ARQL - PREVIEW-Investors seek clarity on ArQule trial plan
8:00 am ET 06/03/2010- Reuters
* What: ArQule to present detailed mid-stage data at ASCO
* When: June 5
* Shares more than doubled with Phase II results in March
* Investors look for parameters on Phase III trial
By Deena Beasley
LOS ANGELES, June 3 (Reuters) - ArQule Inc <ARQL.O> on Saturday will present detailed trial results for its experimental lung cancer drug, which investors hope will help define the next step for a pivotal trial program.
The details could spell the difference between a potential biotech success story and a return to the trenches of early-stage drug discovery.
Shares of the company, based in Woburn, Massachusetts, have risen about 56 percent so far this year, but still trade at less than half their 1996 initial public offering price of $12.25. In March, the shares doubled in value to a year high of $7.49 in one day when the company posted the Phase II trial summary for the drug, known as ARQ197.
"What I would like to see at ASCO (American Society of Clinical Oncology) is good identification of a population of patients that they will then go into the Phase III trial with," said George Zavoico, an analyst at McNicoll, Lewis and Vlak.
ArQule's data will be presented at the ASCO annual meeting in Chicago.
The company said in March that the Phase II trial of the drug, used in combination with Tarceva, showed a 66 percent improvement in the amount of time patients lived without their cancer worsening, compared with use of Tarceva alone.
ARQ197 is part of a potential new class of cancer drugs designed to block a protein, called C-met, involved in cancer cell growth and survival.
But the trial of 167 patients with advanced non-small cell lung cancer achieved statistical significance only after adjusting for "molecular factors," such as whether a patient's tumor had a genetic mutation in the epidermal growth factor receptor (EGFR) or KRAS gene, said ArQule spokesman William Boni.
Tarceva, which is designed to target EGFR, is sold by Roche AG <ROG.VX> and OSI Pharmaceuticals Inc <OSIP.O>.
In the sub-group of patients with non-squamous lung cancer, ArQule said the drug combination improved survival with no cancer growth by 94 percent. Non-squamous is the most common type of non-small cell lung cancer.
"We expect ArQule to begin a Phase III program for ARQ197 plus Tarceva in non-squamous NSCLC in second-half 2010," Oppenheimer analyst Bret Holley said in a research note.
ArQule began life as a provider of contract chemistry services to drugmakers, but that business model fell apart as drugmakers shifted to lower-cost centers in China and elsewhere.
A key step in the transformation from a combinatorial chemistry company to a drug developer was its 2003 acquisition of Cyclis Pharmaceuticals.
In 2008, ArQule hired Paolo Pucci, formerly a senior vice president at Bayer AG <BAYGn.DE>, as its chief executive. Brian Schwartz, also a former executive at Bayer, was brought in as chief medical officer.
The pair had helped to develop targeted cancer drug Nexavar, which is sold by Bayer and Onyx Pharmaceuticals Inc <ONXX.O>.
ArQule, in partnership with with Japan's Daiichi Sankyo <4568.T>, is testing ARQ 197 in several different types of cancer. (Reporting by Deena Beasley; Editing by Steve Orlofsky)
