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By Patrick Crutcher

With ASCO 2011 around the corner, we wanted to provide an overview of two oncology companies that the market will be watching closely: Exelixis Inc. (NASDAQ:EXEL) and Ariad Pharmaceuticals (NASDAQ:ARIA). Both of these stocks have had significant appreciation over the past six months because of clinical data relating to their lead compounds: Ariad's ridaforolimus and Exelixis' cabozantinib (XL184). At ASCO, both companies will be making significant presentations regarding these drugs that have material impacts on their valuations. We've learned that presentations on ridaforolimus and cabozantinib will be featured in the "Best of ASCO 2011" program.

Exelixis will be making three presentations on cabozantinib (XL184) covering castration-resistant prostate cancer (CRPC), ovarian cancer, and one covering the entire randomized discontinuation trial covering nine distinct tumor types. Much of the excitement came out of results in November 2010 (1/2) and February of this year, which showed that cabozantinib reduces or stabilizes metastatic bone lesions, tumor regression, bone pain and narcotic use, and improvements in hemoglobin for patients with anemia.

The significant effect on bone metastases has creates a potential large market opportunity because of the lack of effective treatments and high rate of occurence of metastatic bone lesions in a number of cancers. The dual mechanism of action of cabozantinib, an inhibitor of MET and VEGFR2 kinases, appears very promising thus far and a more mature dataset at ASCO should help to further explain its potential. It's currently designing several Phase 3 trials to further evaluate cabozantinib in metastatic castration-resistant prostate cancer (mCRPC) and its ability to help prevent the formation of bone metastases and extend overall survival in patients with metastatic bone lesions.

In addition to these presentations, investors are still awaiting results from the Phase 3 trial (EXAM) in medullary thyroid cancer (MTC). During its recent conference call, it noted that the trial was fully enrolled in the first quarter and hoped to report top line results from the EXAM trial around the middle of this year. Assuming a positive outcome, it's planning to file an NDA for MTC by the end of 2011.

The funny thing about cabozantinib is that Bristol-Meyers Squibb (NYSE:BMY) dropped its partnership for the drug last year. Recently, rumors surfaced that Exelixis is in fact working with Goldman Sachs (NYSE:GS) to find a buyer of the company. Exelixis currently has roughly $391 million in cash and cash equivalents. It will be interesting to see how its story develops over the next year.

Ariad Pharmaceuticals has been riding a wave of good clinical data on its lead compounds, ridaforolimus and ponatinib. Ridaforolimus will be taking center stage at ASCO, where it will be presenting full Phase 3 data from its SUCCEED study. It plans on presenting this data on Monday, June 6 at 4:30PM CDT. The presentation will include the primary and secondary endpoints along with data from predefined patient sub-analyses in the trial.

As we know, Ariad announced in January that the SUCCEED trial met the primary endpoint, showing an improvement progression-free survival over placebo, in patients with metastatic soft-tissue and bone sarcomas. The full data will be an important indicator of the approvability and future marketability of ridaforolimus. We also are expecting an update on two Phase trials in endometrial cancer, breast cancer, and ovarian cancer. Ridaforolimus is being co-developed under a partnership with Merck (NYSE:MRK), which recently stated its plans to file an NDA for the drug this year.

There is also some additional excitement over its early-stage drug, ponatinib, which showed promising Phase 1 data at the American Society of Hematology (ASH) meeting in December 2010. Ponatinib is currently enrolling a pivotal Phase 2 trial (PACE) for resistant and refractory patients with chronic myeloid leukemia and Philadelphia-positive acute lymphoblastic leukemia (Ph+ ALL). Ariad now anticipates completing enrollment in the PACE study by the third quarter this year and is aiming to present comprehensive interim data at ASH 2011. The trial currently has 52 study locations worldwide.

Ariad anticipates filing for marketing approval of ponatinib in the middle of next year, setting up the possibility for approval by the end of 2012. Ariad views this as a potential big market opportunity, since there are very few effective treatments in the second/third line setting. It's also in an early Phase 1 study for acute myeloid leukemia; it will be presenting some preliminary data from trial at ASCO on Friday, June 3. This program is currently unpartnered, although it's discussed out-licensing it in Asia.

Disclosure: Long EXEL

Source: Ariad and Exelixis Look to Shine at Upcoming Trade Show