3 Biotech Stocks on Our ASCO Watchlist

Includes: ARIA, ARRY, SPPI
by: M. E. Garza

by Patrick Crutcher

Below is the first part in our coverage of companies we are following going into ASCO 2011. For those who don't know or realize, the American Society of Clinical Oncology (ASCO) Annual Meeting is one of the largest cancer oriented medical conferences in the country.

Typically, many biotech companies announce some of their leading clinical data here, and historically stocks have had huge runs into this conference; it’s important to be aware of those who will be attracting some attention. Below are 3 companies that we will be watching as ASCO 2011 approaches. We kept our focus on companies that are giving updates on pipeline candidates that are in Phase 2 or beyond, with some exceptions. Abstracts will be released on ASCO.org on May 18th at 6:00 PM EDT and the 2011 Annual Meeting takes place from June 3-7, 2011 in Chicago, Illinois.

First, ARIAD Pharmaceuticals(NASDAQ: ARIA) will likely have updates on its2 key assets: ponatinib in chronic myeloid leukemia (Phase 2) and ridaforolimus in soft-tissue sarcoma (Phase 3). Back in mid-January, Ariad announced that the SUCCEED Phase 3 trial met its primary endpoint with a 21% improvement in progression-free survival (3.1 weeks; p-value= 0.0001) and hazard ratio (HR=0.72; 28% reduction in risks) on full analysis; safety data was also consistent with previous results.

There might be a silver lining in that the investigators saw a 31% reduction by ridaforolimus in the risk of progression compared to placebo (hazard ratio=0.69; p<0.0001) and a 52% improvement in median PFS (ridaforolimus, 22.4 weeks vs. placebo, 14.7 weeks). PFS is a difficult surrogate endpoint to measure, hence the difference we see between the investigators analysis and the independent review. ARIA anticipates presenting detailed data from the SUCCEED study of ridaforolimus in sarcoma in a “presentation at an upcoming medical meeting this year.” In all likelihood, this means ASCO and complete data should include the secondary endpoint of overall survival data. The hope is that the separation in hazard ratios should translate into a larger increase in overall survival; positive trends in overall survival would certainly benefit the potential approval of ridaforolimus. Ariad’s ridaforolimus program is currently partnered with Merck (NYSE:MRK); Merck intends on submitting a NDA for soft tissue sarcoma later in 2011.

We also expect to hear an update on ponatinib, which is in a pivotal Phase 2 (PACE) trial in patients with resistant or intolerant chronic myeloid leukemia (CML) and Philadelphia positive acute lymphoblastic leukemia (Ph+ ALL). This update could likely feature more complete Phase 1 data from its ongoing study; any update on the Phase 2 study would be a welcomed surprise. Enrollment has been picking up quickly with 25 sites online and it’s expected to complete enrollment by the end of 2011. Most currently expect a full readout of this data sometime in 2H’2012. The company's ongoing Phase 1 study caused a good deal of excitement at the Annual Meeting of the American Society of Hematology (ASH) back in December. Analysts see ponatinib as a potential $500 million or more opportunity in the 2nd and 3rd line setting.

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With Spectrum Pharmaceuticals (NASDAQ: SPPI), we are hoping to hear updates on 2 of its investigational therapies: belinostat and apaziquone. Belinostat is a novel HDAC inhibitor which is being tested as a monotherapy for patients with relapsed / refractory Peripheral T-cell lymphoma (PTCL). They anticipate completing enrollment in the pivotal study and to begin a rolling NDA filing in 2011. The initial Phase 1 study helped move this into the pivotal stage following strong complete response rate, median duration of response and mild side-effect profile (see here). This study has a Special Protocol Assessment (SPA) with the FDA, including Orphan Drug and and Fast Track designations for belinostat in T-cell lymphomas.

Additionally, the company anticipates Phase 2 data (PFS and response rates) in carcinoma of unknown primary site in 2H’2011. The National Cancer Institute is also conducting several clinical trials of Belinostat in hematological and solid tumors, both as monotherapy as well as combo therapy. Belinostat was licensed from TopoTarget near the beginning of 2010. More details here.

Apaziquone is a synthetic bio-reductive prodrug which is being investigated for the treatment of non-invasive bladder cancer. Apaziquone top-line results aren’t expected until 2012, but we could see an interim update or at ASCO 2011 in June. Apaziquone is currently partnered with Allergan (NYSE: AGN) in the U.S., EU and Canada. This study also has an SPA with the FDA and Fast Track designation; it’s composed of 2 separate trials of more than 1600 patients with a primary endpoint of 2 year tumor recurrence rate.

We also anticipate that the company will have several presentations reiterating the long-term survival data in support of Zevalin for Non-Hodgkin’s Lymphoma. In December 2010, it had several very convincing presentations about long-term survival at ASH 2010. Zevalin sales have been slowly increasing over the past few years, but there is still a lot of market to capture. It’s now a matter of convincing doctors to use it and getting rid of the bioscan requirement which will likely come in November of this year.

Last, we want to revisit Array BioPharma (NASDAQ: ARRY). We think that 2011 should have read outs from its two MEK inhibitors, selumetinib and MEK-162. Phase 2 melanoma and non-small cell lung cancer (NSCLC) data on selumetinib will be reported by AstraZeneca (NYSE: AZN) later this year. AZN has 40 on-going or completed Phase 1 or 2 clinical trials with selumetinib. Selumetinib (aka AZD6244) is a 1st generation MEK inhibitor partnered with AZN; it’s the most advanced MEK inhibitor in the clinic.

ARRY is potentially due double-digit royalties depending on sales levels. There are two ongoing Phase 2 trials in particular that will report data in 2011, one testing selumetinib plus DTIC vs. DTIC alone in 1st line melanoma patients with BRAF mutation and another testing selumetinib + Taxotere vs. Taxotere alone in 2nd line NSCLC patients with KRAS mutation. The melanoma trial completed enrollment of 91 patients in March 2010 with the primary end-point of overall survival. In 2nd line NSCLC patients with KRAS-mutation, trial completed enrollment of about 80 patients in July 2010 with the primary end-point of overall survival. This data should bring more attention to its story and might shine more light on ARRY-162, the 2nd generation MEK inhibitor that was recently partnered with Novartis (NYSE:NVS). The company should have some interim updates in regards to its Phase 1 trials using ARRY-162; Novartis has said it will be using it in several combinations with its PI3K inhibitor program soon. With a marketcap of about $170 million, the company seems undervalued just based on the fact that it has nearly $98 million in cash and multiple partnerships (Amgen (NASDAQ:AMGN), Celgene (NASDAQ:CELG)). It also has several other wholly owned pipeline candidates(-380,-520) that add value.

Disclosure: No positions.

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