Here's Why NewLink Genetics Is Vaulting 45% Higher Today

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What happened

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After updating data from its ongoing phase 2 trial of IDO-inhibitor indoximod in advanced melanoma, shares in NewLink Genetics Corporation (NASDAQ: NLNK) shares are jumping 45% at 12:15 p.m. EDT Thursday.

So what

NewLink Genetics' IDO-inhibiting cancer drug pipeline was dealt blows earlier this summer when a mid-stage trial of indoximod in breast cancer patients failed and Roche Holdings returned the rights to GDC-0919, a second-generation IDO-inhibitor. The disappointments caused NewLink Genetics' shares to lose almost half of their value.

On Thursday, shares are winning back some lost ground following the release of updated data from a trial evaluating the use of indoximod alongside the PD-1 checkpoint inhibitor, Keytruda, in advanced melanoma patients.

NewLink Genetics thinks that combining indoximod with PD-1 drugs can deliver even better outcomes for patients because IDO-inhibitors prevent cancer cells from hijacking proteins that suppress immune system responses, and PD-1 drugs improve the ability of T-cells to spot and destroy cancer cells.

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This thinking appears to be on target given the latest study data improves upon previously reported trial results. The new results show a complete response rate of 20% to indoximod plus Keytruda therapy, up from 12% previously. Also, the overall response rate to the approach is 61% and the disease control rate, which includes patients with stable disease, is 80%.

Now what

The data suggests that adding indoximod to PD-1 therapy can improve outcomes for advanced melanoma patients, however, the efficacy and safety of this combination will need to be confirmed in a much larger phase 3 trial. NewLink Genetics hopes to fully enroll such a trial by the end of 2018, so it will be a while before we know for sure that this approach works.

I do believe that there's potential for IDO-inhibition to become a part of standard care in cancer patients, but investors should keep in mind that NewLink Genetics isn't the only company developing IDO-inhibitors. In fact, Incyte Corp is also in the hunt, and its timeline to the FDA appears to be shorter than NewLink Genetics.

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Todd Campbell has no position in any of the stocks mentioned. His clients may have positions in the companies mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.