Figure 4: Market opportunities for AFM13 are modest but meaningful for a company of this size (Source: corporate presentation)
Pro forma cash position was $139 million which could take the company into 2021 (not expecting dilution this year).
ROCK platform represents a new approach to countering tumor immune evasion. Two distinct mechanisms are accessed, direct tumor cell killing (cytotoxicity) and phagocytosis (impact on killing and antigen presentation leading to overall immune response). The company uses tetravalent bispecific molecules (2 binding sites to innate immune cell and 2 binding sites to cancer cells), achieving high activity through high affinity and high specificity (very unique approach). ROCK platform allows for many different structures, molecules can be tailored to specific indications.
While innate immunity can also be unlocked with monoclonal antibodies, the company believes there is no strong innate immune cell activation for most monoclonal antibodies. Generated clinical data also backs this up.
As for the Genentech partnership, Hoess emphasizes how the pharma giant has vast expertise in immuno-therapy and antibody engineering, but still approached the smaller company for its expertise in innate cell engagers (key validation of platform and its potential for developing medicines with better response). In addition to $96 million upfront (already received), milestones of about $5 billion plus royalties await. The partnership allowed the company to maintain control of lead molecules (didn't sacrifice economics here).
As for AFM13 in T cell lymphoma, in 9 patients, 4 showed response, so response rate of 45%. 4 out of other 5 patients have stable disease. Importantly, responses are deepening (patients treated with 2-8 week cycles and have observed stable disease being converted into partial responses).
As for AFM13 in combination with Keytruda in Hodgkin's Lymphoma, in 24 patients at highest dose 88% ORR and 42% to 46% CR rate (doubling versus Keytruda). Again, deepening of response observed and 6-month PFS is 77%. Thus, AFM13 is active in monotherapy and in combination with checkpoint inhibitor, activating innate immune system is resulting in more CRs.
As for getting AFM13 to market, a registrational study is planned for PTCL (as monotherapy) with potential for accelerated approval. The company is currently evaluating Hodgkin's Lymphoma combination PD-1 with AFM13 and pending discussion with FDA will disclose the plan for moving forward.
The approach of combining AFM13 with cord blood derived NK cells makes sense on several levels as the number of NK cells matter (contributes to having response or deeper response). Several academic institutions have pursued this approach by providing NK cells, and MD Anderson preclinical data shows in vivo improvement in efficacy. This has implications for any CD30+ lymphoma and thus another study pursuing this approach in humans is planned.
As for AFM24 in EGFR, the program looks derisked to a degree considering that the target is highly validated via current therapies (however, they are limited by toxicities, acquired resistance and limited antitumor immune response). Affimed hopes to develop a safer therapy which activates innate immune cells and thus is more potent/has greater efficacy (this is already observed in in vivo data).
Figure 5: Aggregate market opportunity for AFM24 is quite large and thus initial data for this program will be a meaningful catalyst (Source: corporate presentation)
Recent Update and Other Information
In mid-October, the company provided a much needed update on the progress of its pipeline, as it was and is obvious that investors and Wall Street are getting fed up with apparently slow movement in the clinic. For AFM24, IND has been filed to initiate first-in-human phase 1/2a trial with the objective of finding the maximum tolerated dose and recommended phase 2 dose (as well as the usual endpoints of safety, PK, PD, signs of early efficacy, etc.). Patients enrolled will have advanced cancers known to express the epidermal growth factor receptor, EGFR. The company also announced that the FDA gave the green light to IND application for a phase 1 study evaluating AFM13 with pre-mixed cord blood-derived allogeneic NK cells to treat patients with relapsed/refractory CD30-positive lymphoid malignancies. In addition, the registration-directed study of AFM13 as monotherapy in relapsed/refractory peripheral T cell lymphoma (pTCL), continues on track to initiate this year.
For the second quarter of 2019, the company reported cash and equivalents of €87.7 million as compared to net loss of €10.3 million (guiding for operational runway into 2021). Research and development expenses rose to €11.5 million, while G&A came in at €2.3 million.
As for upcoming catalysts, interim efficacy looking at pivotal studies of AFM13 (mid to late 2020) appears to be the main catalyst to look forward to in the medium term. As noted prior, the company has the capacity to do additional deals in a similar fashion to the Genentech pact (could come at any time).
Final Thoughts
To conclude, the company continues to offer investors an intriguing value proposition as their unique platform technology with proof of concept established for lead program is valued at only $90 million or so when cash is backed out. Affimed's ROCK platform was also validated by its big pharma partnership, as Genentech sought Affimed out for its expertise in innate cell engagers. The key issue here holding the stock back is slow progress in the clinic, but I'd note that at least development plans in place for AFM13 and AFM24 are both logical and relatively efficient. Hopefully, management can operate in a more timely manner here than in the past, with the key upcoming test being whether interim efficacy looks at AFM13 are accomplished in the aforementioned time frame.
For readers who are interested in the story and have done their due diligence, Affimed is a Buy, and I suggest patiently accumulating dips over the next couple quarters. However, this one seems more appropriate for investors with long term, multi-year time frame.
Risks include slow progress in the clinic, setbacks including delays in timelines presented of management (would lead to even more crisis of confidence in leadership), disappointing data readouts and dilution at some point in 2020 considering current cash position and burn rate. Management really needs to execute in the clinic, as recently pushed back timelines, however slight, have punished the share price. In the first half of 2020, they'd do well to continue highlighting the immense potential of AFM24 and guide for when we can expect initial results.
For our purposes in ROTY, I plan to revisit in Q1 2020 or so for potential inclusion in JF's Scorecard (active ideas that could be chosen for our model account due to presenting compelling catalyst or revaluation opportunities).