Event – Pivotal lung cancer data could see Novelos soar

What the eagerly awaited phase III data for Novelos Therapeutics’ non-small cell lung cancer (NSCLC) drug, NOV-002, has the power to do is transform the small US biotech into one of the hottest commodities in the sector. The hopes surrounding the product have already caused the shares to more than double over the last three months and the data expected by the end of the quarter could send them even higher.

In January, further whetting investor appetite, the group announced that it had reached the requisite 725 events in a 903 patient study - that is, the death of the 725th patient - and excitement was driven by the fact that this happened several weeks after many had predicted, indicating that patients were living longer than expected.

* Estimate from Rodman&Renshaw

The virulent nature of lung cancer means that roughly 60% of patients have usually died nine to 10 months after diagnosis, so if Novelos has indeed extended this significantly with NOV-002 given the limited treatment options that can show survival benefits its success is almost certainly guaranteed (Therapeutic focus - Shots on goal could be the key for lung cancer, February 10, 2010) .

Going the distance

From earlier trials the drug appears to be less toxic than Avastin, which is currently the only product in the US approved in a first line setting to treat lung cancer with chemotherapy. This tolerability advantage shown by NOV-002 should allow patients to take chemo for longer and improve survival times.

While the current trial has not put NOV-002 up against Avastin if NOV-002 does push out survival times beyond the 12.3 months observed with the Roche drug, this and its tolerability means it has the potential to become a signficant player in this space. Although the majority of sales for Avastin are in colorectal cancer, the drug is thought to have sales of just over $1bn in NSCLC, a sum that some believe NOV-002 could also achieve if it gets approval. 

NOV-002, which is a proprietary formulation of oxidised glutathione, works by making cancer cells more sensitive to chemotherapy, while inhibiting their metastasis. What the drug also does, which makes it more tolerable, is help normal cells, which get damaged by chemotherapy, recover from that damage.

Trial data

In phase II trials the drug, which was used in combination with chemotherapy drug cisplatin, showed impressive results; 17% of patients were alive after one year in the cisplatin only arm, compared with 63% in the NOV-002 arm. Additionally, 50% of patients were still alive after 14 months in the NOV-002 arm compared with the seven months achieved in the active control arm.

The latest trial compares NOV-002 in combination with paclitaxel and carboplatin versus the two chemotherapy drugs alone. The primary efficacy endpoint of the trial is improvement in overall survival and Novelos is hoping to show at least a 25% improvement. If the trial is positive the group plans to file an NDA for the product in the third quarter. Given the drug’s fast track designation, approval could come as early as the first quarter of 2011.

This would be an event that could see Novelos’ shares mirror those of Dendreon, which last year saw its shares rise more than seven fold after it reported positive phase III data for prostate cancer vaccine Provenge.

Growing interest

Purdue Pharma has certainly seen value in the product and over the last 12 months has invested $19m in Novelos through two private placements. One of those was part of the licensing of the product by its associated independent company, Mundipharma, in February 2009, which saw Mundipharma gain rights in Europe and Asia, excluding China, and the exclusive right to negotiate to sell the drug in Canada, Mexico and Latin America.

Purdue more importantly has the right of first refusal to acquire the rights to the NOV-002 in the US after the phase III trials are concluded. This deal appears to be at odds with the group’s stated aim of securing the highest bidder for the drug in the most lucrative of all markets.

But there is some debate whether a company will step in to acquire Novelos before it gets down to negotiating with Purdue or any other potential licensee.

If a group were to do down this route the most obvious companies would be Purdue given their existing relationship, or the likes of Sanofi-Aventis, who could see the drug as a logical fit with its chemotherapy drug Taxotere. Rodman & Renshaw have estimated that the market value of Novelos could reach $1bn reflecting the figure Johnson & Johnson paid for Cougar Biotechnology.

But given that NOV-002 appears to work with any chemotherapy product, if the results are what fans of the company are hoping and expecting, the line of suitors for Novelos could grow a lot longer.