Event – ArQule seeks validation to lift flagging share price

As ArQule enters a period of important news flow it will surely be looking to tivantinib to turn its fortunes around. At a time when takeover speculation has swept the sector the company’s stock stands out as one of biotech’s underperformers.

Tivantinib, a c-Met kinase inhibitor, did not exactly overwhelm in an earlier phase II trial in lung cancer, and the coming months will provide the first indication as to whether it works in phase III. The pivotal Marquee trial is due to undergo an interim analysis by the year end, and a stop for efficacy at this stage would be an unexpected knockout result, marking tivantinib as one of the most promising NSCLC projects. More likely, investors will have to grin and bear it until the full data are released in mid-2013.

The NSCLC playing field thinned out recently with the failure of Nexavar, and tivantinib is the most advanced c-Met inhibitor in development (Therapeutic focus - Phase III lung cancer pipeline loses Nexavar as novel agents approach, May 22, 2012). Pfizer’s Xalkori, whose mechanism of action shares some similarity with tivantinib, was approved last year for use in the small subset of patients with the Alk gene mutation.

Company ArQule
Product tivantinib (ARQ 197)
Market cap  $410m
Product NPV  $825m
% of market cap  201%
Event type Phase III interim analysis
Date H2 2012

Marquee is one of two ongoing phase III studies of tivantinib, and will be the first to report data, having completed recruitment of 988 patients in May. Both this and the Asia-focused Attention trial are testing a regimen of tivantinib plus Roche’s Tarceva versus Tarceva and placebo in second-line treatment of non-squamous NSCLC; in the US Tarceva is approved in the second and third-line setting.

An earlier phase II study also added tivantinib on top of Tarceva, and showed overall survival of 43.1 weeks for the combination in a predefined subset of non-squamous patients versus 29.4 weeks for Tarceva alone; however, this only reached statistical significance with p>0.05 if adjusted for prognostic factor imbalances that had favoured the control group. It also supported the use of overall survival as the primary endpoint in phase III.

The Marquee trial will undergo an interim analysis for efficacy and futility after around 375 events, and continuing the study unchanged seems the likeliest outcome; stopping early because of efficacy seems to be unlikely given the high hurdle for efficacy, while terminating for lack of efficacy would represent a nasty setback. If the study remains blinded it will continue until 750 events and report around the middle of next year.

Other cancers

Analysts also see potential in other cancers, in particular liver, in which positive phase II second-line monotherapy data were presented at Asco.

These showed particularly strong improvements in c-Met-positive patients, and a phase III trial in Met-high tumours is being planned. ArQule has also suggested the possibility of moving into first-line use, where tivantinib might be able to capitalise on the failure of Bristol-Myers Squibb’s brivanib.

Still, forecasts for tivantinib are muted. Consensus estimates pin worldwide sales, which will be booked by marketing partners, at just $229m in 2018, and even on such restrained expectations there remains a significant disparity between ArQule’s market capitalisation and tivantinib’s NPV. Perhaps the market has not been particularly impressed by the partners to which the project has been licensed – Kyowa Hakko Kirin in Asia and Daiichi Sankyo elsewhere.

In any case, with around three years’ cash on hand and a mid-stage oncology asset ArQule can clearly afford to wait. Whether investors are as patient remains to be seen, especially given the unlikelihood of a pleasant surprise at Marquee’s interim analysis.

As such, ArQule’s stock is likely to remain in the doldrums for a while longer, and a rerating might only take place after full data are reported in a year’s time or further progress is made in liver cancer.

Study Geography Final data Trial ID
Marquee Worldwide mid-2013 NCT01244191
Attention Asia 2013/14 NCT01377376

To contact the writer of this story email Jacob Plieth in London at [email protected]

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