Micromet Begins New Trial (AMGN) (AZN) (BAYRY) (MITI) (SNY)

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Micromet Inc. (MITI) recently announced that it has begun a mid-stage registrational trial of its lead pipeline candidate, blinatumomab, in adult patients with B-precursor relapsed refractory acute lymphoblastic leukemia (ALL).

The trial was advised to be conducted by the US Food & Drug Administration (FDA) to support accelerated approval of blinatumomab. The trial is a single-arm study which will evaluate 65 patients with the primary endpoint of complete remission (CR) or CR with partial recovery of blood counts (CRh). Micromet expects to complete enrollment for the trial by year-end 2012. The mid-stage study will be followed by a late-stage trial (with a time dependent endpoint) to evaluate the safety and efficacy of blinatumomab versus chemotherapy in adult patients with relapsed refractory B precursor ALL. Design details of the late-stage trial will be provided in 2012.

Blinatumomub is one of the leading BiTE antibodies that Micromet is developing. BiTE antibodies represent a new class of antibodies that activate the T-cells of a patient’s immune system to eliminate cancer cells. The company is developing the candidate on its own.

Currently, Micromet is conducting another mid-stage study (n=20) of blinatumomab in adults suffering from relapsed or refractory B-precursor ALL. This study is evaluating the efficacy, safety and tolerability of blinatumomab in patients who do not respond to standard chemotherapy. Updated data from the trial is expected at the American Society of Hematology (ASH) meeting in December 2011. We believe this data presentation is a major near-term catalyst for the company as it will provide further visibility on the clinical potential of blinatumomab.

Relapsed/refractory ALL is an aggressive cancer of the blood and bone marrow. This disease is difficult to treat and has limited treatment options. No new drug has been approved for the treatment of this disease in the last 30 years. The disease affects 5,330 patients in the US annually.

Our Recommendation

Currently, we have a Neutral stance on Micromet. The stock carries a Zacks #3 Rank (short-term Hold recommendation).

We believe blinatumomab holds tremendous potential in the treatment of ALL. Besides, Micromet’s partnerships with large pharma and biotech companies could generate substantial future royalty revenues for the company. Micromet has entered into contracts with pharma giants like Bayer (BAYRY), AstraZeneca (AZN), Sanofi-Aventis (SNY), Amgen, Inc. (AMGN), which are focused on developing BiTE antibodies against disclosed/undisclosed solid tumor targets.

However, we believe that Micromet requires the strength of a large established player to accelerate blinatumomab’s development in order to gain a head-start over potential competitors on approval. We are also concerned about its early stage pipeline. Accordingly, we prefer to remain on the sidelines.

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