Mirati Therapeutics, Inc. (NASDAQ:MRTX)

Mirati Announces Clinical Collaboration With Bristol-Myers Squibb For The Planned Phase 3 Trial In Non-Small Cell Lung Cancer To Evaluate Sitravatinib In Combination With Nivolumab (OPDIVO®)
[PR Newswire]
PR Newswire•January 7, 2019

SAN DIEGO, Jan. 7, 2019 /PRNewswire/ -- Mirati Therapeutics, Inc. (MRTX) a clinical-stage targeted oncology company, today announced a clinical collaboration with Bristol-Myers Squibb Company to evaluate the combination of sitravatinib and nivolumab (OPDIVO®), in Mirati's planned Phase 3 trial in second line non-small cell lung cancer (NSCLC) patients who have progressed following treatment with a platinum-based regimen and a checkpoint inhibitor.
Logo (PRNewsfoto/Mirati Therapeutics, Inc.)
Logo (PRNewsfoto/Mirati Therapeutics, Inc.)

The Phase 3 pivotal trial is expected to start in the first half of 2019 and will randomize patients to either the combination of sitravatinib with nivolumab or single-agent docetaxel. The trial will include an interim analysis of overall response rate (ORR) as the basis for potential accelerated approval. This interim analysis and the use of a docetaxel control arm follows guidance from Mirati's FDA end of phase 2 meeting. The primary endpoint of the final analysis for the Phase 3 clinical trial will be overall survival.

"Our Phase 2 clinical trial of sitravatinib plus nivolumab in patients with checkpoint refractory NSCLC has shown promising activity and a well-tolerated safety profile," said Charles Baum, M.D., Ph.D., President and Chief Executive Officer of Mirati. "The trial is expected to result in a new drug application (NDA) for sitravatinib for the treatment of NSCLC patients whose tumors have progressed following treatment with a platinum containing regimen and a checkpoint inhibitor. This collaboration further validates the potential of sitravatinib and allows Mirati to invest in and expand the development of our clinical and pre-clinical programs."

Under the terms of the collaboration, Mirati will sponsor and fund the clinical trial and Bristol-Myers Squibb will provide nivolumab at no cost. Mirati maintains global development and commercial rights to sitravatinib outside of certain Asian territories, where it is partnered with BeiGene, and is free to develop the program in combination with other agents.

Mirati was either seriously overlooked in June at 3 or seriously overvalued in November at 14. Based on the preliminary nature of their pipeline and lack of big pharma partners I'm going with the latter. Mirati has benefited from a renewed enthusiasm for oncology biotechs in the latter half of this year, based on a spate of approvals and buyouts related to CAR T and immunooncology. Mirati doesn't have any CAR T or IO of its own, but instead they've glommed onto the 1 + 0 = 1 train driven by Newlink and numerous other small cap bios. What's 1 + 0 = 1? It's what I call the practice of running single arm phase I/II trials of a drug of indeterminate efficacy along with an IO drug with known efficacy. As expected, some positive responses occur with the combination and the company then explains why the responses are so much better than one would have seen with the IO drug alone. Of course, since there's no control group with IO alone we have to wait until phase IIb or III to find out for sure whether the company's drug has any activity or if it's just pocket lint. Meanwhile, the company has raised a ton of cash that should have gone to develop better prospects and they're well on to promoting the next drug in their pipeline.

In this spirit, Mirati revealed 3/11 partial responses from a single arm phase II trial of their kinase inhibitor sitravatinib combined with IO nivolumab for non-small cell lung cancer previously treated with chemo and checkpoint inhibitor. Naturally, management and sellside claim that the responses couldn't have been due to IO nivolumab because the cancer previously failed checkpoint inhibitor therapy. But there are three approved checkpoint inhibitors. Is it possible that one works where another failed? Which checkpoint inhibitors were previously used in the three patients with partial responses? In the eight who didn't respond? I haven't seen that data, if it was revealed at all. We also haven't had enough time to see if these partial responses are sustained or if they are meaningful enough to have an effect on quality of life or overall survival.

Mirati's other big reveal was a single partial response to sitravatinib monotherapy in a phase Ib trial for NSCLC with a CBL-inactivating mutation. This is apparently a highly refractory population, but it is still exactly one case and not something I would expect to create a major shift in company valuation without further data.

Mirati has reported similar quality data (3/11 PR) from a phase Ib trial of monotherapy with their kinase inhibitor glesatinib way back in May 2016 and that didn't stop the stock from a steady downward trajectory that finally ended a couple of months ago with this startling 200% gain. More data is expected from that glesatinib trial as well as further updates from the two ongoing sitravatinib trials before the end of the year. Meanwhile Mirati's market cap has bloated to 350M from 100M in June and there's 100M in hidden cap from 7M exercisable warrants with an effective strike price of zero. Perhaps there will be more exciting news by the end of the year, but I suspect that unless there's a significant number of new responses or a partnership announcement, we'll see Mirati's share price back in the single digits by the beginning of 2018.