Earlier this month, Micromet (MITI) concluded an impressive public offering of $75M, approximately 20% of the company’s market cap. The offering illustrates the transformation the company has undergone from an anonymous biotech play into a recognized industry leader. This is also echoed by the growing attention from Wall St. When I first wrote about Micromet in 2007, the company was covered by a single analyst, RBC’s Jason Kantor, who was one of the first to see the potential in Micromet’s platform. Today the stock is covered by six additional research analysts.
According to the company, its strengthened cash position will provide at least two years of operations, assuming no additional funds are received. Most of the budget will probably be related to Micromet’s lead agent, blinatumomab, which is expected to enter a pivotal trial in Acute Lymphoblastic Leukemia (ALL) in the first half of 2010.
With almost $125M in its coffers, Micromet has just enough money for completing and generating data from the pivotal trial. Nevertheless, some of the money should be put to another use – getting the US rights for blinatumomab back from Medimmune (AZN). As discussed in a previous article, Micromet is trapped in a delicate situation where Medimmune is unwilling to develop the drug, nor is it willing to return the US rights for the drug. Prior to the offering, Micromet could not afford buying back Medimmune’s stake, but now, it can do so without jeopardizing its financial stability. Such a move will be an important value creation event for Micromet, who will finally be able to relicense blinatumomab at terms that are more attractive than those of the original deal with Medimmune. More importantly, such a deal will facilitate the broad global development program this promising drug deserves.
ALL is a niche indication which represents a fast and cheap route to market, so theoretically, Micromet could commercialize the drug in ALL on its own. However, blinatumomab has potential in a variety of other blood cancers, which represent a multibillion dollar opportunity. In order to capture a meaningful market share in these indications, primarily Non-Hodgkin’s Lymphoma (NHL), Micromet must have the muscle of a large partner on its side. With a large partner, Micromet will be able to accelerate blinatumumab’s clinical development that seems more crucial today than ever, as direct competitors are beginning to surface.
The competitive landscape
Blinatumomab targets a protein called CD19, which is highly expressed on cancer cells. When Micromet presented first clinical data for this agent in the summer of 2006, it was the first CD19 antibody to show activity in cancer patients. To date, this status has not changed, but by year end there could be additional CD19 antibodies with clinical proof of concept.
Sanofi-Aventis’ (SNY) SAR3419 is the second most advanced CD19 antibody in development, making it an obvious threat to Micromet’s blinatumomab. SAR3419 is an antibody drug conjugate that was licensed from Immunogen (IMGN) in 2003. The drug entered the clinic in late 2007 and is currently being evaluated in three phase I trials, either as a weekly or every three weeks treatment.
