What's Next For Medarex?

On Monday evening, Medarex (MEDX) announced the results of one of the three completed clinical trials being carried out on one of their promising Phase III candidate. Ipilimumab, an oncology monoclonal antibody molecule, currently being developed in partnership with Bristol-Meyers-Squibb (BMY) "failed to achieve complete or partial shrinkage of tumors in at least 10 percent of the trial's 155 patients with melanoma".

As expected, the market punished Medarex with the stock price falling almost 20% in after-hours trading. Come Tuesday morning, the company held a conference call to discuss the top-line results from the completed clinical trials. Unfortunately the pre-market conference call did little to stem the fall-out from the disappointing clinical read-out.

The statement released by Medarex on Monday evening contains little information regarding the unexpected radiological results and it is expected that the data from the 3 clinical trials will be presented at the 2008 American Society of Clinical Oncology conference. A quick look at the US government clinical trials portal reveals very little about the pivotal clinical trials in patients with advanced metastatic melanoma. Other than Mederex own admission that they did not achieve the primary end-point it's difficult to determine if their planned Ipilimumab regulatory submission will be successful. However, it is important to note that similar clinical trials of monoclonal antibody therapies have also failed to achieve tumor shrinkage as was the case with Ipilimumab. On the other hand, some of these studies are known to have increased the survival benefit of patients enrolled in such studies. In light of these findings, there is the possibility that the FDA may give a favorable response to Ipilimumab application for advanced metastatic melanoma.

While I am yet to listen to this morning's conference call, I am comforted by the fact that as of today, the majority of Medarex's 34 candidates in clinical development are in partnership with other pharmaceutical companies. Out of which, 7 of the candidates are in Phase III development for oncology and inflammatory indications including Ipilimumab which is being fast tracked for patients with metastaticmelanoma. With such a rich late-stage pipeline and the expected low attrition rate of their biological candidates, it is only a matter of time before Medarex turns profitable or is bought out.

With the stock trading at a 52-week low, I am tempted to load up though there is the added risk of the disappointing clinical trial results failing to overcome the regulatory hurdle next year. For that reason, I'll wait until after I have listened to the pre-recorded conference call or read the transcript before making my next move.