When Aethlon Medical (NASDAQ:AEMD) reported fiscal Q1 2020 financial results in August, management noted that they anticipated imminent filing of an Investigational Device Exemption (IDE) seeking approval to initiate U.S.-based clinical studies for their Hemopurifier device in cancer patients. Not only did that filing happen but on October 7th AEMD announced that the IDE was approved by FDA. While initiation of the clinical program is contingent on standard trial-site sign-off, IDE approval means the most significant hurdle is cleared.
The IDE relates to an Early Feasibility Study (EFS) – analogous to a Phase 1 safety-oriented study – using Hemopurifier in conjunction with pembrolizumab in patients with advanced head and neck cancer. Pembrolizumab, marketed by Merck (MRK) as Keytruda, is a next-gen cancer therapy used in immunotherapy against a variety of advanced cancers. A humanized antibody which was initially approved by FDA in 2014, pembrolizumab is one of a new class of drugs known as checkpoint inhibitors which work by manipulating immune system function. In June 2019 FDA approved Keytruda for first-line (i.e. standard of care) treatment of patients with metastatic or unresectable recurrent head and neck squamous cell carcinoma (HNSCC).
Pembrolizumab targets PD-1 (‘programmed cell death protein 1’), a protein found on and responsible for turning on and off T cells’ immunity response. When T cells encounter normal healthy cells, PD-1 attaches to PD-L1 (‘programmed death-ligand 1’), a protein on the healthy cell which lets the immune cell know not to attack it. PD-L1 is also found on some cancer cells, however, which use it as a defense mechanism by tricking T cells into not destroying it.
In cancers that overexpress PD-L1, pembrolizumab inhibits tumor growth by targeting PD-1. More specifically, pembrolizumab attaches to the PD-1 receptor, thereby blocking PD-L1 (from turning the immune response off) and exposing PD-L1 overexpressed cancer cells to attack by the body’s immune system.
The hypothesis behind combining the inhibition of PD-1 (via pembrolizumab) and physical removal of tumor-derived exosomal PD-L1 (via Hemopurifier) from the body is to evaluate whether it is more effective than PD-1 inhibition alone in fighting these unresectable tumors. As it relates to the latter, more and more evidence continues to support therapeutic targeting of exosomes to fight certain solid cancers.
This includes compelling findings from a study (Suppression of Exosomal PD-L1 Induces Systemic Anti-tumor Immunity and Memory, April 2019) published earlier this year in the journal Cell which showed that not only do exosomes play a role in cancer, but also that removal of exosomal PD-L1 inhibits tumor growth (even with tumors resistant to anti-PD-L1 antibodies) and exposure to exosomal PD-L1-deficient tumor cells may result in anti-tumor memory and immunity. Moreover, exosomal PD-L1 of some solid cancers appears to be resistant to anti-PD-L1 therapy – suggesting that effective treatment may require the direct targeting of tumor derived exosomes. Perhaps the most compelling conclusion of the study is the finding that targeting exosomal PD-L1 provides incremental benefit (i.e. suppression of tumor growth) to that of checkpoint inhibitors. AEMD’s EFS study, while small and not necessarily powered for conclusive efficacy, might still provide some insight into the potential utility of Hemopurifier in additive cancer therapy.
Potential Opportunity for Hemopurifier as Keytruda Adjunct… Even if this EFS study is successful, there is no way for us to know what AEMD’s next-steps will be for their cancer program (i.e. a formal U.S. regulatory program using Hemopurifier in combination with pembrolizumab would seem to be the most obvious, although other options could potentially be in play as well). So, while too early to even suggest that there is a reasonable chance that Hemopurifier could one day be used in combination with Keytruda in the treatment of certain cancers, we offer some background on the success of this cancer drug for some context of the significance of this market and the possible opportunity for AEMD.
Keytruda has shown to be a revolutionary drug in the treatment of cancer. Keytruda generated $7.2B in revenue in 2018, is expected to bring in approximately $10B in sales in 2019 and is Merck & Co’s (MRK) most important product. Analysts are predicting that it could reach over $22B in revenue by 2025 and become the best-selling drug of all time. Keytruda has been successfully used to treat 25 different types of cancer, has regulatory approval in more than 22 oncological indications (including non-small cell lung cancer, head and neck cancer, melanoma, cervical cancer and many more) and has been used in over 1,000 clinical trials (BioSpace, Oct 4, 2019. Alex Keown).
Specific to head and neck cancer (i.e. subject of the EFS study), Keytruda is the only checkpoint inhibitor that has FDA approval as a first-line treatment for this indication (Bristol-Myers’ Opdivio is FDA approved for patients that fail chemotherapy), which FDA granted in June of this year. An estimated 65k people in the U.S. are diagnosed each year with head and neck cancer. Which, given the approximate $12k per month cost of Keytruda treatment, means this indication alone (and just in the U.S.) represents an estimated annual market of more than $9B.
Early Feasibility Study
The design of the Early Feasibility Study is consistent with the indication granted to Hemopurifier under FDA’s Breakthrough Device designation which, as a reminder was awarded in November 2018 and relates to “the treatment of individuals with advanced or metastatic cancer who are either unresponsive to or intolerant of standard of care therapy, and with cancer types in which exosomes have been shown to participate in the development or severity of the disease. Therapy with the Hemopurifier device should be an adjunct to standard of care for cancer.
Per Aethlon’s press release earlier this month, this initial human cancer study will enroll between 10 and 12 patients at a single trial site. Like all Phase 1 studies, the primary endpoint will be related to safety. The study will assess efficacy-related performance with secondary endpoints measuring exosome clearance and characterization as well as response and survival rates.
IDE approval is a major milestone in our opinion as while Hemopurifier has previously been tested in human subjects – with no instances of serious safety concerns – the totality of clinical experience to-date has been modest and in disease areas (hepatitis C virus) that would likely not have nearly the commercial opportunity as would oncological applications. To be clear, we are not trivializing the significance of the findings that have come from development to-date of Hemopurifier – including establishment of a safety profile sufficient to clear FDA’s relatively stringent benefit-risk assessment and gain IDE approval. And much of that work likely has cross-over applicability to follow-on development in cancer applications – even more encouraging given that we have always believed (since we initiated coverage of AEMD in 2012; March 13, 2012: Initiating With Neutral Rating) that any commercial opportunity for Hemopurifier in HCV (AEMD’s initial therapeutic target) would be limited and not particularly attractive from a development-spending or investment standpoint.
And while previous clinical testing has shown that Hemopurifier can successfully and safely remove viral toxins from the blood and preclinical testing has demonstrated its ability to remove tumor-derived exosomes, this Early Feasibility Study will be the first real world-type evaluation of whether it may have utility in the treatment of cancer. Unlike HCV, which new drugs have turned into a highly treatable and even curable disease, cancer cures (with some rare exceptions) remain elusive. Treatment of metastatic disease is largely related to one or more of a combination of investigational (drugs, immunotherapy, radiation) therapies and focused on marginal life extension (often with poor quality of life) and palliative care.
As such, cancer not only represents a potentially enormous commercial market but the (unfortunate) terminality and incidence of metastatic disease means that development-related opportunities (potentially including non-dilutive funding, partnerships, clinical trials, regulatory-related resources, etc) are likely much more abundant than what would be the case in most other diseases. In addition, the finality of terminal diseases means that demonstration of ‘effectiveness’ (as well as ‘acceptable safety’) may be comparably less onerous than in less serious conditions or those with currently available treatment options. Moreover, as side effects of some cancer drugs can be particularly challenging to manage and cope with, ‘effectiveness’ might also be defined (for example) as an improvement to quality of life.
These reasons underscore why we view FDA approval of the IDE as such a significant event. If all goes well it will also eventually prove to represent a development and commercial inflection in focus for AEMD. In the meantime, FDA’s regulatory framework for clinical evaluation of novel therapeutics should provide ample opportunity over time to help judge the potential utility of the Hemopurifier in the treatment of cancer – and, by extension, regular and multiple opportunities for inflection in the market value of AEMD.
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