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At ASCO 2012, Arqule (ARQL) presented the full results from their randomized Phase 2 trial of Tivantinib in previously treated second-line treatment in hepatocellular carcinoma [HCC]. In the ITT population, time-to-tumor progression was statistically significant with a hazard ratio [HR] = 0.64 [p-value = 0.04] with 6.9 weeks vs. 6.0 weeks. No real difference in overall survival [OS] in the ITT population.

However, they saw very encouraging activity in the pre-defined MET-high cohort. With a median OS in Tivantinib arm was 7.2 months[n=22] and 3.8 months[n=15] in the placebo arm [HR = 0.38; value = 0.01], median TTP was 2.9 months in the Tivantinib arm and 1.5 months in the placebo arm [HR = 0.43, log rank p-value = 0.03] and median PFS 2.4 months[T] vs 1.5 months in the placebo arm [HR = 0.45, log rank p-value = 0.02]. There was very clear separation in all of the KM curves, with the caveat that these are small numbers.

This is certainly encouraging data that warrants a Phase III trial. Arqule would like the FDA to sign off on a pivotal study using TTP as the primary endpoint, since this would be a quick study. We're unsure if the FDA will do this, but given there are no real options for 2nd-line HCC, it could happen. They also need to convince Daiichi Sankyo (OTCPK:DSKYF) to move forward into Phase III.

Upcoming events

There are several upcoming events over the next 6-12 months to note:

[1] Phase III plans for 2nd-line HCC

[2] Interim analysis of their Phase III MARQUEE study of Tivantinib+Erlotinib in 2nd/3rd-line non-squamous NSCLC [expected by year-end, interim look after 50% of events~370]

[3] Randomized Phase II study of ARQ 197 or placebo in combo with Irinotecan and Cetuximab in 2nd-line patients with metastatic colorectal cancer [CRC] expressing wild-type KRAS [top-line late 2012 to early 2013 and final analysis arond mid-2013]

[4] Randomized Phase II study of ARQ 197 or Chemotherapy[pemetrexed, docetaxel, or gemcitabine] in combo with Erlotinib in subjects with KRAS mutation positive NSCLC

[5] Completion of enrollment in their Phase III ATTENTION trial in non-squamous NSCLC patients with wild-type EGFR in Japan and other Asian countries

With respect to [2], the efficacy bar for interim analyses is quite high in Phase 3 trials, so investors should not be expecting an early halt.

There was some interesting biomarker data presented at AACR 2012 that re-examined their randomized Phase 2 trial in NSCLC that gives us some optimism going into the final analysis. Essentially, when they re-examined those patients with non-squamous histology and c-MET-positive tumors, they saw that Tivantinib+ Erlotinib improved PFS [HR = 0.58, p = 0.28] and OS[HR = 0.46, p = 0.21] compared with patients who received with Erlotinib + Placebo. This is post-hoc exploratory analysis, so you can only extrapolate it so far. Nonetheless, it is encouraging.

With respect to their ongoing Phase II programs in CRC and NSCLC, both of these were started following signals they saw either in Phase 1 or subset of patients in Phase II. We are also still interested in ther pan-RAF inhibitor, ARQ736, which has been shown pre-clinically to be a potent inhibitor of mutant BRAF [V600E], wild-type BRAF and c-RAF. Data possibly next year will shed more light on this program.

Conclusion

Arqule's presented promising data at ASCO 2012 on their lead drug, Tivantinib. Tivantinib seems to have an additional opportunity in HCC that will need to be explored further in Phase III and possibly studied in first-line in combo with Nexavar or alone. The failure of Bristol-Myers' Brivanib leaves the door wide open for Arqule/Daichii Sankyo to step forward in HCC. The utilization of MET positive tumor status should help them carve out a nice market. Arqule has about $100 million in cash at the end of March 31, 2012, which should take them through the majority of these upcoming binary events. At only ~$400M in marketcap, we still see believe shares are undervalued relative to competitors.

Source: Post-ASCO Thoughts On Arqule