A potential bright spot on the horizon for Genmab investors, in the form of a licensing deal for the company’s lead pipeline product,  zalutumumab, dimmed considerably yesterday with the release of disappointing top line results from a phase III study conducted in head and neck cancer.

The news prompted yet another sell off in the Danish biotech’s shares, which dropped 20% yesterday and edged lower again today, ending near Dkr72.20 and setting fresh six-year lows. Although it is too early to completely write off zalutumumab it looks very unlikely that a respectable licensing deal will be delivered in the near future and, unfortunately,  Genmab shareholders have little else to look forward to.  

Missing the point

The study in question was conducted in patients with recurrent or metastatic squamous cell carcinoma of the head and neck who had failed on standard platinum-based chemotherapy; 286 candidates were given either zalutumumab plus best supportive care or best supportive care alone.  

This is a very sick patient population; the study was powered to show a 50% improvement in survival over best supportive care alone, a group of patients only expected to live three to four months.

As it was, patients given zalutumumab actually lived slightly longer than anticipated, median overall survival was 6.7 months in this group. However, so did the control group, with a median overall survival of 5.2 months, meaning the difference between the two arms was not significantly different, missing the primary endpoint of the trial.  

Protocol violations

Whilst the stock market appears to have decided to write the drug off, Genmab was unsurprisingly more upbeat. On a conference call Lisa Drakeman, chief executive, said discussions would now be held with key opinion leaders and regulators to assess what the future might hold for the antibody.  

The company pointed to the high number of protocol violations in both groups as a possible reason for the outcome: 28% of patients in the control arm and 14% in the drug arm received other anti-cancer therapies not permitted under the trial design. 

They also said they were “encouraged” by the progression free survival (PFS) data, with the zalutumumab arm experiencing a 61% increase, highly statistically significant.  

However, further data will be needed to fully assess whether zalutumumab is worth pushing on with, in particular actual figures for the PFS analysis and a per protocol analysis.  Genmab expects to present full data at this year’s Asco cancer conference.  

Although the possibility of filing on the PFS data in an attempt to gain a conditional approval was mentioned, this seems a long shot. 

Partner search

Finding a partner for the drug will now be harder, but not impossible, assuming the glimmers of hope in the data stand up to scrutiny. Ms Drakeman did concede that should further development be warranted, this would be done with a partner. If any deal is achievable, clearly the terms are likely to be far less favourable now, at least in terms of upfront or near term value. 

However, partners will be mindful of the growing focus on comparative effectiveness. Zalutumumab is an anti-EGFr antibody like  Erbitux, which is already on the market for head and neck cancer, and strong signals of any advantages over the incumbent will be sought. 

Whilst the future for zalutumumab is mapped out over the next few months,  Genmab shareholders do have a couple of other issues to track. Firstly, the roll out of  Arzerra, the anti-CD20 antibody recently launched by partner GlaxoSmithKline to treat leukaemia, is being closely watched, given that it will largely be competing against the incumbent  Rituxan. 

Also on the watch list is the ongoing sale of a US manufacturing plant, for which Genmab hopes to get $145m; the group has already taken a financial hit on the cost of writing down the  value of the asset and a prolonged disposal process will only exacerbate fears of further losses.  

Genmab shares lost almost two thirds of their  value last year, making the stock one of the worst performing across the sector, and as such these disappointing results for zalutumamab were particularly unwelcome. Unfortunately, unless  Genmab gets a much better than expected price for its manufacturing plant or manages to substantially reinvigorate its pipeline, it is hard to see how this abysmal share price performance can be turned around.