Two weeks ago Favrille Inc. (FVRL) released preliminary results from its phase III trial concerning its lead drug candidate FavID. FavID is an active immunotherapy used in conjunction with Rituxan for the treatment of B-cell non-Hodgkins lymphoma.
Investors became skittish after finding out there was no statistical difference between FavID and placebo at the secondary endpoints. The $100 million company sold off immediately losing nearly a quarter of market cap in two days.
Having a stake in the small biotech, this reaction prompted me to contact Favrille directly. My discussions with the company provided me with the following information:
The company did not need to report a secondary endpoint, but it did in an attempt to gain an accelerated filing. Judging by the overreaction, this move appears to have backfired in the short term.
However, the sell off may have been overdone, since one secondary endpoint does not a clinical trial make.
It was made clear that the data mattering most in this particular clinical trial is the Time to Treatment Progression [TTP], which will be posted at the conclusion of the study late next year. In a corporate press release, Favrille CEO and President, John P. Longenecker, pointed out that the company is confident that the TTP at the end of Phase III will be positive for the product since Phase II results showed encouraging data regarding the TTP. In that trial, a majority of patients remained progression-free with a follow-up of 32 months when using both FavID and Rituxan.
Favrille Inc. also confirmed that company insiders still hold nearly 65% of company stock and institutional owners T Rowe Price and MPM Bioequities maintain 3% and 4% stakes respectively. I was assured none of this was sold during the two day selling spree. This heavy insider ownership is comforting. At least, I am not the only one with skin in the game.
Although the company has no partnerships at this time, it is interesting to note that several members of the board and management team were involved in the launch of Rituxan while working for either Genentech or Biogen Idec Inc. It makes it even more compelling that the company is positioning FavID as a treatment to be used with Rituxan.
Approval of the product could have huge implications for the company as Rituxan sales last year tallied roughly $1.8 billion. For now, investors have to ride out the volatility and wait on the Phase III primary endpoint data to be released in the later half of 2007. Until then, investors have to be just that, investors.