improving patient tolerance and fully exerting the drug's efficacy against tumors." This is why in the head-to-head trial with Keytruda, Yiviva monoclonal antibody showed better efficacy, and there is great hope to translate PFS into OS.

Another factor to consider is that the HARMONi-2 trial currently only recruits Chinese patients, which may lead to differences in data requirements from the FDA in multi-ethnic populations, so AKESO's global clinical trials need to continue to progress.

Another Victory for Capital and Technology?

By the end of 2022, Yiviva monoclonal antibody was licensed to Summit for $500 million upfront and $5 billion in milestone payments, marking the beginning of AKESO's entry into the international market and opening another capital myth for Summit's CEO Bob Duggan.

Bob Duggan previously invested in driving the research and commercialization of the blockbuster drug Imbruvica in the field of hematologic malignancies (with sales of $9.8 billion in 2021).

He was the CEO of Pharmacyclics, under his leadership, Imbruvica was commercialized and eventually acquired by AbbVie for over $20 billion. Duggan's personal investment return exceeded $3 billion, and the success of Pharmacyclics made him a billionaire. Now he is trying to replicate this successful model at Summit.

Since 2018, Duggan has gradually purchased shares of Summit and became the largest shareholder and CEO of the company by 2020.

After the failure of Summit's original drug in Phase 3 clinical trials, Summit paid $500 million to AKESO in December 2022, gaining commercialization rights for Yiviva monoclonal antibody in the United States and Europe.

Following the release of clinical data from HARMONi-2, Bob Duggan is one step closer to hatching another successful blockbuster oncology drug.

The success of Yiviva monoclonal antibody has made Summit one of the best-performing biotech companies on the US stock market in 2024, with its stock price rising by 365% since the beginning of the year, and its market value exceeding $8.8 billion.

Yiviva monoclonal antibody has also attracted the attention of a top biotech hedge fund, Baker Bros, which disclosed a new position of 23.2 million shares in Summit last month.

Conclusion

The success of innovative drugs is not just a technological breakthrough, only by simultaneously achieving success in capital can we better promote the continuous development of innovative drugs.

As a representative of innovative drugs in China, AKESO is likely standing at the pinnacle of the oncology drug field, achieving dual success in technology and capital