Summary

• GSK’s oncology portfolio is key to growth prospects, as they are expected to offset headwinds currently faced in HIV and the Advair business.

• Zejula provided additional data in maintenance treatment of ovarian cancer that could present share gain opportunities from Lynparza. GSK will look to expand Zejula into additional oncology indications.

• Belantamab mafodotin could be the first to market within the BCMA class of drugs in multiple myeloma, and will provide additional details at an upcoming medical conference.

GSK Facing Headwinds in Established Products but Balanced by Growth Opportunities in Oncology

GSK faces several headwinds in its business, with Advair facing generic pressure, and its new 2-drug HIV regimens struggling to gain traction. On the latter point, GSK must convince skeptical healthcare providers that a 2-drug regimen is able to provide similar levels of efficacy to a 3-drug regimen without developing drug resistance.  I detailed these issues from Gilead’s perspective last year.

However, GSK also has several growth opportunities within oncology and vaccines that are offsetting these headwinds. Within this note, I'll focus on the oncology opportunity and detail two specific assets - Zejula, which GSK will look to expand beyond maintenance ovarian cancer, and belantamab mafodotin, which could potentially be the first-to-market within the BCMA class of drugs in multiple myeloma. Belantamab mafodotin is expected to report pivotal, phase 2 data at an upcoming conference (please note that GSK had originally aimed to present at ASH, but has notified me that they will not be presenting).

Zejula's Data Mixed, but Should Drive Higher Sales  and Operating Leverage Overall

Investors have been discussing GSK's poly ADP ribose polymerase (PARP) inhibitor, Zejula, and its potential sales in maintenance treatment of first line ovarian cancer. For background, Zejula is a once-daily, oral medicine used for the maintenance treatment of women with recurrent ovarian, fallopian tube, or primary peritoneal cancer when their cancer comes back. GSK recently reported additional details on its phase 3 PRIMA study examining Zejula as a maintenance therapy vs. placebo at the European Society for Medical Oncology (ESMO). AstraZeneca's Lynparza (another PARP inhibitor) is considered the golden standard in the space, and also reported additional details on PAOLA-1, studying Lynparza and Avastin vs. Avastin alone. Following ESMO, investors debated who reported superior results at the conference. In general, thoughts were fairly mixed. 

For additional background, there are two primary characteristics to consider within ovarian cancer - homologous recombination deficiency (HRD), and breast cancer gene (BRCA). PARP inhibitors can be used to treat HRD+/BRCA-, HRD+/BRCA+, and HRD-/BRCA- patients.  

The first observation noted among many analysts and KOLs was that the two trial results are not directly comparable. As a result, we must be careful with the conclusions that we draw from the two trials. For example, the populations were different (PRIMA examined a more sickly population) and PFS values were not directly comparable given differing intervals of CT scans.

With that noted, there were some key differences. The most noticeable difference between Zejula and Lynparza results was that Zejula showed some efficacy in the HRD- patient group (progression free survival (PFS) increase of 3.3 months, hazard ratio (HR) of 0.43), but Lynparza and Avastin did not. This opens the door for Zejula to be used in this subgroup where it will compete with Avastin.

Within the other patient groups, investors see Lynparza likely continuing to dominate the HRD+/BRCA+ group (where Lynparza showed much better PFS), and Lynparza and Zejula roughly splitting the HRD+/BRCA- group.

In terms of safety, Zejula had a higher percentage of grade 3+ side effects (at 70.5%) but Lynparza and Avastin had a higher rate of discontinuation (with 20% vs. Zejula's 12%).

Overall, the results for Lynparza were disappointing, as most investors had high expectations for Lynparza to show an effect in all subgroups, including HRD-.

Meanwhile, for Zejula, results were fairly mixed, but on balance positive. On the negative side, the benefit in HRD- was not clearly better than Avastin, and the impact in BRCA+/HRD+ was less impressive than Lynparza. However, the HRD- results were unexpectedly positive compared to Lynparza. Additionally, Zejula could find an audience given that it is a monotherapy and will be less expensive.

Going forward, GSK will look to expand the drug into additional indications. The company noted they would be exploring the drug in combination with PD-1 inhibitors and would be exploring development in lung and breast cancer. My rough estimate is that the street is modeling ~$3 billion unadjusted peak revenue. With consensus at just $900M in risk-adjusted revenue by 2025, the company still has a good amount of upside to the drug should these growth efforts progress further.

Expectations High for DREAMM-2 Readout

In addition to Zejula, GSK investors await data from DREAMM-2 studying belantamab mafodotin in patients who have had three lines of treatment or more (3L+) for relapsed/refractory (r/r) multiple myeloma (MM). This is the most advanced drug in terms of commercialization in a new class of drugs that is being studied by numerous biotech companies in MM.

For background, MM is a large cancer indication, with roughly $10-20 billion in 2018 revenue from drugs targeting the indication. Current treatments consist of numerous combination regimens of three main classes of drugs. The three main classes are: immunomodulatory agents (IMiDs), proteasome inhibitors (PI), and monoclonal antibodies (mAb). The most common drugs include Revlimid (IMiD), Velcade (PI), Kyprolis (PI), and Darzalex (mAb). Almost all MM patients will have a relapse and/or develop refractory MM, and as a result, the combination treatments are heavily fragmented. Current treatments have been successful in extending median life expectancy over the last several decades, but many patients often still develop resistance over time. 

B-cell maturation antigen (BCMA) is an antigen that is specifically overexpressed on plasma cells, making it a prime target for plasma cell cancers like multiple myeloma. BCMA has been linked primarily to malignant MM cells, but are not present in healthy cells. This is in contrast to CS1 and CD38 (current mAb targets), which are expressed on healthy hematopoietic cells, and can lead to off-target toxicities. Additionally, several studies have shown that BCMA promotes the survival and proliferation of MM cells. As a result, BCMA appears to be an ideal target for MM treatment development, and as many as 50 trials are currently underway.

Additionally, there's several different BCMA-targeting modalities in development, including CAR-T, antibody-drug conjugates (ADC), and bi-specific antibodies.  

There are two drugs that are the furthest along in development: bb2121, a CAR-T treatment owned by BLUE/CELG, and belantamab mafodotin, an ADC treatment owned by GSK. Belantamab mafodotin is expected to be the first BCMA to market, assuming upcoming phase 2 data is strong, while bb2121 has shown the strongest efficacy in heavily-pretreated patients so far. CELG will provide an update on bb2121 at ASH in early December, while belantamab will provide an update at a later medical conference.  

Given the focus on GSK, I'll primarily discuss belantamab mafodotin (and will save a more detailed discussion of bb2121 for another article). DREAMM-2 is a pivotal phase 2 trial studying belantamab mafodotin in participants with MM with 3+ prior lines of treatment. DREAMM-1 demonstrated 60% overall response rate (ORR) (n=35) as monotherapy, 8.5% complete response (CR), 7.9 month median progression-free survival (mPFS), and 12M mPFS on follow up. Management has noted that they expect 30-40% ORR in DREAMM-2 (as the study examines a sicker population), but that anything above 25% would be fileable. Note that the 4L+ bar is low, with just a 29% ORR and 3.7M PFS demonstrated with Darzalex. On the efficacy front, expectations going into ASH are high given the strong data demonstrated by belantamab mafodotin (and by bb2121). 

In terms of safety, 80% of patients treated with belantamab had a grade 3+ AE, while 40% experienced at least one serious AE. Corneal events and thrombocytopenia were the most commonly-cited AEs, consistent with the toxic effects of other ADCs. With strong efficacy widely expected, safety could be the key swing factor for the stock. 

Overall, the street is currently modeling roughly $1.5 billion consensus estimates by 2026 from belantamab. The drug is currently being studied in numerous different settings, from 1L to 4L+. If the results continue to report positively (as the street expects them to), estimates will likely move up as the street increases the probability of success within their models. Meanwhile, the success of belantamab could pose a threat to existing mAbs like Johnson and Johnson's Darzalex, and BMY's Empliciti. Additional updates are expected to be reported throughout 2020 and 2021. 

As mentioned, there are numerous other treatments targeting BCMA as well. Notably, datasets from AMG420, LCAR-B38M, and P-BCMA-101 have reported initial results, but the studies remain in the early stages and are thus difficult to compare against belantamab mafodotin and bb2121. LCAR-B38M, owned by Legend Biotech and Johnson and Johnson, is one to monitor in particular, as initial results excited the MM space with 100% ORR and a 74% stringent complete response (sCR). While follow-up data was slightly less efficacious, and the patient population was not as heavily-pretreated as in bb2121, the results remain exciting and should be monitored more closely - JNJ will also be presenting updated data at ASH.

Conclusion

GSK’s growth is expected to be driven in part by their oncology portfolio, and specifically, two assets within that portfolio. GSK recently provided additional data on Zejula, which was somewhat mixed, but ultimately a slight positive as the drug has some opportunities for share gains from Lynparza. Going forward, GSK will explore additional line extensions for Zejula. Additionally, belantamab mafodotin could be the first BCMA drug class to market in the lucrative multiple myeloma indication, and details will be provided at an upcoming medical conference.