Avid Bioservices Inc (CDMO)

[freethemice]

This is a quite interesting story and says something about what is important, and has implications for Peregrine.
I looked at the news about this trial. Back in June 2011 Endocyte announced the final results of the PRECEDENT trial.
http://www.endocyte.com/wp-content/uploads/2011/04/2011.06.05_PRECEDENT-FINAL-RESULTS.pdf
It showed a very large increase in PFS, the primary endpoint. The stock increased over the next few
weeks to a high of $14.65 on July 7, 2011. Note that the results DID NOT include MOS results.
The press release also said they were going to start patient enrollment in a phase 3 trial (PROCEED).
Then on Dec 13,2011 the supplemental analysis was released.
http://www.endocyte.com/wp-content/uploads/2011/04/2011.12.13_EU-Supplemental-Analysis.pdf
This time they used an independent review committee to assess the results. The IRC confirmed the PFS results,
although in the folate receptor positive subgroup they were no longer statistically significant.
The real kicker here is that the supplemental analysis showed that the treatment arm had a MOS of 14.1 months
and the control arm had a MOS of 16.9 months!
The stock plunged from $14 to $3 (73%). So why today does this deal with Merck get announced
and the stock more than doubles, from $3.83 to $7.63?
I believe it is this. In the Dec supplemental analysis the imaging diagnostic, a small molecule attached
to a radioisotope, was validated as having a high rate of agreement with the IRC assessment. The imaging
agent is specific for the folate receptor, which is the target for the treatment small molecule. This means that
in the phase 3 trial only those patients which are positive for over expression of the folate receptor
will be included. Merck seems to be confident that in this selected group there will be good results.
This was a phase 2b trial with 149 women enrolled. So what does this tell us?
1) Even though there was still a large increase in PFS there was NO increase in MOS. MOS rules.
2) The ability to select which patients are positive for the target to be treated is very important.
This is very similar to using FISH to detect the HER2 receptor and using Herceptin.
3) Bavi still has a chance in both first-line, and second-line, NSCLC. It all depends on MOS.
What about a fall back strategy? The imaging angle is interesting here. Nothing has ever been said
about how the new imaging agent might actually be used with bavi itself. There is the possibility that not
every patient has tumors that express PS on the tumor vasculature. Although that is what is expected.
What if some tumors don't have PS on their vasculature? This could maybe be due to differences in
the genetic backgrounds of the patients, or to epigenetics. The new imaging agent could then
be used to select those patients that have tumors that do have PS. Perhaps those patients would
have a better response to bavi. This is just speculation since no study has been done on this, as far as I know.