Replies to post #139540 on Biotech Values

[pcrutch]

Shares of ArQule Inc. (NASDAQ:ARQL : 7.53, -0.25) could see additional upside. ARQL is expected to unveil its regulatory strategy for Hepatocellular Carcinoma (HCC), a primary form of liver cancer, after releasing data at American Society of Clinical Oncology (ASCO), which is expected to be held during the first five days of June.

ArQule is an oncology-focused company developing small molecule kinase inhibitors. Its most advanced program, tivantinib, is in various stages of trials for non-small cell lung cancer and HCC.

Abstracts released in May will include important subgroup data in the monotherapy HCC trial and combination data with Nexavar. At the conference, analysts expect to see overall survival (OS) data from the HCC Phase II.

"We anticipate three major data updates associated with ASCO. Together, we expect these will increase investor confidence in a regulatory/commercial path forward for tivantinib in HCC, and could drive shares higher," RBC Capital Markets analyst Jason Kantor wrote in a note to clients.

Tivantinib trials in HCC became more significant after Bristol Myers Squibb (NYSE:BMY) recently announced that Brivanib failed to meet its primary endpoint of overall survival versus best supportive care in second-line HCC.

The failure of Brivanib made the positive Phase II results for tivantinib more impressive and left the door wide open for new agents in second line HCC.

The lack of statistically significant OS for brivanib raises some concerns for ArQule because the results for time to progression (TTP) were robust. TTP is defined as the time from randomization until objective tumor progression in a cancer study.

For this reason, the analyst said it will be important for the company to show a trend in survival during Phase II to provide investors with confidence in the link between TTP and OS for tivantinib.

While Brivanib recently failed in second line HCC, there are still two other drugs in Phase III for this ailment from Novartis (NYSE:NVS) and Eli Lilly & Co. (NYSE:LLY : 39.59, 0.06). Both companies are running trials similar to the failed Brivanib trial and includes all-comers with second-line HCC.

Novartis is running a 531 patient Phase III trial in 2nd line HCC comparing everolimus to best supportive care with OS as the primary endpoint.

Eli Lilly is running a 544-patient Phase III trial n 2nd line HCC Phase III comparing ramucirumab to best supportive care with OS as the primary endpoint.

Both these trials are expected to read out in 2013.

"If ARQL moves forward with a tivantinib Phase III trial in an enriched population, it could ensure a regulatory path and commercial market even if the others drugs are successful," Kantor noted.

Meanwhile, the company's regulatory path for first-line HCC is less clear, but the combo data at ASCO is vital. ArQule will report data from an 80 patient trial combining tivantinib with Nexavar in 4 different cohorts of 20 patients each. The cohorts include HCC, melanoma, RCC, and others.

While the trial is not controlled, it will generate important safety data and may provide some evidence of additive efficacy in several tumor types. The company seems confident that tivantinib can be combined with Nexavar and would make a good first-line HCC regimen.

However, a decision to move to Phase III is largely based on ongoing competitive first-line trials that could change the standard of care, and ultimately impact a Phase III trial design.

Bristol Myers Squibb is running a 1050-patient Phase III trial of brivanib vs. Nexavar in first-line HCC. The trial is expected to read out in late 2012.

Bayer is running a 731-patient Phase III comparing Tarceva+Nexavar to Nexavar in first-line HCC. The trial could read out in 2012/2013.

"We suspect that ARQL will ultimately run a first-line Phase III in combination with Nexavar. The comparator could be Nexavar, Brivanib, or Nexavar+Tarceva," the analyst noted.

Meanwhile, ArQule says that enrollment in its Phase III MARQUEE lung cancer trial has been progressing very well. They expect to complete enrollment this summer and potentially by ASCO in early June.

Kantor has an "outperform" rating and $11 price target on ArQule shares. The stock price has increased 18 percent in the year and 59 percent in the past 6 months.

[iwfal]

ARQL -

[This significantly increases the chance of success for the ongoing phase 3 trial ARQ 197 Plus Erlotinib Versus Placebo Plus Erlotinib for the Treatment of Non-squamous, Non-small-cell Lung Cancer]

An exploratory immunohistochemistry (IHC) analysis was conducted of archival tissue from a concluded Phase 2 clinical trial with tivantinib and erlotinib in NSCLC. Findings confirmed that in this trial non-squamous NSCLC tumors were more often positive for c-MET expression than squamous NSCLC tumors. In this study, 76 percent of evaluable patients with non-squamous tumors were c-MET positive, and 12 percent of evaluable patients with squamous tumors were c-MET-positive, a percentage that is consistent with existing literature.

FYI - After checking the 'existing literature', of which there is remarkably little, I would disagree with their statement. See

http://www.ncbi.nlm.nih.gov/pubmed/22052229 - which says:

The proportion of high MET gene dosage was 10.58% (22/208) with higher incidence in squamous cell carcinoma (11.86%) and smokers (16.18%), although the differences with adenocarcinoma and nonsmokers were nonsignificant.

I believe this is a test based upon gene copies, so not exactly the same thing as Roche found most predictive (protein levels) and ARQL tested for (they used IHC in your above cite). But still not comforting.
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http://cancerres.aacrjournals.org/content/65/4/1479.long

Among NSCLC, strong c-Met expression (2+) was evident in 6 of 9 (67%) adenocarcinoma, 4 of 7 (57%) large cell, and 4 of 7 (57%) squamous cell carcinoma. We did not see any significant total c-Met staining in normal lung tissues ( Fig. 2A). - and note that they used IHC.

Very small samples - but not aligned with the, as you note elsewhere, post hoc results seen by ARQL.

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And a final note - there are a variety of hints that Met expression in nsclc is highly dependent on number of previous chemo regimens (see, for example, the first cite above which notes: High MET gene dosage was significantly associated with higher tumor stage (stage I + II versus stage III + IV; p = 0.0254) and prior chemotherapy for stage III + IV adenocarcinoma patients (35.71% versus 7.41%; p = 0.0145) ). It is not the only cite that indicates this - but I'd agree the data is still sparse.

So, why does this matter? In the ARQL ph ii they allowed all categories of second line with no limits to number of previous chemos. They got an ITT OS HR of 0.88. In their ph iii they are using a protocol more similar to Roche's for their ph ii - <=2 previous chemo regimens. And Roche got a ITT OS HR=1.09.

All told the ARQL ph iii feels a little too based upon post hoc mining. And even for a viable drug that adds huge risk IMO.

Comments welcome.

PS There is one piece of supporting data which cannot be entirely discounted - and that is that Roche too noted that the squamous patients did less well than the non-squamous. As usual, interpreting ph ii data is generally an inherently uncertain operation - but in general I would suggest uncertainty normally doesn't bode particularly well for the ph iii. (FWIW My working assumption regarding the squamous met data is that the data all aligns if you believe that squamous patients generally have fewer chemo options and no TKIs and thus fewer previous regimens to build up met levels.)