We wanted to give readers some additional coverage on biotechs that we will be watching as ASCO 2011 approaches. The current upswing in momo with these oncology-focused companies should be just the beginning.
As we saw last year, some stocks double or tripled ahead of the conference. With that said, there are a lot of opportunities out there, so it's a matter of indentifying some of the candidates. This time around, we want to talk about what Peregrine, Arqule and Delcath are up to.
The main story for Peregrine Pharmaceuticals (NASDAQ:PPHM) going into ASCO 2011 has got to be the top-line data from their Phase 2 trial of Cotara in recurrent glioblastoma multiforme(GBM). They announced that the study completed treatment of the last patient back in December 2010. Cotara is a Iodine-131 chimeric TNT-1/B monoclonal antibody specific for universal intracellular antigen. Cotara can be used with most GBM patients. Their interim data is very compelling, showing interim median overall survival of 86 weeks for the first 14 patients. If the overall survival trend continues in the whole trial, it could be a potential future value driver. They intend on meeting with the FDA in the 2nd half of 2011 to determine the best path towards approval.
They have 2 other trials running testing Bavituximab in non-small cell lung cancer (NSCLC), both of which should have data readouts in the second half of 2011. For now, we want to keep the expectations for success in this indication low, although the early data is promising. NSCLC is a very tough indication to show clinically meaningful results, as illustrated by AMGN’s recent Phase 3 failure.
Their balance sheet could be stronger going into 2011, as of January 31, 2011, they had about $24 million in cash. Obviously, there is some hope that good clinical data could bring in some non-dillutive cash. Peregrine also has an ‘At Market Issuance’ agreement with MLV to the tune of $75 million;
they have yet to raise any money through this facility. UPDATE: It was brought to my attention that they have in fact raised about $8.8 million thru this facility. See the most recent 10-Q.
ArQule Inc.(NASDAQ: ARQL) is another biotech company that investors should pay attention to going into ASCO and beyond. Their lead product candidate is ARQ197, a selective small molecule inhibitor of the c-MET receptor tyrosine kinase. They posted impressive randomized-placebo controlled Phase 2 data in 1st and 2nd line non-small cell lung cancer(NSCLC) with ARQ197. They are currently running a Phase III program for ARQ197 plus Tarceva in 1st and 2nd line non-squamous NSCLC patients, which is being conducted under a SPA from the FDA. Arqule is currently partnered with Daiichi Sankyo for ARQ197 and the Arqule Kinase Inhibitor Platform (AKIP).
In regards to ASCO, they might have data from their Phase 2 single agent trial in liver cancer ready for ASCO, but it may come later. The study is expected to be completed in May, so it’s possible they could have some data ready. They are also running trials of ARQ 197 in multiple indications, including an ongoing Phase 2 study in colorectal cancer that is enrolling patients with the wild-type form of the KRAS gene who have received front-line systemic therapy. These kind of targetted inhibitors have been hot recently with Exelixis’ XL184 and Plexxikon’s BRAF inhibitor (PLX4032). (Daiichi Sankyo recently acquired Plexxikon for $805 million in cash and $130 million in back-end milestone payments.)
ArQule looks in good financial shape, having added a lot of cash on their balance sheet for FY2011; they plan to end 2011 with $85-90 in cash and securities. This comes from $80 million in cash on the balance sheet as of 12/31/10, but since then they raised $46.5 million in January, and in February 2011 they realized a significant clinical development milestone payment from Daiichi Sankyo for the 1st patient enrollment in the pivotal Phase 3 NSCLC trial.
We hope that Delcath Systems (NASDAQ: DCTH) will be giving an interim update on their Phase 2 study in primary liver cancer, a study being conducted jointly with the National Cancer Institute. They apparently submitted this data to the FDA with their NDA back in December, but investors are still waiting for the read-out. These results could better reflect Delcath’s potential valuation, since the market for primary liver cancer is much greater than the indication their initial NDA submission had been for. In a small study conducted by the NCI in 2004, they saw encouraging results using Melphalan in advanced metastatic liver tumors. Their current Phase 2 is not a randomized, placebo-controlled trial, but it should signal what kind of efficacy/safety the device has in primary liver cancer. Disappointing results could certainly prove problematic to their long-term growth.
After receiving a refusal-to-file letter for their NDA submission back in February, investors are still hopeful that their Hepatic ChemoSAT Delivery System gets CE Mark approval in the second half of 2011. They expect to re-file 505(b)(2) NDA to FDA by the end of September 2011; Delcath had a cash position of approximately $47 million as of December 31, 2010. Eamonn P. Hobbs, CEO and president of Delcath Systems, had this to say, "The FDA's letter requested information involving manufacturing plant inspection timing, product and sterilization validations and additional safety information that we already planned on filing with our 120 day safety update in April, as well as additional statistical analysis clarification." Hopefully, Delcath can deliver in the EU and follow that up with a successful NDA submission the second time around.
Disclosure: Long PPHM
PPHM Completes Treatment of Last Patient in Phase II Cotara(R) Brain Cancer Trial
PPHM 3Q FY2011 results and developments
ARQL FY2010 and 4Q’2010 results
ARQL recent corporate presentation(PDF)
Phase 2 in HCC trial
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