ANIX - Anixa: I Am More Bullish After Efficacy Data For Its Triple-Negative Breast Cancer Vaccine

2023-04-18 19:13:41 ET

Summary

• Anixa just released the first efficacy data for its triple-negative breast cancer vaccine candidate.
• Triple-negative breast cancer is the most aggressive and deadly form of breast cancer.
• The safety and efficacy data are promising and could allow any woman to be eligible to take the vaccine candidate.
• If successful, Anixa’s vaccine candidate would be a revolution in cancer care, and possibly a nice addition to a big pharma vaccine portfolio.
• The stock seems to have suffered a sell-the-news event, possibly related to a publication mishap.

Thesis

I covered Anixa Biosciences (ANIX) a year ago in an overview article where I covered the company's entire pipeline. At that time, investors were expecting data from a small set of patients who had been administered a cancer vaccine candidate that had been developed by the late Dr. Vincent Tuohy. Efficacy data was finally not revealed to the public at the expected conference.

We are a year later and this time, Anixa did deliver , showing antigen-specific T-cell responses in all patients who have been tested with the vaccine candidate. The company is also further along, having passed from the Phase 1a phase of administering the vaccine candidate to patients who are at risk of relapsing from triple-negative breast cancer, to the Phase 1b phase eligible to all women.

Triple-negative breast cancer is the most aggressive and deadly form of breast cancer, with patients at high risk of relapse.

A vaccine candidate is a preventative treatment that should help prevent cancer in patients. To be successful, a 100% success rate is not required and is, in fact, never seen. The few approved cancer vaccines do not guarantee that cancer does not develop, but reduce the risk of developing cancer. In the case of cervical cancer, that risk is reduced by almost 90% for women in their 20s who were offered it at age 12 to 13. In the case of a prostate cancer vaccine, the risk is reduced by 22.5% .

Anixa has seen an antigen-specific immune response in all treated women, which is a big thing and a better than expected result. Antigen-specificity in this case means the immune system reacts against alpha-lactalbumin, a protein expressed in the majority of triple-negative breast cancers, as well as in other breast cancers.

In light of the above, Anixa's just-released data is strong, all the more as it is in the breast cancer that is considered most deadly and accounts for about 15% of all cases. Breast cancer is the second leading cause of death in the US, and is the world's most prevalent cancer, accounting for 685,000 diagnosed deaths each year. There is a substantial need for better treatments.

The marvel of this vaccine candidate is that it could be used by women at risk of relapse first, and could hence serve as a real-life treatment after diagnosis. In a further stage, it could become available to all postmenopausal women, addressing a far larger market of women at the relevant stage of their life, as most breast cancers are found in women who are 50 years or older . For reference, Merck's Gardasil franchise drew in $6.9 billion in sales last year.

Company

Introduction

This is Anixa's pipeline, which I covered in-depth in an article published in May 2022:

Both of its vaccine candidates are based on retired proteins, which I will elaborate on below. The most promising programs here, for me, are the vaccine for breast cancer on the one hand and the CER-T or chimeric endocrine receptor program for ovarian cancer on the other hand.

Anixa has partnerships with renowned institutes such as the Cleveland Clinic and Moffit Cancer Center, which allow it to operate at very low cost, but which also appears to mean that Anixa is sometimes dependent on these institutes' choice to release data at a given point.

At the time of writing the current article, Anixa's market cap was $142 million. After a run-up ahead of the news the past week, trading on the expected day of data release was volatile with some strong profit-taking and/or investors disagreeing with the present analysis. This is the past year's stock chart which shows the intensity of the market reaction.

As this is an update article in light of recent data, I will now focus on that data.

The breast cancer vaccine candidate

Anixa's vaccine science relies on the discovery that some proteins are only expressed during a certain duration of a woman's life. In the case of breast cancer, the concerned protein is alpha-lactalbumin. That protein is only expressed during lactation and pregnancy, and in the majority of triple-negative breast cancers or TNBC.

The late Dr. Vincent Tuohy developed the vaccine candidate over the past twenty years. TNBC is named the way it is because It is estrogen receptor-negative, progesterone receptor-negative, and HER2-negative, and therefore, it does not respond to hormonal therapy medicines or the medicines that target the HER2 protein such as Enhertu.

Treatment options for TNBC, which are often surgery, radiation and chemotherapy, are therefore more limited and come with more safety risks and side effects. There is no treatment focusing on TNBC in particular, and women are at higher risk of recurrence and death within five years after diagnosis.

The vaccine candidate is supposed to activate the immune system against cells expressing this protein, and also contains an adjuvant that activates an innate immune response to that purpose.

The Phase 1 trial, which is meant to assess safety and dosage, consists of two stages.

A first stage is meant to test the vaccine in patients who have completed treatment for early-stage, triple-negative breast cancer within the past three years and are currently tumor-free but at high risk for recurrence.

A second stage is testing healthy women who have not had breast cancer, but are at high risk for developing breast cancer and have decided to undergo voluntary bilateral mastectomy to lower their risk. Typically, those women carry mutations in the BRCA1 or related genes and are therefore at risk of developing triple-negative breast cancer or have high familial risk for any form of breast cancer. Apparently - or perhaps not coincidentally - that part of the trial is in combination with Merck's (MRK) Keytruda. Merck happens to also be the number one big pharma company who is in the cancer vaccine business.

Anixa decided to include efficacy in the Phase 1 trial as well.

A total of 18 to 24 patients will be treated. During the course of the study, participants will receive three vaccinations, each two weeks apart, and will be monitored for side effects and antibodies and T-cell immune response, respectively, prior to vaccination and during vaccination. That means a partial readout may give a pretty good indication as to where this trial is going.

Anixa did not expect much safety issues, if any, as the protein target is not present in women who are not lactating or who don't have cancer. Safety should therefore not be an issue, which is crucial in trials though.

Interpretation of the data now released

Anixa wanted to achieve three goals in the Phase 1 trial. It wanted to establish a maximum tolerated dose , which has been established as announced on December 8, 2022. It wanted to see the vaccine candidate being able to mount an immune response against alpha-lactalbumin, which is the case. Finally, it wanted to see that immune response in a high number of patients.

To evaluate the vaccination effect, Anixa measured two things:

- biomarkers of T-cell activation;

- antibody production specific against ?-lactalbumin.

The news now is that the immune response mounted by T-cells has been seen in all women, and that the immune response is antigen-specific, meaning the body reacts against alpha-lactalbumin, the protein expressed in the majority of triple-negative breast cancers. The company adds that various levels of immune responses have been noted. This may be logical as different dosages were given until the maximum tolerated dose was reached.

Seeing an antibody response in all patients is marvelous. The fact that this antibody response differs is common as it is also seen in the few other approved vaccines. Cancer starts with a small number of cells, meaning that a modest immune response may be able to destroy these. Further testing should confirm that.

I believe the data now shown , which is essentially data one would see from a Phase 2 trial, substantially de-risks Anixa's vaccine candidate.

In comparison, Merck's cervical cancer vaccine mounts an antibody response in 98% of patients and prevents more than 90% of cancers caused by the different human papilloma virus subtypes. The advantage of this vaccine declines after exposure to this virus, making it less recommended for patients above 26 years or older. In the case of the prostate cancer vaccine Sipuleucel-T, the risk of developing prostate cancer was reduced by only 22.5% .

The data now released leads me to believe that the prevention rate could be similar to that of a cervical cancer vaccine in triple negative breast cancer that expresses alpha-lactalbumin. That should be largely good enough for approval, and could attract mass interest from women across the globe.

Thoughts on valuation and buyout/partnering options

At the time of writing the current article, Anixa's market cap was $142 million. The stock has been particularly volatile on the day of the news. Apparently, the company's website provider has published the wrong poster on the company's website, related to another company, showing no immunogenicity. At market close, the company corrected this mishap , putting out a statement linking to the correct presentation .

I believe Anixa's vaccine candidate could be a game-changer in breast cancer care, working both in women who are at risk of relapse, and women who haven't developed triple-negative breast cancer yet. Anixa itself takes it a step further, as it also considers that the breast cancer vaccine could work in other breast cancers that also express the protein. Anixa itself believes it is incredibly undervalued.

My thoughts on valuation are different when it comes to both potential ways to commercialize this vaccine candidate, either as a prevention against recurring TNBC, or as a prevention against it.

The market for triple-negative breast cancer was valued at about $950 million in 2022 and is expected to grow at a CAGR of 5%. A vaccine could become standard of care in a disease setting where there is a critical unmet need. A biotech-typical sales multiple of about 9x could be appropriate, allowing more upside with each step of further de-risking. As mentioned above, I see the data now released as that typical to a Phase 2 trial.

As triple-negative breast cancer is the most lethal form of the world's most prevalent cancer in women, making a vaccine against it for all women would address a much larger market.

I find a comparison with Merck's Gardasil franchise for the prevention of cervical cancer, open to all women of younger age, appropriate here. That franchise drew in $5.7 billion in sales in 2021, with Merck claiming that could double by 2030, meaning Merck sees potential of +$10 billion in sales. For 2022, Gardasil sales were $6.9 billion. Of note, Merck does not have a monopoly and faces competition from GSK's ( GSK ) cervarix here.

Upcoming milestones

Further de-risking could come from the readout of the second stage of the Phase 1 trial in women who did not have breast cancer. That stage was started in October 2022 and should end in the course of 2023. Interestingly, here, is the potential to see data on women who are at risk of developing cancers that are different to triple-negative breast cancer, taking into account the expression of alpha-lactalbumin in other breast cancers.

Big pharma may be eagerly looking to partner here. Anixa has made it no secret that big pharma partnering is on the table for each of its programs. In a recent interview , Anixa stated that it was not able to discuss this any further. That being said, Merck would be an ideal partner, as it could add the vaccine to its cancer vaccine portfolio.

The year 2023 could also see data coming from Anixa's CER-T trial in ovarian cancer. That Phase 1 trial was started in August 2022, will determine safety and maximum tolerated dose, and will consist of up to 48 patients. As mentioned in my previous coverage , the success rate of an immunotherapy candidate in a solid tumor, and certainly a large indication like ovarian cancer, is low. Anixa's autologous therapy candidate is different to CAR-T therapy candidates, in that it mounts a chimeric endocrine receptor on cells and allowing them to target the follicle stimulating hormone receptor.

Financials

Anixa's last quarterly report showed that it had no debt, and that it burned about $7.3 million over one year's time. In light of a cash position of $28 million, its current cash could still last Anixa about 4 years. The low cash-burn apparently relates to cost savings due to the company's partnerships with Cleveland Clinic and Moffitt Cancer Center.

Risks

Risks here are regulator's dependency in relation to the process of clinical trials and the approval process. This is so for all trials Anixa will be conducting, and includes the CER-T trial. The latter additionally comes with a high degree of competition.

Conclusion

Anixa has finally delivered the long-awaited data for its triple-negative breast cancer vaccine candidate. Triple-negative breast cancer accounts for 10-15% of all breast cancer cancers and is considered the most fatal, with a high mortality rate and a high rate of recurrence.

The data released by Anixa are similar to those that would come from a Phase 2 trial and probably could not have been better in my eyes, as the vaccine showed an immune response that was mounted by T-cells against the targeted protein. In line with other vaccines and possibly the different dosing that was given to patients, patient's immune responses differed. Anixa believes that even a small immune response should allow prevention. The immune responses were seen in all patients treated, which outperforms the expectations Anixa had.

Seeing the vaccine mount an antigen-specific immune response in all patients exceeds expectations.

The vaccine candidate could one day be used in three ways: (i) to prevent recurrence in women who have been diagnosed with triple-negative breast cancer, (ii) to vaccinate women against this form of breast cancer which is expressed in the majority of triple-negative breast cancer, and (iii) to vaccinate women against all types of breast cancer, as other breast cancers also express alpha-lactalbumin. At this stage, I have given my thoughts on valuation with a focus on the first two scenario's. The best comparison, for me, is Merck's Gardasil franchise against cervical cancer, which drew in $6.9 billion in sales last year. I believe this vaccine would be a perfect addition to the cancer vaccine franchise Merck is building.

At a less than $150 million market cap, I believe Anixa has a large runway as further de-risking takes place. The market also created an opportunity here, reacting negatively to clearly positive data. Whether this is related to a mishap of the company's website provider is unclear at this point, but the fact is that mishap happened, and the company had to correct it at the end of the trading day. I look at it as an opportunity in light of strong data which, after a year's waiting, finally substantially de-risks this company's prime asset.

In light of the above, I continue to rate the company as a Strong Buy.

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