There is always a debate regarding market efficiency and to what extent stock prices represent the available information about a company. Micromet’s (MITI) surge last week shows that in some cases, the market is far from being efficient. The spike of more than 35% in the last two trading sessions is attributed to the publication of a short article in Science Magazine, one of the world’s most prestigious scientific journals. The article contained clinical data from an ongoing phase I trial of Micromet’s lead candidate, MT103 (partnered with Medimmune). The data was spectacular, showing a strong, dose dependent response in concert with a good safety profile, exactly the kind of data that can put a small biotech in the spotlight. Ironically, the article contained data which has already been presented more than two months ago at the ICML in Switzerland.

Regardless of whether market reaction was justified, publishing clinical data at such an early stage in Science should be viewed as an indication for the scientific community’s embrace of Micromet and its BiTE platform. The BiTE platform relies on monoclonal antibodies for stimulating the patient’s immune system to attack cancer cells that have managed to evade or suppress the body’s immune response. Although most attention is given to the first product from the platform, MT103, it can generate an unlimited number of agents against a variety of cancers, making it a potential revolution in the way cancer is treated.

It still remains to be seen whether additional BiTE agents will be as promising as MT103, but examination of the clinical data leads to the conclusion that Micromet now has one of the most exciting technologies in the biotech industry. The BiTE platform represents a truly novel class of anti-cancer agents and is not like anything else out there. It facilitates the construction of bi-specific antibodies that simultaneously bind cancer cells and the body’s most potent immune cells (T cells), leading to a strong, long lasting and escalating immune response against tumors. In the past decades, there have been numerous attempts to create effective bi-specific antibodies, all of which failed. One exception may be a Biotest’s HRS3/A9, which showed promising efficacy but could not be produced in sufficient quantities for further clinical evaluations. The area of bi-specific antibodies has been long abandoned by the antibody industry and MT103 can be seen as the long anticipated breakthrough that overcame most of the hurdles. It seems that Micromet found the ideal formula for generating a potent yet safe anti-tumor response with bi-specific antibodies.

BiTE antibodies are small enough to get T- cells within sufficient proximity to cancer cells and unleash their lethal mechanisms in a targeted and specific manner. Their small size may also help them penetrate areas inaccessible for other agents. In addition, because the actual attack is done by the patient’s most potent immune cells, which can proliferate and multiply upon activation, it takes a tiny amount of BiTE antibodies for generating a systemic response. This may explain the incredibly low doses of MT103 that led to clinical responses in the phase I clinical trial. When compared to other antibodies and chemotherapeutic agents on a normalized basis, MT103 is certainly one of the most potent compounds to have ever been tested in humans, if not the most potent one.

Promising Data

The Science article reported data for thirty eight NHL (non-Hodgkin lymphoma) patients, who received various doses of MT103. The trial focused on two subtypes of NHL, follicular lymphoma [FL] and Mantle cell lymphoma [MCL], which together represent around 35% of the NHL market. There were 11 cases of objective response (four complete and seven partial), which appeared primarily in the cohorts who received the higher doses. Strikingly, all seven patients who received the highest dose responded to the treatment, two of whom had a complete response. As of the latest follow up (June 1^st) all these responses were ongoing for a period of 1-8.5 months, on top of one response in a patient who had received a lower dose that was ongoing for more than a year. The issue of response duration is cardinal because many treatments, especially Rituxan containing regimens manage to achieve long lasting responses of more than a year in similar patient populations, so in order to be regarded as a viable alternative, MT103 must keep patients in remission for substantial periods of time.

It is important to understand that the significance of the data is not necessarily in the commercial opportunity of MT103 for these patient populations, which fortunately have a slower disease onset and enjoy an abundance of treatment options. The challenging competitive landscape leads to high entry barriers for new therapies for FL and MCL patients. Furthermore, there are additional antibodies in development that bind the same target MT103 binds, CD19. The most advanced of these agents is Sanofi-Aventis’ (SNY) SAR3419, based on Immunogen’s (IMGN) technology, which is currently in two phase I trials. Additional CD19 targeting agents are being developed preclinically in the hands of Genentech (DNA), Seattle Genetics (SGEN), Medarex (MEDX) and Xencor. MT103’s results are actually the first validation of CD19 as a target and are therefore likely to motivate these companies to advance their candidates into the clinic as soon as possible.

Hopefully, MT103 will find its way to the NHL market as the next line of defense for certain subsets of patients, but the real potential lies somewhere else. Because the BiTE platform is a universal and modular platform, it could be utilized to generate a plethora of candidates for indications with limited treatment options, primarily solid tumors. Solid tumors, such as lung and breast cancers are less sensitive to available treatments due to poor accessibility and are consequently responsible for over 90% of cancer related deaths worldwide. BiTE antibodies may have a competitive edge over other therapies due to their small size and certain properties of the immune cells they activate. They may also be advantageous for targets that cannot be hit by other antibody-based platforms, because they do not require internalization in order to be effective. For more on the mechanism by which BiTE antibodies operate and why they are considered so promising, click here. The first BiTE antibody for solid tumors, MT110, recently entered the clinic, and is expected to generate initial data next year.

Substantial Risks

Investors should be aware of the long list of risks associated with MT103 in particular and the BiTE platform in general. With respect to MT103, the data is preliminary and based on a limited number of patients, so it may turn out to be less effective in larger trials. In addition, the NHL market is full of promising compounds, some of which demonstrated comparable or even better efficacy in similar patient populations. A closer look at patient demographics reveals that patients in the highest cohort were younger and less heavily pretreated compared to patients in lower doses, which might explain the 100% response rate.

Despite the explosive potential of the BiTE platform, there is the obvious unpredictability associated with early stage drug development. There is no guarantee that additional BiTE antibodies will replicate MT103’s success, and even if some do, it might be after multiple failures, like is often the case with novel disrupting technologies.

Safety is also a concern, especially in therapies that manipulate the immune system, and until a compound is evaluated in large enough populations the fear of unexpected adverse events is always there. This explains Micromet’s decision not to escalate the dose in the MT103’s trial further, despite the fact that the maximum tolerated dose [MTD] was not reached. Because MT103 is the first product of the BiTE platform, safety issues can lead to delays or even jeopardize the entire platform. Therefore, when a dose escalation study reaches a sufficiently active dose, there is much more to lose from increased toxicity than to gain from better efficacy. In the case of solid tumors, however, it will probably take dose levels near or at the MTD in order to achieve the needed efficacy, so the risk there is obviously higher.

Three Main Events

For the remainder of the year, there will be three important events for Micromet.

Most importantly, the company will publish additional data in December at the Annual Society of Hematology [ASH] annual meeting. The data set will include an update from the ongoing trial in NHL patients as well as preliminary results from a phase II study that evaluates MT103 in Acute lymphoblastic leukemia [ALL]. Choosing ALL as a second indication makes sense because it is estimated that over 90% of ALL cases express CD19.

The data from the NHL trial is very important not only because it will include additional patients and an update on  the durability of the responses, but also because data from Sanofi-Aventis’ SAR3419 will be presented. This will give investors the opportunity to assess the BiTE platform relatively to competing platforms.

The ALL study has important implications as well, because it represents an attractive route for commercialization for MT103. ALL is an aggressive blood cancer with a dismal prognosis and very few treatment options, in contrast to the NHL subtypes in the phase I trial. If MT103 demonstrates sufficient activity against ALL, this indication represents a faster route to market, with very little competition upon approval. In addition, the ALL study is very significant for the future development of MT103, because it represents a different treatment modality. The study does not evaluate MT103 as a primary treatment, but as consolidation in patients who receive chemotherapy but still have leukemia remnants in their bone marrow. The company views this study as a probe for the utility of MT103 as a secondary treatment as well as for the potential of the compound for other aggressive blood cancers.

The second event, which is supposed to take place before ASH, is rumored to be a partnership deal for one of Micromet’s pre-clinical programs or a technology licensing deal with a major pharmaceutical company. Such a development will serve as another validation of Micromet’s potential, provide highly needed cash infusion and decrease the overall risk.

The third event will be some sort of a capital raising deal, which will probably happen sooner rather than later given the recent stock movement. This may put some pressure on the stock in the coming months.

I have been getting a lot of questions from investors with respect to Micromet’s target price. My answer is that the huge potential of the company warrants holding it as long as the BiTE platform continues to produce impressive clinical results. Nevertheless, with a market cap of $220M and a year to date return of over 170%, Micromet is not a cheap stock. The recent jump following the Science article, coupled with the anticipated round of financing might imply that now is a good time to take some gains off the table with the purpose of waiting for a lower entry point down the road, prior to the ASH annual meeting.

Disclosure: Author is Long MITI, IMGN, SGEN