Sign up to SCR Digest, our FREE weekly newsletter, and receive our Notes emailed directly to you.
Email Address *
First Name
Mailing Lists *




















































































































Checkpoint (CKPT): An Innovator of Immune-Enhanced Combination Therapies in Solid Tumors

07/28/2017


NASDAQ:CKPT

Checkpoint Therapeutics, Inc. (NASDAQ:CKPT) is a majority-controlled subsidiary of Fortress Biotech (NASDAQ: FBIO) focused on developing a portfolio of immune-enhanced combination cancer therapies in solid tumors.  Checkpoint’s strategy is to acquire, develop and commercialize immuno-oncology and targeted anti-cancer medicines by acquiring rights or ownership in promising molecules, then funding their research and development to bring the technologies to market.  The company’s portfolio currently consists of six drug candidates in preclinical and Phase I clinical trials.  Two of the compounds are immuno-oncology agents and four are targeted anti-cancer agents. Checkpoint plans to develop its drug candidates both as monotherapies, and then in combination with each other.  Importantly, owning all components of a combination therapy should provide Checkpoint with pricing leverage versus competitors upon commercialization.

The company’s most advanced candidate is designated CK-101, a third generation epidermal growth factor receptor (EGFR) tyrosine kinase inhibitor (TKI)  licensed from the Chinese biopharmaceutical company, NeuPharma, Inc.  

This drug is intended for non-small cell lung cancer (NSCLC) and is expected to address many of the shortcomings in previous generation drugs.  This includes the development of resistance and emergence of adverse side effects for other EGFR TKIs.  Third generation EGFR TKIs are distinct from previous generations in that they selectively target the T790M, L858R and 19 deletion mutations, are selective against wild-type (normal) EGFR and covalently bond with the protein target.  Inhibitors with covalent bonds are more potent and selective than their non-covalent counterparts in silencing proteins.

EGFR is a target of high promise in oncology.  The EGFR protein is a transmembrane tyrosine kinase receptor that is important for regulating cell division and cell death.  In some cases, protein kinases can become mutated, and upregulate to the "on" position.  If EGFR is overexpressed, dysregulated or mutated then it may lead to uncontrolled cell division, tumor growth and tumor progression.  EGFR overexpression can lead to a number of cancers including squamous-cell carcinoma of the lung, anal cancer, glioblastoma, and epithelian tumors of the head and neck.  

In order to fight cancer progression, EGFR TKIs were developed to impede tumor growth and development through the mechanism of intracellular binding to the adenosine triphosphate pocket of EGFR, prevention of tyrosine kinase activation and inhibition of EGFR signaling pathways.  Employing this mechanism of action, first generation EGFR TKI therapies such as Tarceva (erlotinib) and Iressa (gefitinib) provided a 60% to 70% response rate and from 10 to 12 months of progression-free survival for NSCLC patients with EGFR mutations.  

Non-small Cell Lung Carcinoma

About 85% of lung cancers are NSCLC, which represents about 190,000 new cases and over 132,000 deaths each year  in the United States. The EU and Japan add another 340,000 new cases every year.  From 10% to 35%  of patients with NSCLC (depending on genotype) have the EGFR mutated gene which suggests about 70,000 new patients in the US, EU and Japan every year.  Of those, roughly 60 percent, or about 40,000 new patients each year, develop drug resistance caused by the EGFR T790M mutation.

Competing Therapies

Tarceva and Iressa were able to address the dominant EGFR mutations present in this subset of NSCLC patients.  However, during the course of treatment, most tumors developed resistance to the therapy through a further mutation in EGFR called T790M, and the cancer returned.  This recurrence prompted the development of a second generation of EGFR TKIs, such as Boehringer Ingelheim’s afatinib and Pfizer’s dacomitinib which were designed to overcome T790M resistance.   While afatinib and dacomitinib did block the activity of the emerging mutations, they come with increased side effects in the skin and gastrointestinal tract.  This is attributed to inhibiting wild-type (normal) EGFR, which prevents their use at high enough doses to overcome T790M resistance.  

With the general failure of second generation drugs, manufacturers sought to address the resistance related to the EGFR T790M mutation and also avoid targeting the wild-type (normal) EGFR that has led to adverse events in patients.  Several development programs targeting T790M, such as Clovis’ rociletinib and Hamni’s olmutinib, both third-generation EGFR TKIs, either failed to show sufficient efficacy or have been criticized for unacceptable safety profiles and deaths, while Astellas recently ended its SOLAR trial comparing their EGFR TKI, ASP8273, against erlotinib or gefitinib.  The only approved third generation EGFR TKI is AstraZeneca’s (NYSE: AZN) Tagrisso (osimertinib).  The FDA gave the go-ahead for Tagrisso’s commercialization in 2015 via the accelerated approval pathway for the treatment of patients with metastatic EGFR T790M mutation-positive NSCLC.  In 2017, Tagrisso received full approval from the FDA.  The drug improved progression-free survival (PFS) by 5.7 months compared to chemotherapy (10.1 months vs. 4.4 months) and reduced the risk of disease progression by 70%.  AZN has forecast a $3 billion peak in annual sales for this drug’s market, however, based on 40,000 new patients per year and treatment pricing of $120,000, the potential could be higher for the market as a whole.  Besides CK-101, the only other drugs currently in clinical development that may compete for market share against Tagrisso are Novartis’ EGF816 and Pfizer’s PF-06747775, which are also currently in Phase I/II trials.

CK-101

With this concise background, we return to Checkpoint’s candidate.  CK-101 is a third generation EGFR TKI active against selective EGFR mutations which addresses approximately 20% of patients with NSCLC.  This includes the resistance mutation EGFR T790M as well as the L858R and Exon 19 deletion mutations in EGFR.  Second generation EGFR inhibitors did not address all of the shortcomings of the first generation drugs, providing an opportunity for Checkpoint to develop an inhibitor that is highly selective for T790M.  CK-101 is appropriate in patients that have developed a tolerance and resistance to gefitinib and erlotinib.  In September 2016, Checkpoint began enrolling in its Phase I/II CK-101 in-man clinical trial (NCT02926768). The second part of this study (Phase 2) is anticipated to begin by year-end 2017, and enroll patients both inside and outside the US.  

The approval of Tagrisso has provided further validation of the target for this class of drug, as well as a blueprint for a pivotal Phase 3 trial design with PFS as the primary endpoint.  Assuming favorable Phase 2 data, Checkpoint is targeting launch of a pivotal Phase 3 study by the end of next year and a trial duration of 18 to 24 months.

Combination Therapy

When a mutation has been addressed by EGFR TKIs, the tumors continue to adapt or mutate, rendering the therapies less effective after several months of treatment.  This has led to the pursuit of a more effective combination strategy where an EGFR TKI is paired with a checkpoint inhibitor to potentially lengthen a patient’s anti-tumor response.  Published preclinical data suggest that combination therapy with checkpoint inhibitors and EGFR inhibitors may provide increased effectiveness in the target NSCLC population.  Shrinking a tumor with an EGFR inhibitor produces antigens that activate an immune response, while the use of a checkpoint inhibitor allows T-cells to identify cancerous cells and mount a further attack.  A benefit of combination therapies is that they may reduce development of drug resistance, since a tumor is less likely to have resistance to multiple drugs administered together.

With supportive single-agent data, the company intends to also pursue a combination therapy with CK-101 and a checkpoint inhibitor sourced in-house.  The company is currently developing CK-301, an anti-PD-L1 immuno-oncology agent that binds to the PD-L1 receptor and blocks its interaction with PD-1.  Checkpoint anticipates significant opportunities for its anti-PD-L1 monoclonal antibody as both a monotherapy and in combination with other anti-tumor compounds, which includes CK-101.  Management is hopeful that combination therapy will provide not only enhanced effectiveness compared to CK-101 alone, but also a better safety profile as compared to AstraZeneca’s foray into the combination space.  Both Tagrisso and anti-PD-L1 inhibitor durvalumab suffered incidence of interstitial lung disease (ILD) as monotherapies, which was accentuated in combination, subsequently leading to the abandonment of the combination program.  Preclinical and Phase I data for CK-101 and preclinical data for CK-301 have not shown any evidence of ILD, providing confidence that this may not be a problem in combination therapy either.  Owning both compounds in-house provides a substantial commercialization and pricing benefit compared to other combination therapies.

Stock Performance

Checkpoint Therapeutics’ stock, which trades on the NASDAQ under the symbol “CKPT”, has fluctuated in a range between $5.00 and $15.00 over the last seven months.  On December 19, 2016, CKPT began trading on the OTCQX, prior to which there was no public market for the company’s equity shares.  On June 26, 2017, Checkpoint’s shares were uplisted to the NASDAQ, which is anticipated to increase visibility and liquidity of the company’s shares.
    
The company announced the issuance of a U.S. composition of matter patent for CK-101 in late February and presented data on CK-101 at the American Association for Cancer Research (AACR) in early April which coincided with a rise and plateau in the stock price respectively.  However, since late May, the shares have returned some of their gains to settle around $9 per share.  There are several catalysts expected over the next 12 months that may provide substantial appreciation to the equity price including initiation of CK-101 enrollment for Phase 2, launch of Phase 1 for CK-301 and potential data readouts from the CK-101 and CK-301 clinical studies.  

In addition, the recently announced deal for a Phase 2 checkpoint inhibitor similar to CK-301 provides validation for Checkpoint’s business plan and highlights the potential upside in Checkpoint’s stock price if it is able to show continued success.  This arrangement between Celgene and BeiGene comprised of upfront, stock purchase and milestone payments, valued their PD-1 inhibitor BGB-A317 in excess of $1 billion.

Trading volume increased following the move to the NASDAQ, with volume averaging approximately 5,000 shares per day since June 26.
 
Summary

Checkpoint Therapeutics’ strategy of identifying promising compounds, and using its expertise to develop and commercialize mono- and combination therapies has identified a capable candidate for the treatment of NSCLC patients with the EGFR T790M mutation.  While there has been much interest in the space, many competitors have failed, providing an opening for Checkpoint to pursue what may be a $5 billion market for CK-101.  While Tagrisso has taken the lead in third generation EGFR TKIs, they have also provided a clear registration pathway for FDA approval, providing a template to efficiently gain the agency’s endorsement.  Checkpoint is also hopeful based on data to date that CK-101 will have fewer side effects than Tagrisso, providing a strong argument for market share both as a monotherapy and in combination with Checkpoint’s CK-301 anti-PD-L1 compound. 

SUBSCRIBE TO ZACKS SMALL CAP RESEARCH to receive our articles and reports emailed directly to you each morning. Please visit our website for additional information on Zacks SCR and to view our disclaimer.

 
User ID:
Password:
Remember my ID: