SciClone pharmaceuticals (NASDAQ:SCLN) is small-cap biotech that currently markets ZADAXIN for hepatitis almost exclusively in China. It’s profitable, with a solid balance sheet and an interesting pipeline. For an overall analysis of the company, see my recent instablog here.
SCV-07 and oral mucositis (OM)
Today, SciClone announced its topline results from a Phase 2 clinical trial of SCV-07 for prevention of OM, which is the painful inflammation and ulceration of the mucous membrane in one’s mouth. It can happen to lot of cancer patients undergoing chemoradiotherapy, particularly head and neck cancer patients. The National Cancer Institute estimates that ~400K patients in the U.S. suffer from OM during cancer therapy. To learn more about this market, see my article here. SCV-07 is small peptide inhibitor of STAT-3 signaling which is believed to have immuno-modulation activity, thus can prevent or delay the onset of severe OM.
The results of this study are somewhat disappointing. Basically, no statistically significant improvement in the primary end point (delay in the onset of WHO grades 3 to 4 OM) was seen in two doses of SCV-07 after approximately seven weeks of treatment. However, additional analysis showed some benefits in patients with WHO grades 2 to 4 OM. Below is the actions the company intends to take:
“Based on these study findings, SciClone intends to initiate discussions with the United States Food and Drug Administration regarding the design of a second phase 2 study of SCV-07 for the prevention of OM, which would involve higher doses. SciClone has also submitted a late-breaking abstract on results of this study for the 2010 American Society of Clinical Oncology Annual Meeting.”
My takes on this event and SciClone in general
OM is a niche market, and with quite a few approved treatment options available right now. Even getting approved few years down the road, I don’t see SCV-07 being a huge value driver for SciClone. So today’s negative news is just a small setback for an otherwise fast-growing biotech, the less than 5% drop in stock price seems to agree with my assessment. I think the next pivotal milestone for SciClone is the regulatory decision on its DC beads for treatment of liver cancer in China. That result is expected later half of this year. Another interesting product candidate is ondansetron RapidFilm, which was recently approved in 16 major EU countries. SciClone licensed the commercial rights in China, Vietnam, Hong Kong, and Macau pending approvals in those regions which are expected some time in 2011. With a profitable drug (ZADAXIN), SciClone certainly has wind at its back. I see limited downside risk with its stock now at ~$3.5 with a forward P/E of ~10.
Disclosure: No position at time of writing. I intend to accumulate shares at <$3 levels.