Immuno-oncology, Perspective

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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