NewLink Genetics Stock Plunges After Genentech Bails on $1 Billion+ IDO Deal

Published: Jun 09, 2017

NewLink Stock Plunges After Genentech Bails on $1 Billion+ IDO June 8, 2017
By Mark Terry, Breaking News Staff

Ames, Iowa – NewLink Genetics announced that Genentech was returning the rights to its IDO inhibitor GDC-0919 (navoximod). However, the overall research collaboration the two companies have to identify the next generation IDO/TDO (tryptophan 2,3-dioxygenase) inhibitors will continue.

The original deal had an upfront payment of $150 million and with milestones, could have hit over $1 billion. The deal was inked in October 2014. NewLink licensed GDC-0919, which was then called NLG919, to Roche/Genentech. Genetic Engineering & Biotechnology News writes, “The companies reasoned that targeting the IDO and TDO pathways represented a breakthrough approach to fighting cancer, citing earlier studies showing that the IDO pathway was active both within tumor cells as a direct defense against T-cell attack, and within antigen presenting cells in tumor-draining lymph nodes.”

John Carroll, writing for Endpoints News, says, “This is the latest in a series of gut punches to NewLink, which was sent reeling last year and was forced to restructure in the wake of the failure of its pancreatic cancer vaccine. IDO, a hot ticket in biotech now with Incyte evidently well in the lead, was supposed to be its path back.”

It was only a week ago that NewLink announced that its Phase II trial of indoximod plus taxane chemotherapy, either docetaxel or paclitaxel, did not meet its primary endpoints. The endpoints were a statistically significant difference in progression-free survival versus placebo plus taxane chemotherapy in metastatic breast cancer.

“We are obviously disappointed in this decision,” said Charles Link, NewLink Genetics’ chief executive officer, in a statement. “We remain committed to advancing our IDO pathway inhibitor indoximod, which continues to generate exciting data in combination with anti-PD-1 agents, cancer vaccines, and chemotherapy in multiple cancer types including melanoma, prostate cancer, acute myeloid leukemia, and pancreatic cancer.”

NewLink Genetics , which had been trending downward since March, took a hard hit and is currently trading for $10.62. Shares traded on March 31 for $24.10, dropped to $15.50 on April 13, climbed back to $19.05 on April 26 before beginning a strong drop.

This drop follows only a few days after Michael Uln, an analyst with Baird, gave the stock an “Outperform” rating and a price target of $25 after hosting an investor lunch at ASCO in Chicago. At that time, Baird suggested that the IDO pipeline was underappreciated.

Carroll writes, “The writing, though, was on the wall when investigators reported that GDC-0919 delivered only a 10 percent overall response rate in all tumor types in a combination study with Tecentriq—a PD-L1 checkpoint that is also under a cloud since the big Phase III failure in bladder cancer. Genentech is not known for pursuing futile work in cancer.”

At one point in April, the idea of Gilead Sciences acquiring NewLink Genetics was floated. Generally, the top suggestion has been Incyte Corporation , at least until its baricitinib for rheumatoid arthritis was rejected by the U.S. Food and Drug Administration (FDA).

The rationale for NewLink was promising interim results from a Phase II trial of indoximod in combination with checkpoint inhibitors to treat advanced melanoma. Incyte’s epacadostat is an IDO inhibitor, and so is NewLink’s indoximod and GDC-0919. But NewLink is a lot less expensive than Incyte—even more so now.

Todd Campbell, writing for The Motley Fool in April, said, “Despite the solid showing (of indoximod), many industry watchers believe that apacadostat delivers a better blend of efficacy and safety because it targets IDO directly. Unlike apacadostat, indoximod disables IDO via cell signaling.”

But, depending on what NewLink plans to do with their newly reacquired IDO inhibitor, it may be a moot point.

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