Biotech General Discussion

We invest in KPTI because they have an enterprise value below $2 billion, and an approved oral blood cancer drug, XPOVIO (Selinexor), with a new mechanism of action and blockbuster potential. XPOVIO is likely to be approved in additional blood cancer indications this month/year. We are not ecstatic about KPTI because they are at a tough part of the life cycle of a smid-cap biopharma company, early commercial. This is a tough place in a typical time, not to mention in a pandemic and a drug with a new mechanism of action that will require more customer education. On the upside, this is also a profile (approved, early commercial with significant upside revenue potential) that bodes well for getting acquired, although we don't invest in a company hoping for an acquisition.

You can see the downside of early commercial with their high burn now, $50M/quarter (Q1 2020) with relatively low revenue ($16M/quarter). Fortunately they have plenty of cash/equivalents/long-term investments (about $380M with $352M short-term/cash). By the way, you can check this info in our Amp KPTI database entry (https://www.ampbioresearch.com/companies/KPTI). KPTI's long-term debt is manageable currently, at $112M. This is something to watch in the coming year, as many early commercial biopharma companies use debt to fund early commercialization efforts, but revenue needs to grow at a good pace to keep the debt manageable.

For Q1 2020, KPTI reported slightly decreased quarter over quarter revenue for XPOVIO at $16M vs. $18M in Q4 2019. Management noted challenges with new patient starts in March given the Covid pandemic, and suggested that April saw some renewed prescription growth. The March numbers were disappointing because KPTI began the month with positive Boston results in earlier multiple myeloma patients, which might have fueled further growth of XPOVIO even before FDA approval in these less heavily pre-treated patients than their approved indication. You can see a chart of XPOVIO quarterly revenue on our XPOVIO revenue tracking page https://bit.ly/2ZN5ODM.

At ASCO KPTI is reporting out detailed results from their Boston study in relapse/refractory multiple myeloma patients who have had 1-3 prior lines of therapy. We prepared a table comparing their Boston trial and results reported in their ASCO abstract, to prior trials in multiple myeloma that include a similar Velcade (Bortezomib)/Dex control arm https://bit.ly/2TPnXgb. From our table you can see that the Selinexor/Velcade/Dex (SVd) arm had a statistically significant increase in PFS to ~14 months from ~10 months in the Vd control arm. This improved PFS appears in line with the other approved drugs as you can see from the other trials in the table, with caveats re: cross-trial comparison. The bottom line is that none of the current therapies are a cure for multiple myeloma, and patients need new therapies with new mechanisms that are safe and effective. XPOVIO appears to meet that need, at least from an efficacy standpoint.

The biggest issue with XPOVIO has been safety, although this is especially true in the more intense XPOVIO regimen in penta-refractory patients, not the Boston trial patients, who had 1-3 prior lines of therapy. Actually, a major benefit of XPOVIO is the reduced peripheral neuropathy seen compared to the control arm in the Boston trial. It is noteworthy in prior trials of other on-test therapies that Daratumumab and pomalidomide combos cause more peripheral neuropathy than the Vd control arm, but the Carfilzamib (Amgen's KYPROLIS) arm, like the SVd XPVOVIO regimen appears to have less peripheral neuropathy than Vd, maybe even much less than SVd. As far as other AEs, you can see that Selinixor causes thromobcytopenia, fatigue, and nausea, as did pomalidomide, but again Carfilzomib (KYPROLIS) appears to elicit less fatigue and thrombocytopenia. It is noteworthy that patients taking Carfilzamib (KYPROLIS) can experience serious cardiac toxicities (See section 5.1 of KYPROLIS label (https://bit.ly/3cc38lp). Overall, SVd safety and efficacy profile looks not only approvable, but commercially viable, thus meeting the need for another relatively safe and effective option in multiple myeloma.

As far as its ASCO presentation, we include transcripts from institutional investor questions at the 2 more recent KPT investor calls related to the ASCO presentation (see below). Much of the high level data was presented by KPTI when it reported top-level Boston results back in March and in its ASCO abstract (https://meetinglibrary.asco.org/record/186143/abstract) as you can see from our comparative table noted above. And by our look-back, the stock moved on the initial announcement, but not on the ASCO abstract publication when more details was presented. While we look forward to more safety data, and especially graphs of PFS and OS over time, it doesn't appear that the KPTI ASCO presentation and investor event will be another big positive mover for the stock. However, later this month, on June 23, 2020 we have the XPOVIO target PDUFA date, for the DLBCL indication. We plan to dig deeper into the prior XPOVIO DLBCL data in the coming weeks to decide whether to change our KPTI investment as the PDUFA date draws near.

TRANSCRIPTS:

2020 RBC Capital Markets Global Healthcare Virtual Conference May 19, 2020

RBC: We are going to be seeing some data upcoming from your positive phase 3 BOSTON study at ASCO in just a few weeks. Can you tell us a little about what we should be looking for out of XPOVIO in this data? And what you think is going to be most useful for physicians to determine how to best use the agent coming out of the presentation?

Karyopharm: As many of you are aware, the study was positive. We released top-line data couple months ago. We had a statistically significant and very clinical meaningful delta between progression free-survival for the triple SVd vs Vd . We also had a significant improvement in the overall response rate in deep responses as timed the next therapy and trends in favorable direction for overall survival. Couple of points on the study which I think doctors will be looking for especially. First of all, the progress free- survival of the once weekly SVd triple will differentiate itself from the Vd and they will be looking at the graph because they will be looking to see if this is a delay effect, early effect or both. They will remember, if you all recall, this regiment is the first ever regiment to be tested in a large phase 3 study per patient with relapsed myeloma that utilizes once weekly Velcade® in the experimental arm. The reason why that is so important is because the actual use of Velcade® in most places, in patients with relapsed myeloma is once weekly. But all of the phase 3 studies have led to the approval or major publications have been done twice weekly with Velcade®. No one is ever sure what you are really going to get when you're using a modified regiment. We are the first people to do that- to actually give a real regiment. We show this remarkable benefit with a very simple remigement. The other thing that doctors will be looking for besides all of these important efficacy parameters, is looking at the overall survival graph, which we think is even more meaningful because this is also the first trial to ever have cross-over built into the study . Patients who progressed on Vd were able to cross over to a Selinexor based regiment. And the fact that we are seeing a favorable trend in overall survival, even with a cross-over, suggests that the early use of Selinexor is beneficial. And also they will also look at the subset analyses to see what kind of subgroups, patients are most likely to benefit from this regiment. On the side effect profile, we said this is in line with what is reported recently, and in the past with Selinexor, they will want to have some interest there, and they will be looking at the dropout rate as well.

Q1 2020 Earnings Conference Call May 5, 2020

Question:

Jonathan Chang (SVB Leerink)

Second question, can you help set expectations ahead of the ASCO BOSTON data? What kind of data should we be expecting in terms of additional efficacy and safety beyond the topline and in terms of the different patient subgroups?

Answer:

Dr. Michael Kauffman (Chief Executive Officer)

Well, keeping in mind it’s a short presentation, we will pack in a lot of data on efficacy. We will provide the usual primary endpoint, of course, is progression free survival. The key secondary endpoints are overall response rate and overall survival. We actually have a key secondary endpoint of peripheral neuropathy rates, which was a pre-specified endpoint, very important, we believe, especially as we think about positioning this triplet.

We will provide both safety updates and so on. So it should be a pretty robust discussion. We do intend to provide some subgroup analyses, but it will be limited by the amount of time we have to present and so on. But we're excited about it. It should give a pretty good picture of what SVd can do.

#KPTI, #XPOVIO, #Selinexor, #ASCO, #American_Society_of_Clinical_Oncology