It’s a Drug Eat Drug World
In drug development, success by one drug often results in the end of another. That’s exactly the position Bellicum Pharmaceutical (NASDAQ:BLCM) puts upon bluebird bio (NASDAQ:BLUE), creating a very interesting long/short trade opportunity.

The two companies are developing competing treatments for BLUE’s three lead drug candidates: Thalassemia, Sickle Cell Disease and CALD. BLCM clinical data is superior to BLUE in every single disease, rendering waste to BLUE’s development pipeline The story gets more interesting as BLUE appears to intentionally withhold data that their gene therapy failed while they sell millions of dollars of stock. And the market doesn’t know it.

BLUE Vs. BLCM Thalassemia Program

Thalassemia Facts:

  • Hematopoietic Stem Cell Transplant (HSCT) is the sole curative treatment for Thalassemia Major (here).
  • The 5-year overall survival (OS) of Thalassemia patients treated with HSCT is 87-97% (here).
  • With HSCT, the 5-year Thalassemia-Free-Survival (TFS) is 80-89% (here).
  • To be curative, a Thalassemia treatment must render the patient free of blood transfusions.

SUMMARY: BLUE

BLUE’s Thalassemia treatment does not render Thalassemia patients transfusion-free (BLUE β0β0 patients remain dependent on blood transfusion). To the contrary, BLCM and HSCT very effectively render β0β0 and non-β0β0 patients transfusion-free. BLUE treatments also result in inferior platelet and hemoglobin reconstitution vs BLCM (below). Finally, the BLUE treatment itself is much more complex. To justify use, BLUE would have to offer some superior advantage to be viable.

It simply does not; immune reconstitution is worse and safety? Who knows. Either BLUE does not know or is not telling. They don’t report it in any manner we can understand. Combined, we believe these are catastrophic failures that end the commercial viability of this program. We believe the inquiry ends here. BLUE Thalassemia assets are obsolete by superior curative results that are much simpler to deliver, and already well accepted by the market.

BLCM – Superior Hemoglobin Recovery Vs. BLUE

BLCM – Superior Platelet Recovery Vs. BLUE

SUMMARY: BLCM BPX-501

BPX-501 from Bellicum Pharma render Thalassemia patients blood transfusion-free (β0β0 and non β0β0) and compared to BLUE, produce superior hemoglobin & platelet reconstitution (above). Additionally, the transplant procedure is much simpler than BLUE’s experimental gene therapy. Importantly, Using BPX-501, Thalassemia patients are not limited to full-match stem cell transplant donors.

Explanation: As many as 70% of patients don’t have a matched transplant donor. Bellicum’s BPX-501 solves this problem allowing ½ matched donors to safely supply the transplant (typically mother/father/siblings). Prior to BPX-501 ½ match donors (“haploidentical”) were avoided due to high (>20%) transplant related mortality caused by GvHD and infection.

With BPX-501, Thalassemia/SCD/CALD patients are transplanted with ½ matched donor stem cells, (t-cells removed). Several days later, Bellicum’s genetically modified BPX-501 T cells are administered to the patient. These cells include a genetic safety switch to destroy the BPX-501 cells should they trigger GvHD.

BPX-501 clinical trial results demonstrate a new level of safety (2.8% transplant-related mortality vs. historic >20% 1yr), a new level of efficacy and lower incidences of GvHD and infection (see charts below).

However, Bellicum’s success results in bluebird’s failure. Why? BLUE justifies targeting Thalassemia, SCD and CALD to treat the 70% of patients who have no matching stem cell donor. BLUE’s theoretical argument seems to be: Sure, BLUE results are inferior to Stem Cell Transplant, but patients cannot find a stem cell donor match. They die/deteriorate waiting.

Fortunately, for patients, BPX-501 just solved the donor shortage problem. Now most of the 70% of patients who didn’t have a match – have one. We think that’s a problem for BLUE. Inferior results don’t mean you sell at a discount like bargain brand canned corn. Second best in efficacy, safety and death mean you’re out of business. BPX-501 is a better HSCT. HSCT is more than 90% curative for Thalassemia, Sickle Cell Disease and CALD patients. If BLUE can’t cure 90% of these patients with equivalence in safety, we think BLUE’s three (3) lead drug programs are wiped out.

BLCM – Superior Safety, GvHD & Mortality Vs. HSCT

Bellicum Presentation March 15 (here) and Feb 22 (here)

Sickle Cell Disease

  • Sickle Cell disease is curative by Hematopoietic Stem Cell Transplant (HSCT).
  • Using HSCT, “Disease Free Survival” above 90% and Overall Survival of 94-100% are common in adult and pediatric populations (see here).

Source: Stem Cell Transplantation in Patients with Sickle Cell Disease (here)

SUMMARY: bluebird SCT

In a nutshell, we think the BLUE Sickle Cell program is a mess. Tiny number of patients, unreliable results, one (1) reported success, followed directly by seven-out-of-seven patients who demonstrated no or inconsequential clinical benefit relative to HSCT 90% rate of cure (see below)

Clinical “endpoints” are the definitive results from a human trial. In BLUE’s Sickle Cell trial, the patient is transfusion-dependent before treatment (needs regular blood transfusions to survive). This is a key endpoint question the BLUE SCD trial is designed to answer: Was the patient rendered blood transfusion-free by treatment. (see BLUE’s SCD protocol “Efficacy Endpoints” below).

Clinical trial endpoints are considered “material information.” Material information disclosure to investors is required by law.

Source: (here)

Data from the 7 patients who failed SCD treatment in BLUE’s trial was available to BLUE in mid-July 2016. Source (here).

However, BLUE’s SEC filings never report the patients remained dependent on blood transfusion. You know – the key trial endpoint. Not in 2016 Q2, Q3 or in the 2016 annual report. Reading the SEC filings, we can’t tell they failed to obtain clinical benefit. We think that’s an intentional omission of material trial data. We think it’s “intentional” because BLUE did promote the one patient who was rendered blood transfusion-free in the 10-K:

Since infusion with LentiGlobin drug product, this subject has not received a pRBC transfusion for more than 18 months.

Source: BLUE 10-K pg 10 (here)

Beyond missing trial data, we also think the BLUE program is littered with erratic and constant protocol and vectors changes. First HPV569 then BB305. With the recent failure, we don’t know what modified vector or protocol is being used, as BLUE hasn’t disclosed it. Also, multiple trial numbers 204, 205, 206, 207, 212 with who knows what follow through, correlation, safety data and overall survival data. We couldn’t find BLUE trial data on these trial endpoints.

2 of 3 patients remain transfusion-dependent (below)

Trial Endpoint Requires Reporting Transfusion Data (below)

New/Changed Vectors Need Brand New Safety Data

Seven Failed BLUE patients Vs. One Success

BLUE 205 trial – one Sickle Cell Patient becomes transfusion-free. I agree, that’s pretty exciting. Despite the fact HSCT already cures more than 9 out of 10 patients treated. But heck they worked long and hard on this. Congratulations! So what do you do when you have one single patient success? If you are BLUE, you publish in New England Journal of Medicine! Never mind, that while the NEJM is reviewing the article, you dose 7 more patients, and in July 2016, every single patient shows no significant clinical benefit.

All remain transfusion-dependent. Yes, you read that right. 7 of 7 fail treatment. Probably relevant to the NEJM article? Materially relevant to SEC disclosure law? Funny BLUE didn’t think so! The March 2, 2017 NEJM article never mentioned these 7 out of 7 failed patients. The SEC Q3 and full year 10-Q don’t describe the failure. The 7 failed patients were reported in the chart below (our comments in red). Can you understand those patients failed and remained transfusion dependent? We can’t.

Source: 2016 BLUE ASH Presentation BLOOD (Here); My Comments in Red

Note to understand results: VCN rise after infusion = good (chart above). VCN drop is bad (chart above 2); our comments in red. Source (here, here)

Here’s how BLUE disclosed the 7 out of 7 patients failing in their 10-K. We can’t understand they failed from this information – can you?

Here’s BLUE 10-K: promoting their one single SCD patient success “transfusion-free” while not disclosing the 7 patients who failed and remained transfusion dependent (10k pg 7-11 here)

Here’s BLUE’s protocol demonstrating Blood Transfusion is Primary Endpoint and therefore a material SEC disclosure for investors

Pre-revenue biotech companies only need to do a few things: take the money, do the trials, report results. We think BLUE covered up their trial failure, and intentionally did not disclose material information based on the facts described herein. We think the cover-up satisfies the “intentional” prong because BLUE heavily promoted the one single solitary SCD patient (like EVER), who succeeded to “blood-transfusion free,” while NOT disclosing the next 7 patients who failed, and remaining transfusion dependent (see BLUE 10-K filed Feb 2017 here).

We do not think there is a reasonable explanation to report key endpoint data on successful patients and exclude it for patients who fail (see BLUE Sickle Cell protocol “efficacy endpoints” above).

In addition, nowhere have we found BLUE disclosing that Sickle Cell Disease, Thalassemia and CALD are 90% curative by Stem Cell Transplant. We think that’s a material disclosure investors need to know when BLUE is selling them a billion dollars of stock to develop drugs for disease with a 90% cure rate in place.

In conducting extensive investigation of BLUE trial data reporting, we see BLUE’s research as an ongoing effort to hide material failures while they Trump-et tiny successes, resulting in material distortions of truth. Shouting cure for one (1) patient from the hilltop of the New England Journal of Medicine, while you have, in hand, clinical results of 7 additional patients treated that showed no significant clinical benefit? And you fail to fully disclose that epic failure in your SEC filings? While you raise $250 million in a stock offering?

We don’t think that’s the level of full disclosure required by law of a public company, which is why this matter has been referred to the SEC and the attorney general for the Southern District of New York.

We think BLUE’s Sickle Cell Program is far (like FAR far), from a commercial effort. More like fumbling around in the dark hoping nobody notices the ship is sinking and has no rudder.

SUMMARY: Bellicum SCT

Bellicum BPX-501: BLCM reports all treated Sickle Cell Patients are healthy and 100% transfusion-free. BLCM clinical trials have treated a small number of SCD patients, [n=3]; however, all were successful. All are transfusion-free. Keep in mind, BPX-501 is essentially an improved Stem Cell Transplant (HSCT), and HSCT is curative for 90% of SCD patients. We do not think 90% or greater success by BPX-501 in SCD should be a big surprise.

BLCM also treated 122 malignant and non-malignant patients. Results demonstrated superior hemoglobin & platelet recovery (above charts) safety, efficacy, mortality. Results also showed lower infection and GvHD compared directly to Stem Cell Transplant, and increased donor access by way of 1/2 match donors (above charts and report here). BLCM clinical trial data make direct comparison to Stem Cell Transplant (HSCT), the long-standing gold standard treatment for SCD – demonstrating clear superiority.

This is important because we can’t find any data where BLUE compared their clinical results to Stem Cell Transplant. Like NEVER never.

BLCM BPX-501 reports improvements in deadly transplant infection

BLCM also represents a dagger to future BLUE Patient recruitment: Blue protocols specifically exclude patients who have a full Stem Transplant Match. (BLUE protocols for SCD, Thalasemia, CALD). This seems obvious, because HSCT is the widely accepted cure for all of these diseases, (a point BLUE repeatedly does not disclose while they sell millions of dollars of stock to the unwitting public).

Q. When Bellicum’s BPX-501 allows 1/2 match donors to obtain Stem Cell Transplant, can BLUE ethically submit patients to 2 years of BLUE’s “treatment” when they have a 90% curative option available? BLUE’s protocol will certainly need to be amended to exclude patients with full and 1/2 match HSCT donor, at which point, BLUE’s patient recruitment (Thalassemia, SCD and CALD) may prove very challenging.

BLCM is poised to apply for marketing approval in mid-2018; will BLUE SCD get market approval? Who knows. BLUE is required to collect survival data (see protocol above), but we can’t find any viable safety data. However, the bigger issue is BLUE efficacy. Unable to demonstrate superiority to HSCT, we think BLUE’s SCD program is a long, cash-burning bridge to nowhere.

BPX-501 Hemotopoietic Recovery

BPX-501 Patient Disease & Demographics

BLUE CALD

CALD FACTS

  • CALD – 90% survival for patients who receive stem cell transplant (HSCT) absent neurologic disease or Loes score < 10 (here).
  • CALD 5-year survival of 95% in the (HSCT) transplanted group with early stage cerebral disease (here).

At this point, you may be muttering to yourself, “here we go again.” Yes, HSCT is the 90+% curative standard for CALD. Particularly in patients with low “Loes scores.” This is important, because all of the CALD patients in the BLUE CALD study had low Loes scores:

“At enrollment, Neurological Function Score (NFS) was 0 in all subjects and median Loes Score was 2 (1-8).”

Source: BLUE P II/II study data reported May 2016 (here)

BLUE clinical data reporting is scant to say the least. Typical of what we encountered researching all BLUE clinical trial data: report data lacking key information, avoid questions about the data on investor conference calls by stating BLUE can only disclose what’s in the abstract. You know, the abstract lacking key details necessary to reasonably evaluate results. For example, BLUE knows HSCT is the 90% curative standard of care for Thalassemia, Sickle Cell & CALD, and yet they never compare their clinical results to HSCT? Seriously? Although, they do know HSCT is the standard they need to compare with:

“Currently, the only effective treatment option for patients with CALD is HSCT”

Source: Bluebird Website (here)

However, BLUE’s CALD program has never reported a single data point of superiority to HSCT. The BLUE 2016 10-K reveals a few answers that may explain why:

“The results from our Starbeam Study may not be sufficiently robust to support the submission of marketing approval for our Lenti-D product candidate. Before we submit our Lenti-D product candidate for marketing approval, the FDA and the EMA may require us to enroll additional subjects, conduct additional clinical studies, or evaluate subjects for an additional follow-up period.”

The FDA has advised us that our Starbeam Study .. , may not be deemed to be a pivotal study or may not provide sufficient support for a Biologics License Application, or BLA, submission”

“In addition, the Starbeam Study was not designed to achieve a statistically significant efficacy determination.” “…the FDA has advised us that the ALD-101 study is not sufficiently robust to serve as a conventional historical control group and as a basis of comparison against the results of the Starbeam Study. … Based on this assessment, the FDA may require that we conduct additional preclinical or clinical studies prior to submitting or approving a BLA for this indication.”

Source: Bluebird Bio 2016 10k dated submitted Feb 22, 2017 (here)

Additionally, the BLUE CALD study report a disturbing number of “Severe Adverse Events”:

Two SAEs (severe adverse events) were assessed possibly related to Lenti-D drug product (DP), BK virus cystitis and tachycardia.

Source: Molecular Therapy Volume 24, Supplement 1, May 2016 (here)

Two severe events in 17 patients = 12% These were “severe” adverse events. Not good. Sort of brushed under the carpet; not explained in any detail. Not good. Inferior to historic SAE for HSCT, and far inferior to BLCM 2.4% adverse events in 91 patients. All things not good for BLUE.

BLCM BPX-501

BPX-501 is essentially a better HSCT. We believe any disease that is curable by HSCT should be similarly curable by BPX-501. In short, as mentioned above, for reasons of safety, efficacy, reduced infection and GvHD, and, improved mortality, and importantly, access to 1/2 match donors, BPX-501 is poised to become the next standard of care in HSCT. As HSCT is the 90% curative treatment for CALD, we find ourselves agreeing with bluebird:

Currently, the only effective treatment option for patients with CALD is HTSC“.

For the reasons noted in this report, we believe BLUE is facing a pipeline collapse on the level of JUNO, and expect a similar sudden, violent re-pricing of BLUE shares as this information is digested by the market and institutional investors jump ship.

BLUE BCMA CAR T Multiple Myeloma

Last we look at BLUE’s anti-BCMA CAR T program treating relapsed/refractory multiple myeloma. Here’s BLUE’s recent Press Release describing results:

ANTI-BCMA CAR T PROGRAM REPORTED – In November, bluebird bio announced interim phase 1 dose escalation data for its anti-BCMA CAR T product candidate in patients with relapsed/refractory multiple myeloma. 100% of patients in the second and third dose cohorts (n=6) achieved an objective response; two patients were MRD-negative. The overall response rate (ORR) was 78%. Two patients in the study achieved stringent complete responses, with 6 and 4 months follow-up. Among all dosed patients (n=11), no dose-limiting toxicities were observed as of the November data cut-off date, and no Grade 3 or Grade 4 cytokine release

Source: bluebird Feb 22, press release (here)

Wow – sounds great right? Hold on, isn’t this a slight modification of the target used in this trial? Yes, it is.

Source: Journal Blood, 13 July 2016 (here)

Okay, so let’s see what BLUE means by Stringent complete response in a relapsed/refractory multiple myeloma Trial:

PATIENT 10: “Stringent CR” (complete remission). That’s good news! Isn’t it? Maybe not. The patient relapsed 17 weeks after treatment.

PATIENT 11: Let’s look at Patient 11: “Very good partial remission” VGPR. Is this Good? Or? Umm – the patient relapsed 26 weeks after treatment.

PATIENT 8: Another “Very good partial remission.”. Umm… but she relapsed 8 weeks later and died at 10 months.

The response to treatment was a very good partial remission. This response lasted for 8 weeks. At the time of relapse, 0.3% of bone marrow cells contained the CAR-BCMA gene as measured by qPCR. After progression, patient 8 received 3 different treatment regimens with, at best, transient responses. She died 10 months after her CAR T-cell infusion.

The average relapse for all 12 patients was 8 weeks after treatment. When you relapse in relapsed/refractory multiple myeloma, prognosis is dismal, mortality certain.

So to be clear, BLUE’s target anti-BCMA CAR T came from this NIH program (collaboration with NIH). BLUE’s anti-BCMA CAR T target is mentioned in this trial:

We are collaborating on a clinical trial of a 4-1BB-containing anti-BCMA CAR

It is safe to expect similar results in BLUE’s trial using the same or a slightly modified Car T. We think this is a case of buyer beware: We believe when BLUE reports “stringent CR,” that patient may have already relapsed and may no longer be alive.

Very interesting research. I hope they can improve results, but with average relapse rates around 8 weeks, this is not a viable commercial target.

Financial Summary

Bluebird Bio 3 month price target: $15

$3.4 Billion Mkt Cap, 704m Cash, 120m Debt, 66m quarterly cash burn, 9 quarters of cash

Bellicum 12 month price target $26-50

$430 Million Mkt Cap, 160m Cash, 20m Debt, 17m quarterly cash burn, 8.6 quarters of cash, market approval application timeline: 4 quarters

Risks

Unknown risk are always present, short and long. This is particularly the case with pre-revenue Pharma companies which may report surprising good/bad results at any time resulting in sudden and violent stock movements. Further, should the overall market change – extremely bullish or bearish, it is likely to affect the valuations of BLUE/BLCM similarly.

Be mindful the information in this report is not investment advice, it is not a recommendation, only our opinion. I strongly encourage everyone to conduct their own due diligence and draw their own conclusions. I have positions in BLCM and BLUE that may be traded any direction as market conditions change.

Summary

  • The curative standard of care for BLUE’s three lead drug candidates is Stem Cell Transplant (HSCT).
  • HSCT is curative 90% of the time for BLUE’s three lead drug candidates.
  • BLUE demonstrates inferior efficacy to HSCT.
  • Bellicum is poised to be the new standard of care in HSCT with BPX-501, demonstrating superior safety, mortality, lower GvHD, and infection, and expanding the donor pool to 1/2 match donors for the 70% of patients without a match.
  • BLUE’s anti-BCMA CAR T program needs to report relapse and mortality, not just exciting initial patient responses, which are known to rapidly revert back to relapse and mortality.

Best of luck and do your due diligence.

Disclosure: I am/we are long BLCM SHORT BLUE.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.



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