Trevor Williams
Nothing seems to be good enough for the market when it comes to Arvinas (NASDAQ:ARVN); however poor data may be a reason for that. In my last article, I discussed how ARV-110 data in February did not move the stock. This time, on November 22, the SABCS conference “accidentally” released ARV-471 data. That, too, did not do anything for the stock.
Arvinas’ PROTAC (proteolysis targeting chimeras) technology was developed at the lab of Dr Craig Crews at Yale. The technology takes over the body’s E3 ligase-ubiquitin-proteasome mediated protein degradation, and uses it to selectively tag and degrade pathologic proteins. The company has had phase 1 proof of concept data for more than a year.
The company has an oncology pipeline and a preclinical neuroscience pipeline. It now has three assets in the clinic – ARV-471, the lead asset partnered with Pfizer (PFE) and targeting ER+/HER2-Breast Cancer; ARV-110 or Bavdegalutamide, which is targeting metastatic castration resistant prostate cancer or mCRPC; and ARV-766, also targeting mCRPC but with a different profile.
In late November, Arvinas announced early data from a Phase 2 expansion cohort of a Phase 1/2 study, indicating a clinical benefit rate of 38% among breast cancer patients.
The trial, known as VERITAC, is evaluating ARV-471 monotherapy and in combination with Pfizer’s palbociclib. As of the June 06 data cut-off date, 71 patients who had received oral doses of ARV-471 at 200 mg (n=35) or 500 mg (n=36) showed a 38% clinical benefit rate.
Clinical Benefit Rate or CBR comprises complete response, partial response and stable disease, and is not as great a measure of a cancer drug’s efficacy as complete response or even partial response. Note that of 71 patients, only 2 had even a partial response, one each in the higher and lower dose cohorts.
Another important point as noted by Evaluate:
[Date] showed the CBR in ESR1 wild-type patients to be meaningfully lower than in ESR1 mutants: 25% versus 47% respectively. Serds are thought to work especially well in ESR1 mutant disease, so a strong effect in patients without the mutation would have been a boon for Arvinas.
The weaker data in ESR1 wild-type patients may limit the drug’s usage to just ESR1 wild-type population, thereby limiting its market size. This is also the market where SERDs have a larger efficacy, so there will be more competition. Had the molecule done well in the mutant space, it would have had a lower bar to pass, and less competition.
ARV-471’s median PFS, too, was distinctly worse than competing SERDs, which have shown mPFS as high as 6.5 months against ARV-471’s 3.5 months. Moreover, AstraZeneca’s (AZN) intramuscularly delivered SERD, Faslodax, which has consistently shown competitive data, is now off-patent, putting pressure on emerging candidates.
Five patients witnessed Grade 3/4 treatment-related adverse events. There were one and two discontinuations in the 200 mg and 500 mg cohorts, respectively. That too is a point of worry.
The company plans to start two phase 3 trials for ARV-471 as a single agent and in combination with palbociclib. One trial will be in a second-line setting and the other in first-line for ER+/HER2- metastatic breast cancer in Q4 2022 and Q1 2023, respectively.
Pfizer signed a mega deal with Arvinas last year for ARV-471 where it paid $650mn upfront, another $350mn to buy a 7% stake in ARVN, and upto $1.4bn in future milestone payments. Pfizer had earlier invested $28mn in the company when they were starting out.
Financials
ARVN has an unjustifiable $2.12bn market cap and a cash reserve of $1.2bn. Research and development expenses were $77.5 million for the quarter ended September 30, 2022, while General and administrative expenses were $20.0 million. At that rate, given their huge cash balance, the company has a cash runway of more than 3 years.
Insiders don’t seem to be interested in buying ARVN stock. There are mostly sales related to option exercises, and a few outright sales. There was just a single buy 2 years ago, nothing further.
Bottomline
ARVN seems to be something of a failed promise. Moreover, the poor trial data fails to justify the huge valuation. I was once a shareholder, but I quit my position in November. In my earlier articles, you can see my enthusiasm for the science. However, the company so far hasn’t lived up to its promise. Data has been consistently underwhelming, and while they have a lot of cash thanks to Pfizer, the market cannot sustain its interest in the face of such data. I have sold out, and I do not plan to take a position again anytime soon.
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