By Andrew McDonald, Ph.D., Ning Yang, Ph.D.
Ziopharm Oncology (NASDAQ:ZIOP) is a biopharmaceutical company that employs molecular and synthetic biology techniques to develop cancer therapies. Its lead compound is palifosfamide (ZIO-201), which targets patients with soft-tissue sarcoma (STS) and small cell lung cancer (SCLC). Palifosfamide is currently being studied in two Phase III trials. PICASSO 3 is an ongoing Phase III trial evaluating palifosfamide in conjuction with doxorubicin for the front-line treatment of patients with metastatic STS, whereas MATISSE is an adaptive Phase III trial evaluating palifosfamide in combination with carboplatin and etoposide as a treatment for patients with extensive-stage SCLC. Results for PICASSO 3 trial is anticipated in 2H2012. Ziopharm currently has total cash of $110.39M, a market cap of $406.34M and an enterprise value of $286.52M (August 15, 2012). With two Phase III trials ongoing, we look to possible inflection points in late-2012 and beyond, and believe that Ziopharma's stock will be volatile following the release of positive PICASSO 2 overall survival and PICASSO 3 progression-free survival (PFS) data. PFS is the primary endpoint of both trials.
Palifosfamide is a novel DNA-targeted alkylating agent which bypasses drug resistance mediated by aldehyde dehydrogenase, an enzyme associated with cancer stem cells. Ziopharm claimed that palifosfamide was carefully design to have similar efficacy compared to other in-class agents with significantly improved safety profile. Intravenous (IV) palifosfamide is currently being evaluated in a randomized, double-blind, placebo-controlled Phase III trial (PICASSO 3) for first-line metastatic STC indication and also in a pivotal Phase III trial (MATISSE) for first-line metastatic SCLC indication. In addition, Ziopharm is developing an oral formulation for palifosfamide. The Investigational New Drug Application for the oral formulation was approved in February 2012. Ziopharm has obtained Orphan Drug Designation for palifosfamide in both the U.S. and EU for the treatment of STS. The company has been granted three patents covering palifosfamide's pharmaceutical composition in the U.S., with two scheduled to expire in 2029 and one in 2020. Three foreign patents have been issued in Australia, New Zealand, and South Africa, with 47 foreign patent applications pending.
Soft-Tissue Sarcoma is cancer of soft tissues (including fat, muscle, nerve, and nerve sheath, blood vessels, and other connective tissues). In the U.S., the annul incidence of STS for 2012 is estimated to be about 11,280 cases, with an overall mortality rate of approximately 3,900 cases per year, including adults and children. According to the company, there are approximately 100,000 patients worldwide who are initially diagnosed with STS every year. Metastatic STS arises when the disease has reoccurred and surgery is no longer an option. Doxorubicin is the only FDA-approved front-line therapy in the U.S. for the treatment of metastatic STS.
PICASSO 2 Phase II Trial Ziopharm has been developing palifosfamide in conjunction with doxorubicin to treat patients with metastatic STC. The company initiated a randomized, open-label, cross-over, Phase II trial (PICASSO 2) in 2H2008, to compare palifosfamide + doxorubicin to doxorubicin alone in patients with front- or second-line metastatic or unresectable STS. Sixty-seven patients were enrolled in the study with 62 patients eligible for evaluation. The median PFS for the palifosfamide + doxorubicin arm is 7.8 months as compared to 4.4 months for the doxorubicin arm. The hazard ratio for the PFS is 0.427 (95% CI: 0.191, 0.951) favoring the palifosfamide + doxorubicin arm (p-value = 0.019). Response rate was 23% for the palifosfamide + doxorubicin arm as compared to 9% for the doxorubicin arm. In addition, the company reported that both arms had clinically similar safety profiles. However, little details in toxicity were provided. Preliminary OS data released in February 2012 also indicated a hazard ratio of 0.78 favoring the palifosfamide arm (with a 2-year survival rate of 40% compared to 30%). The study continues to track OS events and final results are expected to be reported in 2H2012.
PICASSO 3 Phase III Trial In 2Q2012, Ziopharm completed enrollment in the pivotal Phase III trial (PICASSO 3) for first-line metastatic STS. PICASSO 3 is an international, randomized, double-blinded, placebo-controlled trial with 424 patients randomized 1:1 to receive palifosfamide + doxorubicin or doxorubicin + placebo. Outcome in PFS, the primary endpoint of the study for accelerated approval, is anticipated in 4Q2012, and OS data is expected to be reported one year later.
Small Cell Lung Cancer is the most aggressive form of lung cancers. It spreads much more quickly than non-small cell lung cancer. In 2012, it is estimated that approximately 33,900 new cases of SCLC will occur in the U.S.[2,3] The estimated annual incidence worldwide is 200,000 patients. China annual incidence alone has grown to over 150,000 patients. Almost all cases of SCLC are due to cigarette smoking. Platinum + etoposide is the current standard of care for front-line setting, and topotecan is only FDA-approved second-line therapy.
Phase Ib Trial was a multicenter, open-label, dose escalation study of IV palifosfamide in combination with etoposide and carboplatin in patients with SCLC and other selected cancers. A total of 22 patients (11 females and 11 males) were enrolled in the study (7 with SCLC, 3 with non-SCLC, 3 with ovarian cancer, 1 with germ cell tumor and 8 with other cancers). The maximum tolerated dose of palifosfamide was 130 mg/m2 along with 90 mg/m2 etoposide and carboplatin. The dose limiting toxicity was neutropenic fever. Of the 6 patients with SCLC evaluable for efficacy, 2 showed partial response, 2 stable disease, and 2 progressive disease.
MATISSE Phase III Trial Ziopharm is currently enrolling up SCLC patients who have not received initial chemotherapy in an adaptive, multi-center, open-label, randomized, adaptive, Phase III trial, MATISSE, evaluating palifosfamide in combination with etoposide and carboplatin. Up to 548 patients will be randomized 1:1 to receive palifosfamide + etoposide + carboplatin or etoposide + carboplatin. The primary endpoint of the study is OS, and the secondary endpoints are PFS, objective response rate, quality of life, and disease related symptoms. On June 11, 2012, Ziopharm announced dosing of 1st patient in the trial.
Other Clinical Trials for Metastatic Soft-Tissue Sarcoma
We have conducted our due diligence on the competitive landscape for metastatic STS (see Figure 1). Overall, metastatic STS is a disease with significantly unmet medical need. The only FDA-approved (in 1974) front-line chemotherapy, doxorubicin, has yielded disappointing results in advanced STS. Ifosfamide, composed with doxorubicin, although resulting in consistent response rate ranging between 10-25%, does not yield any survival advantage. 
Imatinib, branded as Gleevec, was granted accelerated approval in February 2002 by the FDA for the adjuvant treatment of patients with Kit-positive unresectable and/or metastatic malignant gastrointestinal stromal tumor, a subgroup of STS. On December 19, 2008, the FDA approved imatinib for the adjuvant treatment of adult patients following complete gross resection of Kit positive GIST, followed by regular approval on January 31, 2012. The drug, developed and marketed by Novartis (NYSE:NVS), was designed to target the activating mutations of stem cell factor, c-Kit, and the platelet derived growth factor. In multiple Phase II and III trials, Imatinib has produced high overall response rates and exceptionally good PFS for patients with unresectable and/or metastatic GIST, and has yielded objective responses in more than 50% of the patients.[8,9,10,11]
Sunitinib malate, marketed as Sutent by Pfizer (NYSE:PFE), is an oral, small-molecule, multi-targeted receptor tyrosine kinase inhibitor. The drug was approved by the FDA in 2006 for the treatment of GIST after disease progression on or intolerance to imatinib. Its approval was based upon a two-arm, international, randomized, double-blind, placebo-controlled trial in patients with GST who were intolerant of imatinib. Three hundred and twelve patients were randomized 2:1 to receive imatinib or placebo. The PFS for the imatinib arm was 24.1 months as compared to 6.0 months for the placebo group [HR = 0.33 (95% CI: 0.24, 0.47; p<0.0001)], while the objective response rate was 6.8% (95% CI: 3.7, 11.1) as opposed to 0%.
On April 26, 2012, the FDA approved pazopanib tablets, branded as VOTRIENT by GlaxoSmithKline (NYSE:GSK), for the treatment of patients with advanced STS who have received prior chemotherapy. Pazopanib is a multi-targeted angiogenesis inhibitor. The approval was based on a randomized, double-blind, placebo-controlled, multicenter trial in patients with metastatic STS who had received prior chemotherapy, including an anthracycline. Three hundred and sixty-nine patients were randomized 2:1 to receive pazopanib 800 mg orally daily or placebo. The median PFS was 4.6 months for the pazopanib arm as compared to 1.6 months for placebo arm [HR = 0.35 (95% CI: 0.26, 0.48; p<0.001)]. The objective response rate was 4% for the pazopanib arm as opposed to 0% in the placebo arm. The median OS was 12.6 and 10.7 months for the pazopanib and placebo arms, respectively (HR=0.87; 95% CI: 0.67, 1.12). Common adverse events (AES) (>20%) included fatigue, diarrhea, nausea, weight loss, hypertension, decreased appetite, vomiting, tumor pain, hair color changes, musculoskeletal pain, headache, dysgeusia, dyspnea and skin hypopigmentation.
Ridaforolimus is a potent mTOR inhibitor co-developed by Merck (NYSE:MRK) and Ariad Pharmaceuticals (NASDAQ:ARIA). In a randomized Phase III trial, 711 patients were randomized 1:1 to receive ridaforolimus or placebo. According to the FDA's analysis, the median PFS was 16.1 weeks for the ridaforolimus arm as compared to 14 weeks for the placebo arm [HR=0.74; 95% CI: 0.63-0.88; p = 0.0006]. The median OS data was not statistically significant. Due to marginal improvement in PFS and safety concern, ridaforolimus was rejected by the FDA.
Trabectedin (Yondelis) is an antitumor agent of marine origin produced by chemical synthesis. It binds to minor groove of the DNA and results in cell apoptosis. The drug received market authorization from the European Commission (EC) for the treatment of advanced or metastatic STS in 2007 and is currently marketed by Zeltia in the EU and by Johnson & Johnson (NYSE:JNJ) worldwide. Trabectedin has shown objective responses in two independent, multicenter, Phase II studies performed in the U.S. for patients with unresectable STS. A total of 72 patients were enrolled with 36 patients for each study. Confirmed objective response rates were 14% (95% CI: 5-30%) and 8% (95% CI: 2-23%) in chemotherapy -naïve and pretreated patients, respectively. 12-month PFS was 18% (95% CI: 4-32%) and 11% (95% CI: 2-24%) for the two patient groups, respectively. 12-month OS were 49% (95% CI: 20-78%) and 55% (95% CI: 35-75%). The most common grade 3-4 toxicities included neutropenia and transiently increased transaminase concentrations.  The drug is currently in a multicenter, open-label, single-arm, Phase III trial in the U.S. in patients with advanced or metastatic STS (excluding leiomyosarcoma and liposarcoma) that has relapsed or refractory to standard treatment options. The study is expected to be completed by December 2012. Trabectedin has been granted an orphan drug by the EC and the FDA for STS.
TH-302 is a nitroimidazole prodrug of the cyotoxin, bromo-isophosphoramide mustard (Br-IPM). The drug is activated in hypoxic conditions and Br-IPM is released to alkylate DNA. In a Phase 1/2 trial, 91 patients with previously untreated advanced STS were treated with doxorubicin + TH-302. Among 89 patients available for evaluation, 2% had a complete response, and 34% had a partial response. The median PFS was 6.7 months (95% CI: 6.2-8.1 months), whereas the 3-month and 6-month progression-free rates were 83% and 63%, respectively. The median OS was 17.5% (95% CI: 16.1-not reached), with 6-month survival rate of 93% and 12-month survival rate of 70%. TH-302 is currently in a randomized, multicenter, open-label, Phase III study comparing the efficacy of TH-302 + doxorubicin vs. doxorubicin alone in patients with locally advanced unresectable or metastatic STS. The primary end-point of the study is OS within 2 years of time frame. The study is expected to be completed in 2015. For more information about Threshold, please see our recent Seeking Alpha note.
Eribulin (branded as Halaven) is a non-taxane microtubule dynamics inhibitor developed by Eisai Co. The drug was approved by the FDA in 2010 for metastatic breast cancer indication. In an open-label, Phase II trial, 128 patients with advanced STS received IV eribulin. The progression-free rates at 12 weeks were 31.6%, 46.9%, 21.1%, and 19.2% for leiomyosarcoma patients, adipocytic patients, synovial patients, and other sarcoma patients, respectively. The drug is currently in a randomized, open-label, Phase III to compare the efficacy and safety of eribulin with dacarbazine in patients with advanced STS. The study is expected to be completed by 2015, with a primary endpoint set as OS and a secondary endpoint as PFS.
Figure 1: Clinical Trials for Advanced or Metastatic Soft-Tissue Sarcoma
Generic Name (Brand Name)
Trials & Efficacy & Safety
Bristol Meyers Squibb (NYSE:BMY)
Approved since 1989
Response rate: up to 9%
Inhibitor of the receptor tyrosine kinases for platelet derived growth factor and c-Kit
Approved as an adjuvant treatment since 2002 for unresectable or metastatic GIST; approved as an adjuvant treatment since 2008 for patients following complete gross resection of Kit positive GIST
1) Randomized, double-blind, placebo-controlled, 713 c-Kit positive GIST pts; 2) hazard ration for 12-month recurrence-free survival (RFS): 0.398 (95% CI:0.259, 0.610), p < 0.0001; 3) 31% in imatinib group vs. 18% in placebo group experienced AEs of >grade; 4) discontinuation: 17% vs. 3% mostly associated with edema, gastrointestinal disturbances, fatigue, low hemoglobin, and rash.
1) Randomized, multicenter, open-label, Phase III, 397 patients with c-Kit positive GIST following surgical resection, two-arm (12-month or 36-month imatinib treatment); 2) 36 months prolonged RFS (hazard ratio of 0.46 (95% CI: 0.32,0.65), p < 0.0001) and OS (hazard ratio of 0.45 (95% CI: 0.22, 0.89), p = 0.0187) compared to 12 months; 3) discontinuation: 8% for 12-month vs. 14% for 36-month
Sunitinib malate (Sutent)
Multi-targeted receptor tyrosine kinase inhibitor
Approved since 2006 as second-line therapy for metastatic GIST
1) Two-arm, international, randomized, double-blind, placebo-controlled, 312 pts; PFS: 24.1mo vs. 6.0 mo [HR = 0.33 (95% CI: 0.24, 0.47; p<0.0001)]; 2) Objective response rate: 6.8% vs. 0% (95% CI: 3.7, 11.1); 3) AEs (>10%): diarrhea, hypertension, bleeding, mucositis, skin abnormalities, altered tastes
Multi-targeted angiogenesis inhibitor
Approved for patients with advanced STS who have received prior chemotherapy since April 2012
1) Randomized, double-blind, placebo-controlled, multicenter, 369 pts randomized 2:1 to pazopanib/placebo; 2) PFS: 4.6mo vs. 1.6mo [HR=0.35(95% CI: 0.26,0.48; p<0.001)]; OS: 12.6mo vs. 10.7mo [HR=0.87(95% CI: 0.67,1.12)]; 3) AEs (>20%): fatigue, diarrhea, nausea, weight loss, hypertension, decreased appetite, vomiting, tumor pain, hair color changes, musculoskeletal pain, headache, dysgeusia, dyspnea and skin hypopigmentation; 4) Others: hepatic toxicity, arterial and venous thrombotic events, hemorrhage, gastrointestinal perforation and fistula formation, pneumothorax and left ventricular dysfunction.
Potent mTOR inhibitor
Merck & Ariad Pharmaceuticals
Rejected by the FDA on March 20, 2012
1) Randomized, double-blind, two-arm (ridaforolimus vs. placebo), 711 pts.; 2) median PFS: 16.1 wks vs. 14 wks [HR=0.74; 95% CI: 0.63,0.88; p = 0.0006]; median OS: 20.8 months vs. 19.6 months [HR=0.93; p=0.46]; 3) discontinuation rate: 14% vs. 2%; grade 3-4 AEs: 64% vs. 25%; grade 1-4 AEs (>20%): stomatitis, asthenia/fatigue, infection, rash, cough, diarrhea, nausea, decreased appetite, headache, edema, abdominal pain, dyspnea, and fever.
Antitumor agent of marine origin produced by chemical synthesis
Zeltia, Johnson & Johnson
Approved in the EU for advanced or metastatic STS in the EU and in Phase III trial in the U.S.
1) Two independent Phase II trial, 72 pts in total; 2) objective response rate: 14% (95% CI: 5-30%) for chemotherapy-naïve group and 8% (95% CI: 2-23%) for pretreated group; 3) 12-month PFS: 18% (95% CI: 4-32%) vs. 11% (95% CI: 2-24%); 12-month OS: 49% (95% CI: 20-78%) vs. 55% (95% CI: 35-75%); 4) AEs (grades 3-4): neutropenia and transiently increased transaminase concentrations. Trabectedin did not cause alopecia, mucositis, cardiotoxicity or neurotoxicity
Nitroimidazole prodrug of the cytotoxin, bromo-isophosphoramidemustard
Threshold Pharma (NASDAQ:THLD)
In a Phase III trial; primary completion date: June 2014
1) Phase 1/2 trial, 91 patients with previously untreated advanced STS treated with TH-302 + doxorubicin; 2) median PFS: 6.7mo (95% CI: 6.2-8.1mo); 3-month PF rate: 83%; 6-month PF rate: 63%; median OS: 17.5mo (95% CI: 16.1-not reached); 6-month survival rate: 93%; 12-month survival rate: 70%
Non-taxane microtubule dynamics inhibitor
In a randomized, open-label, multicenter, Phase III trial to compare the efficacy and safety of eribulin with dacarbazine in subjects with advanced STS
1) Open-label, single-arm, multicenter, Phase II trial, 128 patients (37 had adipocytic sarcoma, 40 had leiomyosarcoma, 19 had synovial sarcoma, and 32 had other sarcomas); 2) progression free rate at 12 wks: 31.6% in leiomyosarcoma pts, 46.9% in adipocytic sarcoma pts, 21.1% in synovial sarcoma, 19.2% in other sarcomas; 3) grade3-4 AEs: neutropenia (52%), leucopenia (35%)15
Source: LifeSci Advisors 
Other Clinical Trials for Small Cell Lung Cancer
Small cell lung cancer represents is an aggressive form of lung cancer with no new front-line therapies in decades. Unlike STS, chemotherapy is an essential component of appropriate treatment for all patients with SCLC. Figure 2 summarizes current standard chemotherapies and compounds in late-stage clinical trials. The initial chemotherapy regimens were primarily the combination of cyclophosphamide, epirubicin and vincristine (CEV), which has been replaced by etoposide + cisplatin (EP) as current FDA-approved front-line therapy. In a large randomized trial with 436 patients, EP resulted in a median OS of 14.5 months as compared to 9.7 months for CEV therapy in patients with limited-stage disease (p = 0.001). With less haematological toxicity and better efficacy, EP in combination with concurrent thoracic radiotherapy is recommended for patients with limited-stage disease.
Relapse rate for SCLC patients after initial treatment is high. Single-agent topotecan is the only FDA-approved second-line therapy. In a randomized Phase III trial, IV topotecan showed similar response rates and survival but better safety, as compared to combination regimen of cyclophosphamide, doxorubicin and vincristine. In another Phase III trial, oral topotecan + best supportive care (BSC) improved OS as opposed to BSC alone.
Celgene (NASDAQ:CELG) sponsored a randomized, open-label, multinational Phase III trial comparing amrubicin versus topotecan in patients with SCLC after failure of first-line chemotherapy. 637 patients were enrolled and randomized to amrubicin or topotecan arms. The study was completed in 2011 and no significant improvement in efficacy was found for amrubicin therapy. The median PFS was 4.1 months as opposed to 3.5 for the topotecan arm (p = 0.02), while the OS was 7.5 months as opposed to 7.8 months for the topotecan arm (p = 0.17).
Figure 2: Chemotherapies (in Development or on Market) for SCLC
Generic Name (Brand Name)
Trials & Efficacy & Safety
etoposide + cisplatin
topoisomerase inhibitor; platinum
IV + IV
Approved as first-line therapy since late 1970s
In a randomized trial, 426 patients were assigned 1:1 to EP or CEV arm: 1) In limited-stage pts: 2- and 5-year survival rates: 25% and 10% vs. 8% and 3% (p = 0.0004); OS: 14.5 months vs. 9.7 months (P = 0.001); 2) In extended-stage pts, no significant survival difference between the two arms.
Topoisomerase I inhibitor
Approved for relapsed SCLC indication since April 2007
1) Phase III, randomized, two-arm (topotecan vs. cyclophosphamide + doxorubicin + vincristine), 211 pts; 2) response rate: 24.3% vs. 18.3% (p=0.285); median PFS: 13.3 wks vs. 12.3 wks (P = 0.552); 3) median OS: 25.0 wks vs. 24.7 wks (P=0.795); neutropenia: 37.8% vs. 51.4% (p<0.001)
1) Randomized, open-label, two-arm (topotecan + BSC vs. BSC), 141 pts; median OS: 25.9 wks vs. 13.9 wks (p = 0.0104)
Topoisomerase II inhibitor
Key Phase III trial did not meet primary endpoint
1) Randomized, open-label, multinational, two-arm (amrubicin vs. topotecan), Phase III trial; 2) median PFS: 4.1 months vs. 3.5 months (p=0.02); median OS: 7.5 months vs. 7.8 months (p=0.17)
Source: LifeSci Advisors
PICASSO 3 Trial Design One big concern regarding PICASSO 3 trial design is that its primary endpoint is PFS instead of OS. Is positive PFS data good enough for the FDA approval? To answer this question, we looked at the recent FDA-approved pazopanib and -rejected ridaforolimus (see above Other Clinical Trials for Metastatic Soft-Tissue Sarcoma session for more details). Note that pazopanib's approval was solely based upon 3-month improvement in PFS with no significant difference in OS data when compared to placebo. Ridaforolimus, on the other hand, was rejected due to only 2.1-week improvement in PFS as opposed to placebo. We think that good PFS data alone with similar toxicity might be sufficient for the FDA approval.
PICASSO 2 Data Investors should be cautious in interpreting PICASSO 2 PFS data. Although the median PFS was improved for 3.4 months for the palifosfamide + doxorubicin arm when compared to the doxorubicin arm alone, the fact that the study was open-label and had cross-over provision made the PFS data more prone to bias. However, preliminary OS data released in early 2012 indicated a hazard ratio of 0.78 favoring the palifosfamide + doxorubicin arm, which suggest that the PFS improvement is real. The final OS results are expected to be reported in 2H2012. The company claimed that both treating arms had similar safety profiles. However, little details were provided. A more compressive safety profile needs to be established in the ongoing PICASSO 3 trial, which can be a key for assessing the risk benefit ratio for the FDA approval.
Competitive Landscapes Trabectedin, TH-302 and eribulin (see above Other Clinical Trials for Metastatic Soft-Tissue Sarcoma session for more details) are three drug candidates in late-stage clinical trials currently competing with palifosfamide for metastatic STS indication. Trabectedin's trial, although expected to be completed by December 2012, is for second-line treatment of metastatic STS. Both TH-302 and eribulin are in open-label, Phase III trials with primary endpoints as OS. Ziopharm will be at least one-year ahead in the FDA NDA submission if positive PFS data is obtained in the ongoing PICASSO 3 trial. For SCLC space, no new drug compounds are in late-stage clinical trials.
Other than palifosfamide, Ziopharm is also investigating DNA-based anti-cancer therapeutics. In January 2011, Ziopharm announced that it will partner with Intrexon to utilize Intrexon's genetic engineering platform to work on two potential drug candidates: Ad-IL-12 and DC-IL-12, both of which are DNA IL-12. Both are currently in Phase I study, and Phase II study is expected to initiate at the end of 2012. Preliminary clinical studies have shown that therapy with IL-12 was well-tolerated and achieved an overall disease control rate of 50% in 8 evaluable patients with Stage III or IV melanoma. Partnership with Intrexon to explore the controlled production of therapeutic antibodies widens Ziopharm's research focus, and if the results prove to be of clinical benefit, it will imply the development of a promising technology with broad applications.
Ziopharm's quarter-over-quarter cash burn was $14.2M (4Q11), $11.5M (3Q11), $6.0M (2Q11), and $8.4M (1Q11), resulting in an annual burn rate of $40M. With total cash of $110.4M, the company can continue operating through 2014. There is possibility that the company will raise more cash in 2013 for palifosfamide FDA submission and commercialization based upon positive PICASSO 3 trial data.
We assume that palifosfamide will obtain 50% market share if approved as first-line therapy for metastatic STS. With annual incidence of over 10K patients in the U.S. alone and estimated annual cost of $80K per patient, we estimate that the sales of palifosfamide will reach $250M by 2018 if approved in 2014. With a discount rate of 30% and top-line multiple of 5, one can estimate a firm value of $414M, which is significantly higher than the current EV of $286.5M (August 15, 2012). Note that in our estimation, we have ignored the EU market and the SCLC indication. Overall, we think that this stock will go significantly higher (~2x) based upon a positive PICASSO 3 outcome. We do note, however, that oncology Phase III trials are notoriously challenging and significant risk of missing the primary endpoint exists.
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