2023-08-21 09:02:22 ET
Summary
- ATRA is going to report topline results of a double-blind, randomized, placebo-controlled phase 2 study in progressive multiple sclerosis in November.
- Based on strong pathophysiological rationale and very promising early-phase data, including supportive imaging and biomarkers, I expect a positive outcome.
- ATRA will soon need to raise cash considering very high R&D expenses, but following positive phase 2 results this shouldn't be a problem.
- I suggest ATRA as a speculative "Buy" considering significant upside potential following positive phase 2 results, but there are risks.
Overview of the thesis
Atara Biotherapeutics' ( ATRA ) is expected to announce topline results from an ongoing double-blind, randomized, placebo-controlled phase 2 study in patients with non-active progressive multiple sclerosis ( MS ) in November. Based on strong scientific rationale, as well as promising clinical efficacy data from early-phase studies there is good chance of positive results. Nevertherless, these studies were small, open-label and not placebo controlled. Therefore, there is significant risk associated with the thesis. Provided positive results, ATRA is very undervalued based on the MS indication alone and not taking into account the rest of the pipeline which is also promising.
Overview of Atara Biotherapeutics
Atara Biotherapeutics' ( ATRA ) platform is based on allogeneic (donor-derived) T cells that are enriched with specific receptors that target EBV-infected cells. The rationale is to target diseases associated with EBV-infection, including EBV-associated malignancies and progressive MS (the focus of this article). Tab-cel is already approved in Europe for EBV-positive post-transplant lymphoproliferative disorder and ATRA is in (lengthy) discussions with the FDA for potential BLA submission without the need for a new study. ATRA is also evaluating potential label expansion to additional EBV-related malignancies. Finally, ATRA is developing CAR-T cell therapies for oncology indications, but these are at a very early stage.
Stock price has been significantly punished for various reasons, including;
- False expectations from the interim analysis of MS phase 2 study
- Regulatory hurdles resulting in significant delays in the progress of BLA submission for tab-cell in USA (according to the latest PR news are now postponed for Q3 2023)
- Setback in CAR-T cell pipeline, following the death of a patient
- Huge R&D costs relative to available cash
The purpose of this article is to assess the prospects of ATRA's candidate against multiple sclerosis considering upcoming phase 2 readout. For an overview of other aspects of ATRA not addressed in this article I refer readers to latest articles by Edmund Ingham and Avisol Capital Partners .
Brief overview of multiple sclerosis
Multiple sclerosis ( MS ) is an immune-mediated inflammatory demyelinating disease of the central nervous system, resulting in a variety of neurological symptoms (including numbness, tingling, mood changes, memory problems, pain, fatigue, blindness and/or paralysis) and eventually results in significant disability. It mostly affects patients aged 20-50 years old, more often women, and it is estimated that nearly 1 million people are living with MS in the U.S alone.
Clinical presentation and course/prognosis of MS are heterogeneous and to some degree unpredictable. Based on the pattern and course of disease MS is categorized into:
- Clinically isolated syndrome (the first attack of MS)
- Relapsing-remitting MS ( RRMS ); Clearly defined relapses with full/partial recovery, but no/minimal disease progression during the periods between relapses. About 85-90% of MS patients are initially diagnosed with RRMS, but most eventually enter a secondary progressive phase.
- Secondary progressive MS (SPMS); Follows the RRMS pattern with gradual worsening with or without occasional relapses, minor remissions, and plateaus
- Primary progressive MS (PPMS) (approximately 10% of MS patients); Progression from disease onset without a preceding RRMS stage.
RRMS/SPMS/PPMS can be further subdivided to active (clinical relapses or MRI evidence of contrast-enhancing lesions and/or new or unequivocally enlarging lesions on T2-weighted images) or not active, and progressive (increasing disability) or non-progressive. Disability may progress after relapses or even without/between relapses in progressive forms.
More treatments are available for RPMS than for progressive forms and there is an unmet need for more effective and safe treatments for progressive forms of MS. In other words, current treatments are effective in preventing relapses but less effective in preventing disease progression. Ongoing ATA188 phase 2 trial is enrolling patients with non-active primary/secondary progressive MS, for which indication ATA188 has been granted fast-track designation.
Multiple sclerosis clinical phenotypes (National Multiple Sclerosis Society)
Rationale for targeting EBV-infected B lymphocytes in multiple sclerosis
According to a landmark study published in Science (a leading medical journal) EBV may be "the leading cause of MS". I won't tire you with the details here. Briefly, the study showed that: (1) Hazard for developing MS was 26.5x higher in EBV-positive compared to EBV-negative subjects, (2) Among seronegative subjects (i.e. no evidence of prior EBV infection) at baseline, EBV infection was associated with 32-fold higher hazard of developing MS compared to persistent seronegativite (i.e. no EBV infection), (3) EBV serconversion (infection) was associated with increases in sNfL, a sensitive and early biomarker of axonal degeneration, (4) No such associations were found for other viruses, including the similarly transmitted CMV, suggesting that findings are specific to EBV.
Numerous other recent publications in top medical journals (e.g. Nature Reviews Microbiology , Nature Reviews Neurology , The Lancet Neurology ) discuss the role of EBV in MS and treatment implications. A detailed discussion is beyond the scopes of this article, but it is worth noting the following. While the above-mentioned study in Science convincingly proves that EBV is a trigger for MS, its role as a 'driver' of disease progression is less clear. The latter has major treatment implications, because for EBV-targeted therapies to work against established MS, EBV must be a driver of disease progression. Reasons to believe EBV is also a driver for disease progression include the following findings: EBV latency drives survival of autoreactive inflammatory B-cells (i.e. EBV helps the survival of B cells that contribute to ongoing damage), deficient control of EBV infection by cytotoxic T-cells in MS patients (i.e. patients with MS are unable to sufficiently control EBV infection resulting in persisting immune disregulation), promising evidence of efficacy from EBV-specific T cell therapy (discussed below).
To sum-up, there is very strong evidence that EBV infection is a trigger for MS, and promising (but less certain) evidence that EBV is also a driver of disease progression and thus a target for treatment.
Rationale of ATA188 and proof-of-concept studies
After primary infection EBV persists in latent form in B lymphocytes throughout the life of the host, and in MS patients may be a driver of disease progression. Notably, as mentioned above, there is deficient control of EBV infection by cytotoxic T-cells in MS patients. ATA188 aims to overcome this deficiency. ATA188 "is an investigational, off-the-shelf, allogeneic, EBV T-cell immunotherapy that targets EBV-infected B cells and plasma cells, including those within the central nervous system, that are believed to cause MS". In other words, ATA188 uses EBV-targeted T-cells to kill EBV-infected B cells which presumably contribute to disease progression.
Proof-of-concept for this approach, i.e. using EBV-specific T cell therapy for MS, comes from an earlier small study . The study enrolled 5 patients with PPMS and 5 patients with SPMS. All patients had progressive neurological deterioration for at least 2 years and none had received immunomodulatory therapies for at least a year before enrolment (i.e. autologous EBV-targeted T cell therapy was the only therapy they received). Patients were followed for 6 months post-treatment. Seven of ten patients showed clinical improvement, in 6 of which there was both symptomatic and objective (reduction in EDSS score) improvement. In 2 cases disease was stabilised (no further progression post-treatment), and in only 1 case was there disease progression. Improvement was more likely in patients that received T cells with strong EBV reactivity (all six improved vs 1 of 4 participants that received T cells with weak EBV reactivity) suggesting that improvements were indeed attributable to the treatment. Improvement was more likely in patients with EDSS<=6.5, suggesting better efficacy when treatment is started earlier, i.e. before irreversible neurological damage. Treatment was well-tolerated by all patients with no serious adverse events.
In contrast to the above study (which used autologous T cells, i.e. derived from the patients themselves), ATA188 is off-the-shelf, allogeneic T cells (i.e. much more feasible to use in everyday clinical practice). ATA188 has been evaluated in a phase 1 study ( part 1 of EMBOLD study ). Efficacy was evaluated in 24 patients in the initial 12-month period, of which 18 chose to enroll in a long-term open-label extension (OLE), in which all patients received annual treatment. OLE data, as of April 2021 (up to 33 months follow-up), were announced in ECTRIM 2021 ; 9 (37.5%) patients met sustained disability improvement ( SDI ) criteria either in the initial 12m period (n=7) or in the OLE (n=2), of which 7 had sustained EDSS improvement, i.e. confirmed disability improvement ( CDI ). Another 13 (54%) people had stable EDSS scores and the remaining 4 experienced confirmed disability progression. After nearly 4 years follow up (data presented in ECTRIM 2022 ), all 5 patients with CDI who remained in the trial were found to have maintained their improvements for all subsequent clinic visits. Similarly, all eight people with stable EDSS who were still in the trial remained at that status quo. Participants who achieved CDI after one year also had evidence of reduced brain atrophy and signs of remyelination (a restoration of the lost myelin sheath) compared with those who failed to achieve CDI. Treatment was well tollerated.
In other words, ATA188 is a well-tolerated treatment that has resulted in improvement or disease stabilization in the majority of treated patients, for up to 4 years so far, with objective imaging data further validating the clinically observed efficacy.
Comparison of AT188 with current treatment options, and specifically B-cell depleting therapies
Currently there are numerous available disease-modifying therapies (DMT) for MS patients, which also means a lot of competition for ATRA's candidate. These are categorized based on efficacy into: high-efficacy disease-modifying therapies ((HE-DMTs)) and moderate-efficacy disease-modifying therapies. The problem with HE-DMT is higher risk for toxicity. Nevertheless, the trend nowdays is to start early with HE-DMT because this approach may be more effective in preventing disease progression. Most commonly used HE-DMTs include anti-CD20 antibodies (ocrelizumab, ofatumumab, ublituximab, rituximab) which deplete peripheral B cells and natalimumab (which prevents trafficking of lymphocytes in the central nervous system). These therapies, reduce frequency of relapses and appear to somewhat delay disability progression. However, there is significant room for improvement both in terms of efficacy and in terms of safety.
Limitations of anti-CD20 B-cell depleting treatments include : infusion/injection related reactions (the most common adverse effect), infection risk, progressive multifocal leukoencephalopathy, suboptimal efficacy of vaccines, malignancy risk, failure to deplete B-cells from lymph nodes and CNS parenchyma (a potential ongoing source of disease activity).
Notably anti-CD20 monoclonal antibodies deplete circulating memory B cells, the primary site of persistent latent EBV infection. Whether ATRA's approach will have benefits over anti-CD20 mAbs remains to be seen. However, in theory, directly targeting EBV-infected B-cells (as the cause of MS) rather than "blind" depletion of B-cells could have significant advantages, overcoming many of the limitations of anti-CD20 described above.
Overview of the Phase 2 study
The phase 1/2 EMBOLD study was a 2-part study;
- Part 1 (discussed above): open-label, sequential dose-escalation period. The aim of part 1 was to assess safety and tolerability and guide dose selection for part 2.
- Part 2: double-blind, randomized, placebo-controlled study followed by an open-label extension (OLE) period
I will focus here on the 2nd part, for which topline results are expected in November. The study enroled patients diagnosed with non-active (no clinical and/or radiological relapse for 2 years prior to screening) PPMS or SPMS and Expanded Disability Status Scale (EDSS) scores of 3.0 to 6.5.
The primary outcome is the percentage of participants with confirmed EDSS improvement at 12 months. Secondary outcomes include: (1) Percentage of participants with confirmed EDSS improvement at 15 months, (2) Percentage of participants with sustained disability improvement (SDI; ie, confirmed EDSS improvement or 20% decrease in timed 25-foot walk [T25W]) at 12 months], (3) Percentage of participants with SDI at 15 months, (4) Change from baseline in immunoglobulin G ((IgG)) index (at 9 months).
Implications of the interim analysis
Last July ATRA reported results of the planned interim analysis (IA) of the phase 2 study, which resulted in a significant hit to the stock's price. According to the IA there were no safety concerns and no sample adjustment was necessary, which in my opinion is a positive outcome. A bad outcome would be a decision to increase the sample size or unexpected serious adverse events or stopping the trial for futility.
What drove the price down was the statement that "there was not a sufficient dataset to draw conclusions about the predictive value of six months EDSS improvement for 12 months EDSS improvement. The IDSMC believes the six-month interim endpoint may be an inaccurate measure of the potential of this intervention in this condition", which resulted in an overreaction in my opinion. Firstly, the purpose of the interim analysis was to assess safety and to evaluated whether any adjustment to the sample size would be needed. Secondly, at the time of the interim analysis "there were EDSS data on 34 patients evaluable at six months and 15 patients at 12 months (across both placebo and active groups with 1:1 randomization)", which is a very small number in my opinion to make conclusions.
The problem is that ATRA had stated that "The IA will primarily focus on EDSS improvement at 6 months, which based on Phase I data was found to be greater than 85% predictive of achieving confirmed EDSS improvement at 12 months", which was a mistake in my opinion creating false expectations from the IA.
Why I believe the phase 2 will be positive
To sum up the above:
- There is strong pathophysiological rational implicating EBV not only in triggering MS onset but also in driving disease progression.
- There is convincing proof-of-concept from two phase 1 studies, showing neurological improvement or disease stabilization in the majority of treated patients with progressive MS.
- Specifically, in phase 1 part of the EMBOLD study the majority (20/24, 83%) of patients had either sustained neurological improvement (9/24, 38%) or disease stabilization (13/24, 54%). Notably, these findings were sustainable over about 4 years follow-up (5/5 sustained improvement, 8/8 sustained stabilization).
- Above clinical observations are further validated by objective imaging data (less brain atrophy and signs of re-myelination among respondents) and biomarker data (reduced accumulation of plasma Glial Fibrillary Acidic Protein, a potential biomarker of disease progression in MS, among respondents).
- I am not concerned about the results of the interim analysis.
Financials
According to Q2-2023 results ATRA reported cash and cash equivalents and short-term investments as of June 30 of $153.6M. Total cost and operating expenses were $72.4M (cost of commercialization $2.9M, R&D $56.1M, G&A $13.3M), while total revenue was just $957K. ATRA estimates that available cash and investments are sufficient to fund planned operations into Q2 2024. At the minimum ATRA has enough cash to EMBOLD topline results. Following positive results ATRA should have no problem raising cash at good terms.
Total MS market size across the seven major markets (the US, France, Germany, Italy, Spain, the UK and Japan) is expected to reach $29.8B by 2030 (US representing 78.6% of this market). In US the prevalence of SPMS is 27–45 for every 100,000 members of the general population, which corresponds to about 90K-150K patients. PPMS is diagnosed in 10-15% of patients with MS ( 1M in US ), i.e. another 100-150K patients. Conservatively assuming similar pricing ( $59,000 ) to the recently approved Briumvi ( TGTX ) this corresponds to an adressable market size of $11.2B-$17.7B just in US. Conservatively assuming just a 20% market share this would correspond to a market size potential of $2.2B-$3.5B (the upper limit of this estimation matches ATRA's estimations that " annual U.S. market opportunity in PMS could be at least $3.5 billion by 2025"). Under a partnership scenario with just 10% royalties (not accounting for potential milestone payments) this would correspond to peak yearly revenue potential for ATRA of $224M-$354M. Considering an EV/revenues multiple of 7.1 (typicall for biotechs), a fair EV in the above scenario would be $1.6B-$2.5B, not accounting for ATRA's rest pipeline. According to Seeking Alpha valuation metrics , at the time of writing ATRA has an Enterprise Value (EV) of just $61M.
Risks
Competition from existing therapies in MS is fierce. The major risk to the thesis would be negative results by the phase 2 study. Importantly, even if positive, results have to be competitive compared to existing therapies (e.g. higher efficacy, additive/synergistic efficacy or fewer side effects). ATRA will also soon need to raise cash, but following positive phase 2 results this shouldn't be a problem.
Recommendation
I believe that ATRA's stock price has been punished enough and the market doesn't seem to place much value on the MS indication at the moment. Based on strong supportive scientific rationale and promising signals of efficacy in phase 1 studies, I suggest ATRA as a speculative "Buy" before upcoming phase 2 readout. However, I have to emphasize that available data are not convincing enough yet and whether ATA188 will have advantages over current B-cell depleting therapies is uncertain. Therefore the risk is high. Invest only what you can afford to lose. Less risk-tolerant investors may consider bying now and selling before the readout, hoping for a rally getting closer to November readout, although such a rally is not guaranteed based on ATRA's current momentum (of note ATRA's momentum grade according to Seeking Alpha rating is "D").
For further details see:
Atara Biotherapeutics: A Speculative Buy On Upcoming Phase 2 Multiple Sclerosis Readout