Shares of Gilead Sciences and Arcus Biosciences toppled Tuesday after their lung-cancer regimen trailed a rival concoction from Roche. RCUS stock skidded more than 20%.
The companies tested three approaches in patients with non-small cell lung cancer. The results confirm the benefits of adding a drug called domvanalimab to a backbone immunotherapy drug. Overall, 41% of patients responded to the treatment. At the median, patients lived for 12 months before their cancer worsened, a measure called progression-free survival.
But the results paled in comparison to Roche's combination. Roche tested two different drugs that use the same mechanisms. That led to an overall response rate of 45% and a median 16.6 months of progression-free survival. Merck is also in this space, testing its blockbuster cancer drug Keytruda with a possible rival to Gilead and Arcus' domvanalimab.
"Domvanalimab shows clear signs of activity, keeping hopes alive for a $5 billion-plus out-year opportunity in lung cancer," RBC Capital Markets analyst Brian Abrahams said in a note to clients. "But without certainty around differentiation in an increasingly crowded space with better-entrenched competitors, we believe it will take some time to determine the program's prospects."
On today's stock market, RCUS stock crashed 32.5%, closing at 20.59. Gilead stock skidded 1.9% to 84.77.
RCUS Stock: Tumor Cells Are Hiding
Domvanalimab belongs to a class of drugs that block TIGIT, a receptor that interferes with the immune system's ability to respond to cancer. By blocking TIGIT, these drugs aim to release the immune cells to attack cancer cells hiding nearby.
Companies are testing their TIGIT blockers on top of immunotherapies that target PD-1, a protein tumor cells can use to hide from the immune system.
Gilead and Arcus' first approach involved testing a PD-1 drug alone. Bearishly for RCUS stock, its drug vastly underperformed rivals. Overall, just 27% of patients who received that drug, dubbed zimberelimab, responded to the treatment. At the median, they lived 5.4 months before their cancer worsened.
Historically, other PD-1 inhibitors have led to overall response rates of 37%-47%, SVB Securities analyst Daina Graybosch said in a report. But she also noted Roche's Tecentriq also lagged historical benchmarks in its Phase 2 study with a 24% overall response rate and median progression-free survival of 4.1 months.
Second Approach Yields Mixed Results
The second approach involved adding anti-TIGIT drug domvanalimab to PD-1 blocker zimberelimab. The results were better than zimberelimab alone, but paled in comparison with Roche's combination. It's also important to note that Merck is using the standard of care PD-1 drug, Keytruda, in its TIGIT combo.
"Gilead/Arcus remain one to two years behind front-runners, and while no apples-to-apples data is available from Merck, (doctor) feedback suggests given the prevalent use of Keytruda, the bar for Merck's TIGIT may be somewhat lower," RBC's Abrahams said in his note.
Gilead and RCUS stock investors were also disappointed with the third approach. Adding a third treatment to the mix with domvanalimab and zimberelimab resulted in lower response rates and a shorter window of time before patients' cancer progressed.
"Arcus has previously indicated median duration of response could be differentiating for the triplet arm, though we believe this may not now be the case given the lack of commentary," Wedbush analyst Robert Driscoll said in a note.
He has an outperform rating and 36 price target on RCUS stock.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
