Background: PI3K and history of GDC-0084
PI3K is a promising target for GBM drug development
The PI3K signaling pathway plays a crucial role in cellular proliferation, metabolism, survival and apoptosis (programed cell death). PI3K signaling is initiated by receptor tyrosine kinases or G-protein coupled receptors located at the cell surface, and by some oncogenic proteins such as Ras.
The PI3K pathway is frequently over-activated in cancer. The over-activation can occur through a variety of mechanisms including mutation and amplification of genes in the pathway, or by loss of function of the tumor suppressor PTEN, which is a negative regulator of PI3K signaling. Abnormal PI3K signaling is associated with over 80% of cases of the GBM.
The first approved cancer drugs that target the PI3K pathway were the rapamycin analogues everolimus and temsirolimus, which inhibit mTORC1. The PI3K inhibitor idelalisib (Zydelig, Gilead Sciences) was first approved by the FDA in 2014 and is approved to treat several types of leukemia and lymphoma, providing validation for PI3K as a target for anticancer drug development. Idelalisib is a selective inhibitor of the delta isoform of PI3K (PI3Kδ).
In March 2016, Gilead halted six combination trials of idelalisib in newly diagnosed patients due to serious side effects including deaths from infections. Idelalisib inhibits the delta isoform of PI3K and inhibiting strongly PI3Kdelta affects the immune system. In contrast, GDC-0084 strongly inhibits PI3Kalpha and only weakly inhibits PI3Kdelta, and has not caused similar side effects in clinical trials.
Thorough GDC-0084 preclinical program
Novogen will benefit from the thorough preclinical development program that Genentech has conducted for GDC-0084.
GDC-0084 is a potent brain-penetrant small molecule inhibitor of PI3Kalpha (EC50 2nM) that was specifically designed for treatment of brain cancer. The drug is also deliberately designed to be a moderately potent inhibitor of mammalian target of rapamycin (mTOR) kinase (EC50 70nm) to avoid the toxicity seen with drugs that are potent inhibitors of both targets.
GDC-0084 was shown to freely cross the blood-brain barrier in the mouse, rat and dog. Studies showed that the drug inhibited PI3K activity in mouse brain, and strongly inhibited tumor growth in animal models using patient-derived tumors.
GDC-0084 combines with radiotherapy for increased efficacy
GDC-0084 showed increased efficacy when it was combined with radiotherapy under different treatment schedules in two separate studies performed in mice with GBM tumors implanted in the brain. However, it was not clear from the mouse studies whether GDC-0084 will give maximum benefit when administered as a monotherapy at the completion of a course of radiotherapy, or whether it would be more effective if it was administered at the same time as radiotherapy.
Phase I trial showed a trend to efficacy at higher doses
Genentech conducted a Phase I study of GDC-0084 in patients with progressive or recurrent high-grade gliomas (WHO Grade III–IV), including GBM and malignant astrocytoma. The study enrolled 47 patients in eight successive dose escalation cohorts (2-65mg). The maximum tolerated doses (MTD) was identified as 45mg.
Overall, the adverse event profile was consistent with PI3K/mTOR class effects; adverse events at the MTD were amenable to monitoring, manageable and reversible upon dose hold or discontinuation. The most common Grade 3 adverse events related to GDC-0084 were hyperglycemia (four patients) and mucositis (three patients).
Oral dosing of GDC-0084 demonstrated favorable pharmacokinetics in the Phase I trial, with sustained plasma levels following daily oral dosing. Analysis of tissue samples from a surgical brain specimen from one patient confirmed that the drug crosses the blood-brain barrier in humans, with concentrations seen in healthy brain and in tumor tissue higher than the levels in plasma
(Exhibit 3).
Exhibit 3: GDC-0084 concentration in a surgical brain specimen*
Sample |
Total GDC-0084 |
Free GDC-0084 |
Plasma |
0.56 uM |
0.11 uM |
Brain Tissue |
0.86 uM |
0.058 uM |
Brain Tumor |
0.80 uM |
0.054 uM** |
Source: Morrissey, Vora et al ASCPT 2016 poster. Notes: *Resection of brain tissue and tumor from a patient dosed at 45 mg QD; samples obtained 5.5 hours (plasma) and 7 hours (brain) post-dose. **Assumes same binding as brain.
Exhibit 4 summarizes the tumor responses for the patients in the Phase I study, grouped by dose cohort. Although none of the tumors reached the 50% reduction in tumor size that would qualify as a partial response, a dose response in tumor growth was apparent, with much less tumor growth in patients treated at 45mg (the MTD) or higher doses.
It is important to note that the Phase I study was performed in patients with late-stage disease and rapidly growing tumors. In the planned Phase II trial, Novogen will be testing whether this reduction in tumor growth is sufficient to improve PFS and/or overall survival in patients with early-stage disease who have undergone surgical resection and radiotherapy.
Exhibit 4: GBM patients in Phase I trial showed a trend to better disease control at higher doses of GDC-0084
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Source: Wen et al 2016 ASCO poster. Note: Maximum tolerated dose was identified as 45mg (blue bars).
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Targeting the majority of GBM patients who get minimal benefit from current drug therapy
Novogen anticipates conducting a randomized Phase II trial of GDC-0084 as adjuvant therapy in newly diagnosed GBM patients with unmethylated MGMT promoter. In a seminal study reported in 2005, Hegi et al found that GBM patients with an unmethylated MGMT promoter received only minimal additional benefit when standard of care drug TMZ was added to radiotherapy in first-line treatment of newly diagnosed disease.
Exhibit 5 shows that patients whose tumor contained a methylated MGMT promoter received a survival benefit when TMZ was added to standard radiotherapy; their median survival was 21.7 months, as compared with 15.3 months among those who received only radiotherapy (HR 0.51, P=0.007). In patients with an unmethylated MGMT promoter, there was a smaller and statistically insignificant difference in survival between patients who received TMZ and radiotherapy (orange line) compared to radiotherapy alone (blue line, 12.7 vs 11.8 months, HR 0.69, P=0.06).
Exhibit 5: Adding TMZ to radiotherapy in first line GBM provides little benefit to patients with unmethylated MGMT promoter
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Source: Hegi et al N Engl J Med 2005;352(10):997-1003
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Brain metastases offer potential upside
Although initial development of GDC-0084 will target GBM, it also has the potential to treat brain metastases for a range for different cancers. Brain metastases are quite common, but there are few drugs available to treat them. Lung, breast and melanoma represent the majority of brain metastases. Genentech has done preclinical studies showing that GDC-0084 improves survival in mouse models of brain metastases in HER2+ breast cancer. A large study estimated that approximately 7% of HER2+ breast cancer patients eventually develop brain metastases.
The company has highlighted that the treatment of brain metastases from cancers that originate in other parts of the body is a potential opportunity for future partners. In order to provide a modest recognition of this opportunity, we have added a potential indication for the treatment of brain metastases of HER2+ breast cancer in our indicative valuation model.
Additionally, even though GDC-0084 has been specifically designed to cross the blood-brain barrier, it is also likely to be effective against tumors elsewhere in the body. However, at this stage we have not included potential applications of GDC-0084 for any indications other than GBM and breast cancer brain metastases in our valuation model.
Cantrixil Phase I underway – data expected H118
A Phase I study of Cantrixil in ovarian cancer enrolled its first patient on schedule in December 2016. Up to 60 patients are expected to be enrolled across six sites in the US and Australia. While the primary purpose of the trial is to demonstrate safety and tolerability, patients will also be assessed for tumor responses. The trial is expected to take around 18 months to complete, reporting data in H1 CY18. The US FDA has granted Cantrixil Orphan Drug status for ovarian cancer.
Cantrixil is being administered as an intraperitoneal (IP) therapy delivered directly into the abdominal cavity. IP administration delivers higher concentration of the drug to the site of the tumor for longer periods, and studies of advanced ovarian cancer patients have shown a survival benefit for IP delivery compared to intravenous administration of chemotherapy drugs.
Researchers at Yale University have shown that Cantrixil is active in a stringent, clinically relevant rodent model of human ovarian cancer. Cantrixil is the first drug to show uniformly high potency against the Yale library of ovarian cancer stem cells collected from tumors that had stopped responding to chemotherapy. Patients with ovarian cancer face a very poor prognosis, with a five-year survival rate of only 35%, so an urgent unmet clinical need remains for better treatment for ovarian cancer patients.
Trilexium is at an earlier stage of development than GDC-0084 and Cantrixil. The company is undertaking an ongoing program of drug formulation, preclinical efficacy and toxicology studies, but the drug is not expected to enter the clinic before 2018. If Cantrixil shows signs of efficacy in the ongoing Phase I trial, then we would expect to see increased focus on the development of Trilexium.
Trilexium has shown efficacy against cells from a wide range of cancers, including melanoma, colorectal, liver, lung, breast, prostate and brain cancers, in in vitro studies. Notably, the drug is highly cytotoxic against patient-derived explants of the childhood brain cancer known as diffuse intrinsic pontine glioma (DIPG) in vitro. Trilexium also inhibits tumor growth in flank models where GBM, melanoma and prostate cancer tumors are growing under the skin of rodents.
In addition, combination therapy with Trilexium and the BRAF inhibitor dabrafenib (Tafinlar, GlaxoSmithKline) inhibited melanoma tumor growth and improved survival in mice to a significantly greater extent than dabrafenib alone.
Additional orthotopic animal studies are planned where the human tumor cells are growing in the same organ as the original cancer. This allows the cancer cells to interact with the surrounding organ tissue, which affects the growth, differentiation and drug sensitivity of tumor cells. Mechanism of action and biomarker studies are underway, aimed at informing patient selection for future clinical trials.
Anisina terminated, new ATM discovery program funded
The company has terminated development of Anisina, following inconsistent efficacy and emerging toxicology findings in preclinical studies that raised concerns about whether a therapeutically active dose could be safely administered to patients. The scientific committee of the board of directors concluded that the available preclinical data did not support initiation of clinical trials for Anisina. Anisina had been scheduled to enter the clinic in H2 CY17.
Separately, a collaboration led by Novogen has been awarded a grant of up to $2m from the Australian government payable over three years to develop next-generation ATM therapies for cancer treatment. The research is distinct from the technology underlying the terminated Anisina program.
Novogen is the lead partner in the collaboration that also involves the University of New South Wales and the privately held CRO, ICP Firefly. Novogen will contribute $0.7m and the University of New South Wales will contribute $0.2m to funding the project.
While the project is at a very early stage, it could potentially provide a new ATM drug with a superior toxicity and activity profile to address the market opportunity that had previously been identified for Anisina.
Development scenarios for GDC-0084 post-Phase II
We consider two potential development scenarios for GDC-0084 in GBM (accelerated approval post-Phase II or standard approval post-Phase III), as outlined below.
Potential for accelerated approval if Phase II is positive
If the upcoming Phase II trial of GDC-0084 in GBM demonstrates that treatment with GDC-0084 delivers a statistically significant and clinically meaningful improvement in PFS, then this would probably justify filing an application for accelerated approval. With PFS data anticipated in H1 CY20, this scenario could potentially see the drug launched in H2 CY21 as shown in Exhibit 6.
Exhibit 6: Assumed clinical trial and approval timeline for GDC-0084 accelerated approval
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Source: Edison Investment Research
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Potential timeline for Phase III approval scenario
Our second scenario assumes that the results of the first Phase II trial indicate that GDC-0084 is efficacious against GBM, but that additional evidence from a second clinical trial is required before filing for approval. We anticipate that this second trial would take three years to complete and note that it could potentially involve combining GDC-0084 with radiotherapy or TMZ. Exhibit 7 shows our forecast timeline for this two-trial scenario, which could potentially see a launch in H1 CY25.
Exhibit 7: Assumed clinical trial and approval timeline for GDC-0084 under two-trial scenario
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Source: Edison Investment Research
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An additional Phase Ib would give a partner more options
In our view, Novogen could give potential partners more options for future development of GDC-0084 by completing an additional Phase Ib trial while the Phase II trial is underway. One potential option for such a trial would be to identify the dose GDC-0084 can be safely administered while the patient is undergoing radiotherapy treatment (concurrent administration); a second option would be to identify a dose of GDC-0084 that can be safely used in combination with TMZ (ie adding GDC-0084 on top of TMZ therapy).
Both of these treatment strategies could potentially lead to higher overall efficacy. Adding GDC-0084 on top of standard TMZ therapy would have the added advantage of opening up the potential to treat GBM patients with a methylated MGMT promoter, as well as the unmethylated patient population to be targeted in the upcoming Phase II trial.
Novogen has not disclosed any plans to conduct an additional Phase Ib trial, but we have included one in Exhibits 6 and 7 to illustrate potential timing.
We have substantially revised our valuation model for Novogen to reflect the termination of the Anisina development program, the addition of GDC-0084 following the completion of the in-licensing transaction, and longer development timelines for Cantrixil and Trilexium. We have valued GDC-0084 under two different development scenarios for GBM – in addition to our base case valuation, which assumes market launch in 2025 following completion of a Phase III trial, we have also valued GDC-0084 assuming accelerated approval with a launch in 2021.
As a result of these changes our base case valuation of Novogen has declined to $66m (previously $86m) or $3.39/ADR undiluted (vs $4.95/ADR) and $3.23/ADR after diluting for options and convertible notes. Novogen’s primary listing is on the ASX under the code NRT; each NASDAQ-listed ADR represents 25 ordinary shares. Our undiluted base case valuation equals A$0.18 per ASX-listed ordinary share at current exchange rates. Note that the per-ADR value accounts for the shares issued as part of the acquisition of Glioblast ($1.1m in shares) but not the Glioblast milestone payments (potentially $1.0m of shares in FY18 on initiation of Phase II, and a further $1.0m potentially payable in FY20 on successful completion of Phase II).
In both valuation scenarios for GDC-0084, we assume that the program is out-licensed to a marketing partner in mid-2020 after reporting PFS data from the Phase II trial in a deal that includes $120m in clinical and regulatory milestone payments (but differing upfront payments; we risk-adjust milestone payments in our forecasts). We also assume that Novogen pays a royalty of 10% of net sales to Genentech and that global sales for GBM reach $1,050m in 2030.
Under both scenarios for GDC-0084 we also include a second indication for the treatment of brain metastases in patients HER2+ breast cancer, with a 2026 launch date.
The two scenarios assume different launch dates, upfront payment amounts and royalty rates payable to Novogen. For the post-Phase III approval scenario used in our base case valuation, we assume a 2025 launch date, and that the license deal includes a $20m upfront payment and that Novogen receives a 15% royalty on net sales (the accelerated approval scenario valuation is discussed below Exhibit 8).
We have revised forecast development timelines for Cantrixil and Trilexium to include a Phase II trial duration of 2.5 years in line with the forecast for GDC-0084 (vs two years previously). Cantrixil is now assumed to be launched in 2025 (vs 2024). Trilexium is now assumed to commence clinical trials in 2018 (vs 2017) and launch in 2027 (vs 2026).
While our valuation reflects our understanding of the likely development path for Novogen’s three lead drugs, it should be considered as indicative because of the early stage of development of Cantrixil and Trilexium. Our valuation is based on a risk-adjusted discounted cash flow model. Our cash flow forecasts extend out to 2035, but do not include any terminal valuation and apply a 12.5% discount rate. In calculating the diluted NPV/share, we assume that the $0.5m remaining balance of the Triaxial convertible note is converted to 24m shares on completion of Phase II trials. (the $1.1m convertible note was issued as part of the purchase of Triaxial and its SBP technology, $0.7m was converted in H1 FY17).
Exhibit 8 shows our base case market assumptions for GDC-0084, Cantrixil and Trilexium and the contribution of product royalties and milestone payments to the rNPV. We have offset the risk-adjusted trial cost against milestone revenue for each drug, rather than against royalty revenue. This understates the contribution of the milestone payments to the rNPV and overstates the contribution of royalties.
Exhibit 8: Novogen base case valuation (assumes confirmatory GDC-0084 pivotal trial required)
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Likelihood (%) |
rNPV ($m) |
rNPV/ ADR ($) |
Assumptions |
GDC-0084 – GBM |
25% |
13.0 |
0.67 |
Global peak sales* of $1,050m from GBM (11,500 US cases/year, 61% unmethylated MGMT promoter, 80% penetration); pricing of $50k. Global sales 2x US sales; launch 2025; assumes receives 15% royalty on sales, pays away 10% of royalty to Genentech. |
GDC-0084 – brain metastases in HER2+ breast cancer |
20% |
5.4 |
0.28 |
Global peak sales of $570m (233,000 US breast cancer cases/year, 37% HER2+, 7% develop brain metastases, 50% penetration); pricing of $50k. Global sales 2x US sales; launch 2026; assumes receives 15% royalty on sales, pays away 10% of royalty to Genentech. |
Ovarian and other abdominal cancers: Cantrixil |
10% |
20.2 |
1.04 |
Global peak sales of $680m from ovarian cancer (14,300 US deaths/year, 30% penetration) and bowel cancer (50,300 US deaths, 25% develop malignant ascites, 20% penetration); pricing of $50k. Global sales 2x US sales; launch 2025; assumes receives 15% royalty on sales, pays away 5% of revenue to Yale. |
Melanoma: Trilexium |
5% |
3.2 |
0.17 |
Global peak sales of $$300m assuming 9,700 US deaths/year; 30% penetration; pricing of $50k. Global sales 2x US sales; launch 2027; assumes receives 15% royalty on sales. |
Brain cancer: Trilexium |
5% |
2.9 |
0.15 |
Global peak sales of $300m assuming annual US incidence of GBM of 11,500 cases, 25% penetration; DIPG US incidence 275, 80% penetration; pricing of $50k. Global sales 2x US sales; DIPG launch 2027; 15% royalty on sales. |
GDC-0084 milestones |
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2.2 |
0.11 |
Assumes potential licensing upfronts and milestones total $140m ($127m net of payments to Glioblast and Genentech; $38m after risk adjustment). |
Cantrixil milestones |
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9.1 |
0.47 |
Assumes potential licensing upfronts and milestones total $140m ($23m after risk adjustment); assumes 5% of upfront and milestone payment paid away to Yale. |
Trilexium milestones |
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3.6 |
0.18 |
Assumes potential licensing upfronts and milestones total $140m ($14m risk adjusted). |
SG&A to 2020 |
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-8.1 |
-0.42 |
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Portfolio total |
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51.4 |
2.66 |
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Cash (31 December 2016) |
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14.1 |
0.73 |
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Enterprise total |
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65.6 |
3.39 |
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Source: Edison Investment Research. Note: *Peak sales in actual dollars in forecast year. We had previously expressed peak sales in 2015 dollars based on current addressable market. We assume that the addressable markets grow at 4% per year. Launch dates listed are calendar years (in some cases the launch will be in the following financial year to the calendar year stated).
For our alternative accelerated approval valuation scenario, we assume a market launch in late 2021 and that Novogen receives a higher 20% royalty rate and a larger $40m upfront payment because the data are ready for filing, with other deal terms the same as for the Phase III approval scenario. Exhibit 9 shows that accelerated approval for GDC-0084 would increase our valuation for Novogen to $111m or $5.74/ADR (undiluted) and $5.41/ADR after diluting for options and convertible notes.
Exhibit 9: Novogen valuation in GDC-0084 accelerated approval scenario
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Likelihood (%) |
rNPV ($m) |
rNPV/ ADR ($) |
Assumptions |
GDC-0084 – GBM |
25% |
45.6 |
2.36 |
As for Exhibit 8, except 2021 launch (vs 2025) and 20% gross royalty on sales (vs 15%). |
GDC-0084 – brain metastases in HER2+ breast cancer |
20% |
10.7 |
0.55 |
As for Exhibit 8, except 20% gross royalty on sales (vs 15%). |
GDC-0084 milestones |
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9.7 |
0.50 |
Assumes potential licensing upfronts and milestones total $160m ($147m net of payments to Glioblast and Genentech; $48m after risk adjustment). Milestones received earlier than base case (final milestone in 2021 vs 2025). |
GDC-0084 total |
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66.0 |
3.41 |
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Remainder of portfolio |
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30.9 |
1.60 |
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Portfolio total |
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96.9 |
5.01 |
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Cash (31 December 2016) |
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14.1 |
0.73 |
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Enterprise total |
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111.0 |
5.74 |
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Source: Edison Investment Research. Launch dates listed are calendar years.