AZN Phase 3 MYSTIC data examining combination of durvalumab (anti-PD-L1) and tremelimumab (anti-CTLA-4) compared to standard of care (SOC) chemotherapy in firstline non-small cell lung cancer (NSCLC) are expected imminently. Primary endpoints for Incyte Corporation (NASDAQ:INCY) include progression-free survival (PFS) and overall survival (OS) in PD-L1-positive (likely ≥ 25%, but cut-off not disclosed) in combination and monotherapy compared to SOC. PFS results are anticipated mid-2017 and final OS data in 2018. Notably, several interim analyses for OS are included in trial protocol, and it is unclear what information will be provided to the public. In the firm's coverage, Bank of America Merrill Lynch is focused on impact of results on INCY due to read-through to epacadostat (IDO inhibitor) and PD-(L)1 combinations in NSCLC.
Durvalumab and tremelimumab combination demonstrated lower objective response in all-comers (35% v. 43%) and PD-L1+ ≥ 25% (33% v. 78%) than BMY’s Opdivo/Yervoy in CM-012. Further, durvalumab monotherapy (27%) in 1L does not seem as active as Opdivo (50%) and Keytruda (45%) in PD-L1+. The firm notes a PFS benefit is often hard to achieve due to ‘pseudo-progression’ and AZN’s adding OS to coprimary endpoint reflects this concern, in its view. While MYSTIC may show a PFS benefit over SOC, BAML believes investors should focus on difference between combination and monotherapy, which is an even higher hurdle. Based on published data, the firm is cautious on a significant benefit from this combination versus monotherapy.
BAML's $2B probability-adjusted peak sales for epacadostat in NSCLC translate to 15% of its PO. Results of MYSTIC could impact its view of IDO combination peak penetration (base case: 16%) and probability of Phase 3 success (base case: 60%). The firm's scenario analysis suggests a +/- 10% move is possible depending on trial outcome. Due to multiple potential outcomes, BAML did not believes the bear case for INCY will be actualized and expect a more conservative impact. Overall, the firm believes increased depth and durability of responses seen with IDO/PD-1 combination could lead to enhanced survival without increased tolerability issues observed with PD-1/CTLA-4 combination.