Novartis Abandons U.S. BLA for Tislelizumab as Monotherapy in NSCLC Following FDA Feedback

Can China-developed PD-1 drugs be introduced to the U.S. market? Since this year, several companies have faced setbacks in attempting to do so. The most recent attempt's outcome came from Novartis and BeiGene.

On July 12, the original review deadline for the marketing application of tislelizumab as a second-line treatment for esophageal squamous cell carcinoma (ESCC), no news had come regarding whether the FDA approved it. Two days later, BeiGene announced that the FDA would extend the review period for this BLA because on-site inspection could not be completed due to the COVID-19 pandemic, and the review will continue until the on-site inspection is finalized.

But the FDA has not yet provided an updated PDUFA date. If this marks the first major setback in the PD-1 collaboration between Novartis and BeiGene, then on July 19, tislelizumab faced another round of challenges.

1

Abandon PD-1 Monotherapy for NSCLC

At Novartis' Q2 earnings call, Novartis CEO Vas Narasimhan revealed that Novartis and BeiGene currently have no plans to file for tislelizumab monotherapy indications after receiving "FDA feedback." Vas Narasimhan was referring to the application related to tislelizumab as a monotherapy for non-small cell lung cancer (NSCLC). In other words, Novartis has abandoned hope of submitting a BLA for tislelizumab as a monotherapy for NSCLC in the United States.

According to Endpoints, the conclusion of the "FDA feedback" was that the study driven by BeiGene "did not adequately reflect the number of patients in the United States and the standard of care used."

The overseas application for tislelizumab in the treatment of NSCLC is based on the results of three clinical trials: RATIONALE-303, RATIONALE-304, and RATIONALE-307, which included a total of 1,499 patients.

In January 2021, tislelizumab was approved in China for its first lung cancer indication, which is in combination with two chemotherapies for the treatment of first-line advanced NSCLC patients. The data relied upon came from the RATIONALE-307 study conducted in mainland China. In June of the same year, tislelizumab was approved in combination with chemotherapy for the treatment of first-line advanced non-squamous NSCLC patients, also based on the RATIONALE-304 study conducted in China.

Unlike the aforementioned two studies, RATIONALE-303 enrolled 805 patients across 10 countries in the Americas, Europe, Asia, and Oceania, randomly assigning them in a 2:1 ratio to either the tislelizumab group or the docetaxel control group.

RATIONALE-303 aims to evaluate the efficacy and safety of tislelizumab in second- or third-line treatment for patients with locally advanced or metastatic NSCLC who experienced disease progression after receiving platinum-based chemotherapy. The primary endpoints of the trial are overall survival (OS) in the intent-to-treat (ITT) population and in a subset of patients identified with high PD-L1 expression. In the ITT population, interim analysis data showed that the median overall survival (mOS) was 17.2 months in the experimental group and 11.9 months in the control group. In the subset of patients with high PD-L1 expression, the mOS was 19.1 months in the experimental group and 11.9 months in the control group.

If, two months ago, the rejection of Coherus and Junshi Biosciences' PD-1 by the FDA was due to the relatively easier-to-change quality control process – in fact, at the beginning of this month, Junshi Biosciences has already resubmitted the relevant BLA, with a PDUFA date of December 23 – then the issues faced by Novartis and BeiGene in their NSCLC indication application are likely similar to the situation previously encountered by Eli Lilly and Innovent Biologics.

At that time, one of the core issues focused on by the FDA was whether clinical research data from a single country was applicable to American patients. The FDA expert committee voted 14 to 1 that sintilimab should be supplemented with clinical trials to gain approval. In the end, the FDA issued a CRL to Eli Lilly and Innovent Biologics based on this opinion.

Novartis' concern lies partly here. Vas Narasimhan emphasized on the conference call: "I do believe that the FDA has now made it clear that they want any study submitted to be global, with an appropriate number of U.S. patients, and the standard of care used should also reflect relevant requirements in the U.S."

On May 20, the U.S. E&C Republicans website released a news article stating that three Republicans, Cathy McMorris Rodgers, Brett Guthrie, and Morgan Griffith, jointly sent a letter to FDA Commissioner Robert Califf regarding clinical trials conducted in China. The letter noted that clinical trials relying solely on patient enrollment from a single country may not represent the U.S. patient population.

"Because trials from a single foreign country often differ in racial and ethnic representation from the U.S., additional data is required to ensure the applicability of product results to the U.S. population," the letter cited previous comments by FDA officials Harpreet Singh and Richard Pazdur.

Therefore, Vas Narasimhan stated that his current focus will be on prioritizing the completion of the BLA for tislelizumab as a second-line treatment for ESCC, which has the highest likelihood of success, rather than considering entry into the crowded PD-(L)1 market for NSCLC in the United States.

2

Opportunities Behind M&A Yet to Be Verified

Excluding the force majeure factors brought by COVID-19, second-line treatment of ESCC is indeed the closest to success for Novartis in promoting tislelizumab in the United States. On June 30, Novartis and BeiGene announced that the global Phase III clinical trial RATIONALE-306 of tislelizumab combined with chemotherapy for first-line treatment of esophageal squamous cell carcinoma (ESCC) was successful, significantly improving survival data compared to chemotherapy.

Specifically, the combination therapy group extended mOS from 10.6 months in the control group by 6.6 months to 17.2 months, which is the best data for first-line PD-1 treatment of ESCC — in terms of extension, Merck's Keytruda extends by 2.6 months, BMS's Opdivo by 2.5 months, Hengrui Medicine's Camrelizumab by 3.3 months, Innovent Biologics' Sintilimab by 4.2 months, and Junshi Biosciences' Toripalimab by 6.0 months.

Since Novartis introduced Tislelizumab in January 2021, the latter has been approved for multiple indications in China. However, given the changes in the U.S. market and the impact of COVID-19, it remains uncertain when Tislelizumab will enter the U.S. market.

Although the message of abandoning the tislelizumab NSCLC indication was released during this teleconference, Novartis seems not to intend to completely "cut ties." According to the second-quarter financial report, Novartis plans to submit a BLA to the FDA this year for tislelizumab as a first-line treatment for nasopharyngeal carcinoma.

Moreover, Novartis is also seeking new M&A opportunities to meet the needs of the company's performance growth. Novartis CFO Harry Kirsch hinted that the industry will soon see moves from Novartis in this regard, as it has considerable M&A capital.

In early April, Novartis drafted a plan to combine its pharmaceuticals and oncology businesses. As part of the restructuring plan, Novartis established a new position, Chief Strategy and Growth Officer, responsible for corporate strategy, R&D portfolio strategy, and business development. This move aligns with Vas Narasimhan's stated goal of improving Novartis' weak position in the U.S. market and aiming to rank in the top five in key segments. Subsequently, Novartis hired Ronny Gal, a Wall Street veteran analyst, to lead merger and acquisition activities.

Vas Narasimhan once revealed that Novartis might have more M&A activities in the second half of this year, provided that attractive companies are identified. It is estimated that by 2024, Novartis' restructuring will save at least US$1 billion annually.

The problem is that the U.S. Federal Trade Commission (FTC) has already expressed concerns about the consolidation in the biopharmaceutical industry and the increased market power of existing leading companies through mergers and acquisitions. Since March 2021, the FTC has been working with international counterparts to revise antitrust reviews for pharmaceutical companies.

Experts at the FTC believe that scale expansion cannot drive innovation in the biopharmaceutical field. Patricia Danzon, a healthcare economics expert at the University of Pennsylvania, stated that in recent years, the share of new drugs from large pharmaceutical companies has gradually declined, while small companies have contributed about 70% of new molecular entities.

Research finds that R&D output of pharmaceutical companies declines after mergers, raising concerns that buyers may impede innovation by acquiring competitors.

Experts are also concerned that the enhanced bargaining power of large pharmaceutical companies in drug pricing negotiations could disrupt market order. If a merged biopharmaceutical company owns an "essential" or blockbuster product, it can bundle the star drug with newly acquired products to drive up prices. A lot of data show a significant relationship between highly concentrated markets and rising drug prices.

What awaits Novartis is a series of rather complicated tasks to handle. For instance, how to find partners for the three innovative drugs in Phase II clinical trials: CPK850 (for treating retinitis pigmentosa), CSJ117 (for treating asthma), and LJN452 (Tropifexor, for treating NASH)?

In the past few years, Novartis attempted to combine LJN452 with drugs from Pfizer and Allergan, but data from clinicaltrials.gov shows that these two studies on NASH have been halted.

Moreover, the future of Sandoz, Novartis' generics division, also impacts the overall direction of the company. There have been constant rumors about a potential spin-off since at least 2019. In the second quarter of this year, Sandoz delivered solid performance, leading Novartis to forecast low single-digit growth for Sandoz this year. Vas Narasimhan stated that he would decide by the end of this year whether to divest this generics and biosimilars division.

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