Immuno-oncology: the future of cancer therapy?

John McDougall, from Rathbones’ research team, gives an overview of immuno-oncology, an exciting area of pharmaceutical research that could have a major impact on cancer treatment success rates. 

John McDougall

By John McDougall, Rathbones' research team

In recent years, there have been very few industry-changing breakthroughs in pharmaceutical and biotechnology drugs. In most areas, pharmaceutical companies have improved treatments only incrementally. For example, drugs may come in different formulations or may work slightly better than the previous version, but there isn’t a marked change in survival rates or recovery. However, this isn’t true of all therapeutic categories. One of the areas where scientists are making real progress is in the area of oncology (anti-cancer medicine) and immuno-oncology looks very promising indeed.

When the body detects a tumour, the immune system tends to shut down, giving the cancerous cells the opportunity to multiply without much bodily response. Immuno-oncology drugs wake up the immune system and allow the body to fight the cancer. Recently, there have been significant developments in this area, particularly in the area of anti-PD-1 and anti-PD-L1 antibodies.

A PD-1:PD-L1 binding in a tumour keeps T-cells (white blood cells) deactivated. If T-cells are deactivated there will be a reduced response from the immune system. Anti-PD-1 and anti-PD-L1 antibodies (produced by drug companies) break the PD-1:PD-L1 binding and this activates the T-cells, triggering an immune response. In some cases the tumour reduces in size or grows more slowly – in other cases, the cancer has disappeared completely.  

It is still very early days, but some of the initial results have been remarkable. The treatment has been observed to be highly effective on patients who display high expression of PD-L1 in a tumour. Academic research indicates that a high expression of PD-L1 in a tumour leads to a significant increase in the rate of deaths. This could mean that people with cancers with the lowest survival rates may turn out to respond best to this treatment. For example, the antibodies have so far been particularly effective in treating advanced lung cancer, something which has proven particularly difficult to treat in the past.

It is very difficult to tell at the moment what effect this development could have on cancer treatment in the future. No drugs have yet been approved by the US Food and Drug Administration (FDA). It may be that the investment community has become overly excited about this area given there has been little else in terms of new drugs on which to focus? Maybe, but the initial results have been striking. However, it is quite possible that those who have responded well to treatment initially may get the cancer again or their condition could deteriorate in the future in some way. Only time will tell.

Investment analysts’ forecasts for the potential size of the market for these drugs vary enormously depending on how the market is defined. Conservative forecasts suggest immuno-oncology market will be worth $10bn annually, whereas more optimistic forecasts say it could be $35bn. So far, the anti-PD-1 and anti-PD-L1 antibodies have only been tested on three types of tumour: lung cancer, melanoma and kidney cancer. Not only could this treatment be used to treat other types of cancer, but also certain chronic diseases such as HIV and hepatitis B. Some analysts assume that everyone with cancer can be treated, not just the patients with high incidence of PD-L1. Also, some are forecasting that the antibodies will work with other cancer treatments such as chemotherapy and other oncology products.

The development of immuno-oncology drugs is extremely important to the pharmaceuticals industry. The patents on some existing cancer drugs will soon expire leading to the erosion of sales by generic competition. However, if the companies concerned can sell the new immuno-oncology products in a bundle with existing cancer products this could defend these sales against generics. However, it is also possible that there could be some unforeseen side effects when using these treatments in combination. Again, only time will tell.

Four of the major pharmaceuticals companies are involved in immuno-oncology: Bristol-Myers Squibb (BMS), Merck, Roche and AstraZeneca. BMS has a time advantage over the other three in most cancers with its first drug launch expected in 2015. The company was a pioneer in this area and are the most exposed to immuno-oncology. Merck has a time advantage in melanoma (with its first product launch potentially by the end of 2014) and Roche is third in terms of its pipeline. Pfizer’s bid for AstraZeneca suggests that all the big companies are taking these developments seriously, even though AstraZeneca’s immuno-oncology products are all still in phase I clinical trials.

The American Society of Clinical Oncology (ASCO) Conference will take place between 30 May and 3 June 2014 and pharmaceuticals companies are expected to announce significant data from their anti-PD-1 and anti-PD-L1 trials. Roche has indicated that it will announce initial testing results for a new tumour area. If the results announced at ASCO are good it is likely that there will be extensive press coverage around this time.

As investors, we must be careful when the market gets excited about ‘hot topics’ such as this one. Many of the companies involved in this area have performed well over the past few months as investors have anticipated good trial results. We should bear in mind that the cash flows associated with these treatments are not likely to be material for some years, if at all. However, if these new drugs do succeed, cancer could become analogous to a chronic disease rather than the devastating condition that it is today.