Driehaus Emerging Markets Small Cap Growth Fund · NASDAQ:DRESX
Driehaus Emerging Markets Small Cap Growth Fund — Driehaus Capital Management — Investor Presentation (July 2016)
25 slides from Driehaus Emerging Markets Small Cap Growth Fund's investor presentation, July 2016
Slide 1: Counting Cards in Biotech
Driehaus Capital Management 25 East Erie Street Chicago, IL 60611 T: 800.688.8819 312.587.3800 F: 312.587.3840 COUNTING CARDS IN BIOTECH A Checklist for Improving the Odds of Success in Early Stage Targeted Therapies in Cancer Date Issued: July 2016
Slide 2: Our Argument: If Investing in Early Stage Biotech Is a Gamble, Let's Count Cards
OUR ARGUMENT: IF INVESTING IN EARLY STAGE BIOTECH COMPANIES IS A GAMBLE, THEN LET’S COUNT CARDS Many people believe early stage biotech is a gamble “The harsh truth is that investing in a small or even medium sized biotech company is a lot like gambling in Las Vegas. You are either going to win big
Slide 3: Two Decades of Clinical Trial Data Show Low Probability of Success
TWO DECADES OF CLINICAL TRIAL DATA TELL US THAT PROBABILITY OF SUCCESS FOR EARLY STAGE DRUGS IS LOW Historic Probability of a Drug in Each Phase Reaching Market Studies listed 100% 93% 90% 83% 80% 77% 70% 60% 60% 50% 50% 42% 40% 30% 27% 19% 20% 16% 16% 10% 11% 10% 0% Phase I Phase II Phase III Regis
Slide 4: Early Stage Oncology Studies Have Even Lower Probability of Success
EARLY STAGE ONCOLOGY STUDIES HAVE AN EVEN LOWER PROBABILITY OF SUCCESS, IN AGGREGATE Historic Probability of a Drug in Each Phase Reaching Market - By Indication Hay, 2014; Nature Biotechnology 100% 96% 90% 85% 87% 85% 80% 82% 82% 80% 70% 61% 59% 60% 55%55% 50% 50% 45% 40% 37% 30% 25% 17% 19%20%17%
Slide 5: Focus on Targeted Therapies, Specifically Kinase Inhibitors
KNOWING THE CLINICAL RISKS, WE FOCUS OUR APPROACH ON TARGETED THERAPIES – SPECIFICALLY KINASE INHIBITORS Cancer Treatment Modalities Surgery Radiation Chemotherapy Targeted Therapies Immuno-Therapy Use highly Support the immune Cut out accessible Interfere with a concentrated X-rays Use cytotoxic dr
Slide 6: Kinase Inhibitors Are a Type of Targeted Therapy
KINASE INHIBITORS ARE A TYPE OF TARGETED THERAPY Introduction to Kinases Kinome Tree A visual schematic of all 500 kinases What is a kinase? • Kinases are cellular switches that regulate cell growth. • There are over 500 kinases. How are kinases implicated in cancer? • Kinases that have mutated to b
Slide 7: At Least Five Features Increase Probability of Success for Kinase Inhibitors
AT LEAST FIVE FEATURES INCREASE PROBABILITY OF SUCCESS FOR KINASE INHIBITORS ENTERING CLINICAL DEVELOPMENT Strength of Feature Evidence Base Evidence Clinical Success Rates of VEGF Therapies in 50+ Phase 3 Trials Biomarker-Selected Patient Population Source: Meadows, Cold Spring Harbor Perspectives,
Slide 8: Kinase Inhibitors Underperform When Patients Are Not Selected by Biomarkers
KINASE INHIBITORS HAVE SUCCESS RATES WORSE THAN HISTORIC 1 AVERAGES WHEN PATIENTS ARE NOT SELECTED BY BIOMARKERS Success Rates of Anti-VEGF & Anti-EGFR Therapies in Unselected Patients VEGF studies = 50 trials; EGFR studies = 22 trials 100% 90% 80% 70% 63% 74% 60% 84% 50% 37% Historic Ph3 40% Oncolo
Slide 9: Biomarker Driven Patient Selection Results in Higher Clinical Success Rates
IN CONTRAST, A BIOMARKER DRIVEN PATIENT-SELECTION 1 STRATEGY RESULTS IN HIGHER CLINICAL SUCCESS RATES Clinical Trial Success Rates for Biomarker Targeted and Non-Biomarker Targeted Therapy for Advanced NSCLC Falconi, 2014; n=199 compounds from 1998-2012. “Success” per phase was defined as advancing
Slide 10: Genomic Biomarker Selection Leads to Larger Signals of Efficacy
SELECTING PATIENTS USING A GENOMIC BIOMARKER LEADS TO 2 LARGER SIGNALS OF EFFICACY THAN THE AVERAGE BIOMARKER Association of Biomarker-Based Treatment Strategies With Response Rates and Progression-Free Survival in Refractory Malignant Neoplasms Schwaederle, 2016 Figure 1B Figure 1C Average of 30% R
Slide 11: Oncogenic Driver Mutation as Genomic Biomarker Yields Larger Signal
SELECTING PATIENTS WITH AN ONCOGENIC DRIVER MUTATION 2 AS THE GENOMIC BIOMARKER YIELDS AN EVEN LARGER SIGNAL 100% Overall Response Rate of ALK-Inhibitor Studies Presented at ASCO 94% 100% n=23 Studies, conducted from 2011-2016 88% 90% 82% 82% 80% 72% 72% 74% 70% 70% >63% Median Response 70% 61% 63%
Slide 12: Most Tumors Are Not Homogenous; Homogenous Ones Respond Well
MOST TUMORS ARE NOT HOMOGENOUS; THE ONES THAT ARE 3 HOMOGENOUS RESPOND VERY WELL TO TARGETED THERAPY Tumor Response Rate to Targeted Therapy, Based on Mutation Burden Lebbe, 2013. Biopsies sourced from 44 patients with BRAF mutated melanoma treated with vemurafenib at recommended dose. Patients spli
Slide 13: Selective Inhibition Avoids Side Effects, Enabling Maximal Inhibition
SELECTIVE INHIBITION AVOIDS SIDE EFFECTS, ENABLING 4 MAXIMAL INHIBITION OF THE ONCOGENIC DRIVER MUTATION This table shows the potency of five compounds against five targets. In this case, the objective is to maximally inhibit the kinase driving the cancer (EGFRm+) while avoiding the kinases that cau
Slide 14: Side Effects Can Result from Poor Drug Properties
SIDE EFFECTS CAN ALSO RESULT FROM POOR DRUG PROPERTIES; 5 BELOW WE COMPARE THE PROPERTIES OF TWO COMPETING DRUGS Absorption Metabolism 80 AZD9291 and its active CO-1686 and its active metabolites metabolites 70 Half-Life Duration (Hours) 60 High 50 Concentration 40 30 CO-1686 20 10 0 AZD9291 AZ7550
Slide 15: Producing Favorable Drug Properties Is More Difficult Than One Might Think
PRODUCING FAVORABLE DRUG PROPERTIES IS MORE DIFFICULT 5 THAN ONE MIGHT THINK... An analysis of the attrition of drug candidates from four major pharmaceutical companies, 2000-2010 Waring, Nature Reviews Drug Discovery 2015 Reason for attrition, 605 drugs Non-Clinical Toxicology 40% Pharmacokinetics/
Slide 16: Framework Application: Company Level
FRAMEWORK APPLICATION: COMPANY LEVEL 1 Biomarker- 2 Oncogenic 3 Tumor 4 Selective 5 Good Drug Selected Driver Homogeneity Inhibitor Properties Kinase Inhibitor Drug Patient Mutation Overall Pure-Play Company Candidates Population BLU-554 BLU-285 RET pre-clin LOXO-101 LOXO-195 RET pre-clin binimetini
Slide 17: Framework Application: Product Level
FRAMEWORK APPLICATION: PRODUCT LEVEL Biomarker- 1 2 Oncogenic 3 4 5 Selected Tumor Selective Good Drug Indication Driver Patient Homogeneity Inhibitor Properties Mutation Population KIT Exon 17 D816V mutated BLU-285 Systemic Mastocytosis PDGFRα D842V and KIT Exon 17 mutated BLU-285 Gastrointestinal
Slide 18: Appendix
APPENDIX A. Tumor Heterogeneity B. Targeted Therapies and Immune Therapies C. Glossary D. About the Authors 18
Slide 19: Tumor Heterogeneity: Resistance Mutations Currently Limit Treatment
A TUMOR HETEROGENEITY: RESISTANCE MUTATIONS CURRENTLY LIMIT TREATMENT, BUT COULD POTENTIALLY BE HARNESSED IN THE FUTURE Resistance Mutations Cause Kinase Multiple Therapies Can Extend Durability, If Resistance Can Re-Sensitive Tumors, Resistance, Limiting Response Durability But Resistance Eventuall
Slide 20: Targeted Therapies and Immunotherapies: Future Applications
TARGETED THERAPIES AND IMMUNOTHERAPIES: B FUTURE APPLICATIONS Targeted Therapy Indications Combos Immunotherapy Indications 1L BRAF 2L NSCLC Melanoma ALK/EGFR WT 1L ALK Lung 1L Melanoma 2L+ NSCLC after 1L/2L VEGF ALK/EGFRi in Various ALK/EGFRm 2L PD-L1+ NSCLC TBD 1L EGFR Lung after ALK/EGFRi in ALK/
Slide 21: Glossary
GLOSSARY Term Definition Source A gene that makes a protein called anaplastic lymphoma kinase (ALK), which may be involved in cell growth. Mutated (changed) forms of http://www.cancer.gov/publications/dic ALK the ALK gene and protein have been found in some types of cancer, including neuroblastoma,
Slide 22: Glossary
GLOSSARY Term Definition Source Inhibitor A drug that blocks the biological function of a target. n/a IR Insulin receptor. n/a A form of a chemical element in which the atoms have the same number of protons (part of the nucleus of an atom) but with a different number of neutrons (part of the nucleus
Slide 23: Glossary
GLOSSARY Term Definition Source A study that tests whether a new treatment works for a certain type of cancer or other disease (for example, whether it shrinks a tumor http://www.cancer.gov/publications/dic Phase II or improves blood test results). Phase II clinical trials may also provide more info
Slide 24: About the Authors
ABOUT THE AUTHORS Michael J. Caldwell Experience Assistant Portfolio Manager • Nearly a decade of experience investing in micro and small cap biotech companies B.S. Biomedical Engineering, • Assistant Portfolio Manager on the Driehaus Event Yale University Driven strategy and Senior Analyst on Micro
Slide 25: Notes
NOTES This presentation is not intended to provide investment advice. Nothing herein should be construed as a solicitation, recom- mendation or an offer to buy, sell or hold any securities, other investments or to adopt any investment strategy or strategies. You should assess your own investment nee
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