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Tuesday, September 29, 2015

Can-Fite BioPharma Gets FDA Fast Track for CF102

Last week, Can-Fite BioPharma Ltd. (CANF) announced the U.S. Food and Drug Administration (FDA) had granted CF102 Fast Track designation as a second line treatment for hepatocellular carcinoma (HCC), the most common form of primary liver cancer. This is an indication for which Can-Fite has also been granted Orphan Drug status given the high unmet medical need and lack of effective treatment options for patients failing first line therapy. It is also approved for compassionate use in Israel.

Zacks biotech analyst, David Bautz, PhD, published an article providing for investors an in-depth look at the science and mechanism of CF102. I encourage investors to read this article because I'm not going to rehash the scientific rationale for CF102 here. Instead, this article will focus on the market opportunity and just how big CF102 could be if Can-Fite is successful in its development.

Can-Fite's Phase 2 Program

As Dr. Bautz noted in this article, Can-Fite is currently conducting a Phase 2 trial with CF102 in patients with advanced HCC and Child-Pugh B cirrhosis (NCT02128958). Child-Pugh is a scoring system proposed as a way to predict the outcome of liver cancer patients following surgical resection. The scale looks at variables of liver function, including bilirubin and albumin levels, as well as incidences of ascites, encephalopathy, and prothrombin (clotting) time. The scale is highly correlated with overall survival, with a paper by Cabibbo et al., 2012 finding that the median survival of Child-Pugh A, B and C patients with HCC and not appropriate for curative or palliative treatments were 9.8 month (range 6.4-13), 6.1 months (range 4.9-7.3), and 3.7 months (range 1.5-6), respectively. 

In Can-Fite's Phase 2 trial, a total of 78 patients are expected to be randomized 2:1 to receive 25 mg of CF102 or placebo twice a day for consecutive 28-day cycles. The study is currently enrolling patients in Israel and Europe. The primary outcome of the study is overall survival, which will not be evaluated until after 75 deaths have occurred. The first patient was dosed in December 2014 and management anticipates data from the study in mid-2016.

Nexavar Failures - Still A Big Market

Standard of care for these HCC patients is Nexavar® (sorafenib), a drug that has been shown to increase median overall survival by approximately just shy of three months - 10.7 months in the sorafenib group vs. 7.9 months in the placebo group (hazard ratio = 0.69 [95% CI 0.55-0.87]; P<0.001) - in a randomized, double-blind Phase 3 study conducted at 121 centers in 21 countries around Europe, North America, South America, Australia, and Asia (Llovet et al., 2008). However, 97% of the patients (581 of 602) in this Phase 3 trial were Child-Pugh A. 

A second Phase 3 study with Nexavar® was conducted in 226 HCC patients at 23 centers in China, South Korea, and Taiwan. The median overall survival was 6.5 months in patients treated with sorafenib, compared with 4.2 months in those who received placebo (hazard ratio = 0.68 [95% CI 0.50-0.93]; p=0.014) (Cheng et al., 2009). All 226 patients were Child-Pugh A.

A retrospective study conducted by DA Fonseca et al., 2015, found that Nexavar's utility in Child-Pugh B patients is significantly lower than in the less advanced, Child-Pugh A, patients. For example, the median overall survival of Child-Pugh B patients from the two Phase 3 studies (n=20) was only 2.53 months [95% CI 0.33-5.92] vs. that of 9.71 months (95% CI: 6.22-13.04) for Child-Pugh A patients; the difference was statistically significant (P=0.002). The results for the Child-Pugh A patients were very similar to what Cabibbo et al., 2012 published (9.8 months vs. 9.7 months), but the results in Child-Pugh B were far worse (6.1 months vs. 2.5 months). This seems to suggest that Nexavar® is simply an ineffective drug in HCC patients with Child-Pugh B cirrhosis. 

CF102 Shows Potential Utility In This Difficult To Treat Population

Can-Fite previously completed a open-label Phase 1/2 study with CF102 in 18 HCC patients that yielded encouraging results (NCT00790218). According to the 2013 publication, median overall survival in the study population, 67% of whom had received prior Nexavar®, was 7.8 months, and for Child Pugh B patients (28%) it was 8.1 months. Stable disease by RECIST was observed in four patients for at least 4 months. CF102 also helped maintain liver function over a 6-month period (Stemmer et al. 2013). The authors found a correlation between receptor over-expression levels at baseline and patients' overall survival. One of the patients who presented with skin nodules that were biopsy-proven to be HCC metastases prior to the trial showed complete metastasis regression during three months of treatment with CF102. This would be an astonishing leap forward from the Phase 3 data in Child-Pugh B patients observed in the global program for Nexavar®.

CF102 Shows Good Safety & Tolerability

The Phase 3 data on Nexavar® show the drug to be poorly tolerated. For example, 80% of the patients reported adverse events (vs. 52% for the placebo group), with the biggest, statistically significant, issues being gastrointestinal side effects such as anorexia, weight loss, diarrhea, nausea, and vomiting. Other issues included alopecia, skin reactions, hypertension, abdominal pain, and bleeding. In contrast, in the CF102 Phase 1/2 trial, no serious drug-related adverse events or dose-limiting toxicities were observed. CF102 also showed no adverse effect on routine measures of liver function over a six-month period in 12 patients treated for at least that duration, suggesting that CF102 could be utilized safely in patients with cirrhosis or decreased liver function, like that of Child-Pugh B patients.

CF102 Can Be Big For Can-Fite

American Cancer Society predicts there will be 35,660 new cases of primary liver cancer in the U.S. in 2015. The organization also predicts 24,550 deaths from the disease in 2015. That being said, liver cancer is much more common in countries in sub-Saharan Africa and Southeast Asia than in the U.S. In many of these countries it is the most common type of cancer, likely due to the rampant infection rate of hepatitis B and C in these regions. The ACS predicts more than 700,000 people are diagnosed with this cancer each year throughout the world, or which nearly 400,000 or so live in China (source: Onyx Pharmaceuticals). 

Nexavar® is indicated for the treatment of patients with unresectable hepatocellular carcinoma. The drug is also approved for advanced renal cell carcinoma (RCC). The drug did roughly $1 billion in sales in 2014, and management comments hinted that roughly 40-45% of the global sales is coming from the HCC indication (Gorkin, 2011). This suggests a penetrable global market for HCC at roughly $400 to $500 million. Nexavar® costs approximately $6,500 per month (source: GoodRx), or around $65,000 for an average 10 month treatment period. Keep in mind, patients will have likely failed transarterial chemoembolization (TACE), a form of intra-arterial catheter-based chemotherapy that selectively delivers high doses of cytotoxic drug to the tumor bed, before they progress to Nexavar®, and the drug failed a Phase 3 trial in patients keeping HCC from returning following surgical resection.   

Based on the Barcelona Clinic Liver Cancer (BCLC) algorithm for the treatment of hepatocellular carcinoma, the estimated target market for Nexavar® is around 40% of the diagnosed population. This equates to roughly 14,250 patients in the U.S. It removes the 30-40% of patients that are cured through surgical resection or liver transplant and the 20% that respond to TACE. It also excluded the 10%  Child-Pugh C patients that are terminally ill and likely to receive only supportive care. 

Based on the available Nexavar® Phase 3 data stratified by liver performance status (Kostner et al., 2013) the market opportunity for a drug like CF102 is still significant. The target patient population includes all Child-Pugh B patients and those that either do not respond to Nexavar® or are unlikely to respond to Nexavar® based on performance status. I estimate this is easily 10,000 to 12,000 patients in the U.S. each year. The course of treatment in these patients may be less than the approximate 10 month average for Nexavar®, but even if Can-Fite prices CF102 at a similar rate of $6,500 per month, at an average course of treatment of eight months that equates to $52,000 per patient.

With a minimum of 10,000 targetable patients in the U.S., the peak opportunity to Can-Fite looks like approximately $500 million. Based on Nexavar® sales, Onyx has been able to penetrate about 30% of the addressable market. If Can-Fite, through a commercial partnership similar to the one Onyx signed with Bayer/Amgen, can accomplish a similar level of penetration, the U.S. revenue opportunity for CF102 is approximately $150 million. The opportunity in Europe is likely another $100 million in my view.

Asia Represents A Large Partnering Opportunity 

The interesting opportunity for Can-Fite is in countries in Southeast Asia. Above I noted that these areas of the world have significantly higher rates of primary liver cancer due to epidemic-like infection rates of hepatitis B and C. The World Cancer Research Fund International estimates that 80% of the global primary liver cancer patients on earth are found in less developed countries outside the U.S. and EU. For example, the highest incidence rates can be found in Mongolia, Lao, Gambia, Vietnam, Korea, Thailand, Cambodia, and China.

I believe there is a meaningful opportunity for Can-Fite to sign licensing and distribution agreements in areas like China and Korea. Management has already out-licensed its other clinical-stage candidate, CF101, to Kwang Dong Pharmaceutical in Korea, so this management team has experience partnering with large Korean pharmaceutical companies. They also have experience negotiating term sheets with companies in China and Japan. Licensing deals that provide upfront cash to Can-Fite for CF102 in Asia will help support the U.S. and EU development plans.


Can-Fite has had some good news over the past few weeks, first announcing that the U.S. FDA granted Fast Track status to CF102 as a second line treatment for hepatocellular carcinoma and recently closing on a $9 million registered direct offering that will extend the current runway to the middle of 2017. I believe the opportunity to out-license CF102 in Asia is the next potential catalyst for the company. It seems as though the market is starting to pay more attention to CF102 now and that presents investors with a very interesting catalyst mid next year when the top-line Phase 2 data is expected.

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