Check­Mate-227: Bris­tol-My­ers Squibb has a MYS­TIC-sized prob­lem on its hands

Ja­mi Ru­bin, Gold­man Sachs

No­body knows how to put a top ex­ec on the spot quite like Gold­man Sach’s Ja­mi Ru­bin.

The high-pro­file an­a­lyst has a well-earned rep for go­ing straight for the jugu­lar, and that was on full dis­play Thurs­day night as she went at Bris­tol-My­ers Squibb’s lat­est po­ten­tial Achilles heel in im­muno-on­col­o­gy: Its Check­Mate 227 tri­al that in­cludes a matchup of Op­di­vo and the CT­LA-4 drug Yer­voy in front-line lung can­cer.

With the spec­tac­u­lar MYS­TIC fail on every­one’s mind Thurs­day, and the com­pa­ny’s stock fresh­ly pum­meled by the im­pli­ca­tions of As­traZeneca’s prat­fall on its own PD-L1/CT­LA-4 com­bo, she said, “it’s very hard to walk away from MYS­TIC feel­ing warm and fuzzy about 227.”

None of this, of course, was un­ex­pect­ed at Bris­tol-My­ers, which is acute­ly sen­si­tive to just how im­por­tant Op­di­vo is to its fu­ture. Bris­tol-My­ers had al­ready re­placed its R&D chief af­ter a key fail­ure of its own in lung can­cer, which gave Mer­ck a big ad­van­tage that it’s now cap­i­tal­iz­ing on with a front-line OK for a com­bi­na­tion of Keytru­da and chemo. By the time Ru­bin tack­led the ele­phant in the room, Bris­tol-My­ers CEO Gio­van­ni Caforio had al­ready drawn a dis­tinc­tion be­tween MYS­TIC and 227. He told an­a­lysts:

Gio­van­ni Caforio, Bris­tol-My­ers Squibb CEO

(O)ur Check­Mate 227 is a first-line, non-small cell lung can­cer pro­gram, not just one tri­al, in­ves­ti­gat­ing sev­er­al im­por­tant sci­en­tif­ic ques­tions. In study 227 we have at least three dis­crete op­por­tu­ni­ties for suc­cess. We will be able to eval­u­ate the com­bi­na­tion of Op­di­vo plus Yer­voy, we will eval­u­ate Op­di­vo plus chemo in PDL-1 neg­a­tive pa­tients and we will be avail­able to eval­u­ate Op­di­vo plus chemo in all com­ers. Ad­di­tion­al­ly, as you know, we are test­ing two cy­cles of chemo with the com­bi­na­tion of Op­di­vo and Yer­voy.

It’s al­so im­por­tant to rec­og­nize that MYS­TIC tri­al and Check­Mate 227 are very dif­fer­ent tri­als. First, the dose and sched­ules are dif­fer­ent. In 227, we be­lieve we have op­ti­mized the dose and the sched­ule. Sec­ond, the tri­al sizes are very dif­fer­ent. 227 en­rolled over 2,200 pa­tients, with 1,200 pa­tients in the PDL-1 pos­i­tive por­tion alone. In con­trast, MYS­TIC en­rolled rough­ly 1,100 pa­tients in all com­ers, and its pri­ma­ry end­point was eval­u­at­ed in a sub­set of that pop­u­la­tion. While the MYS­TIC re­sults are im­por­tant da­ta and we look for­ward to see­ing more, it’s very dif­fi­cult to read across tri­als.

New R&D chief Thomas Lynch went fur­ther af­ter Ru­bin’s com­ment, not­ing that Yer­voy has a proven sur­vival ben­e­fit that could log­i­cal­ly be ex­pect­ed to con­tin­ue in a com­bo with Op­di­vo. And he al­so un­der­scored the op­tions the com­pa­ny has to go in dif­fer­ent di­rec­tions, adding that there are a cou­ple of new moves in R&D to come up with a bet­ter CT­LA-4.

But Bris­tol-My­ers is now fac­ing a tough chal­lenge win­ning over an­a­lysts. Not­ed Leerink’s Sea­mus Fer­nan­dez:

While 2Q pro­vid­ed en­cour­ag­ing growth for BMY’s key fran­chis­es, we are up­dat­ing our DCF-based price tar­get to $61/shr (from $66/shr pre­vi­ous­ly) to re­flect in­creased un­cer­tain­ty fol­low­ing the fail­ure of AZN’s MYS­TIC (Imfinzi (dur­val­um­ab; an­ti-PD-L1) + treme­li­mum­ab (an­ti-CT­LA-4)) and the po­ten­tial read through to BMY’s I/O com­bo of Op­di­vo + Yer­voy (ip­il­i­mum­ab; an­ti-CT­LA-4) in the PDL1+ group in the on­go­ing Check­Mate-227 tri­al.

As­traZeneca CEO Pas­cal So­ri­ot has been plagued all year long by the in­tense fo­cus that has been cen­tered on MYS­TIC. And he’ll have to spend the rest of the year ex­plain­ing how the com­pa­ny plans to move on from the first big end­point flop.

That’s not a po­si­tion that Bris­tol-My­ers Squibb wants to be in. But ex­ecs don’t have much choice. Brad Lon­car, an in­vestor who runs the $CN­CR im­munother­a­py ETF, has been track­ing quar­ter­ly PD-(L)1 sales, and the lat­est up­date to­day shows why the fo­cus on 227 isn’t go­ing away.

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