Event - Poniard approaching pivotal phase III data point

Analysis

As Johnson & Johnson closes its $1.1bn acquisition of Cougar Biotechnology another one-product oncology player, Poniard Pharmaceuticals, is gearing up to report pivotal data on its key cancer drug picoplatin.

The so-called “next-generation” platinum-based chemotherapy is being trialled in a range of cancers and data due this quarter are from the most advanced study conducted so far, a phase III study in patients with small cell lung cancer, called Spear. The event is certainly binary for the stock: positive results will hopefully lead to a licensing deal or even a takeout; failure could mean a survival struggle ensues, given limited cash reserves.

A fair amount of optimism exists for the outcome, among analysts and investors. Shares in the company have doubled to $6.64 since results from two earlier stage studies, in metastatic colon cancer and prostate cancer, were released at this year’s Asco (ASCO EventAnalyzer - 2009's winners and losers, June 4, 2009). Not only did this raise hope for efficacy in lung cancer, but it also added weight to the company’s attempt to create a pipeline from one product; clearly a high risk strategy.

Equally as effective

Picoplatin is similar to other widely used platinum-based chemotherapies such as Eloxatin, or oxaliplatin, carboplatin and cisplatin. Poniard is hoping to show it is just as effective but with much better tolerability; the Asco data seemed to suggest this could be true.

In a phase II study in metastatic colon cancer the drug was non-inferior to Sanofi-Aventis’ Eloxatin, but with significantly less neurotoxicity. Although more haematological side effects were seen with picoplatin, oxaliplatin is associated with relatively much more severe neurotoxic effects, which can continue even after therapy has ended. Analysts believe this presents a trade off that is likely to be acceptable to doctors.

However, the Spear trial will provide the first late-stage data. In March, the enrolment target of 401 patients was reached and an independent committee recommended the study continue. Picoplatin is being looked at in platinum-refractory and resistant small cell lung cancer patients who have failed or relapsed from initial therapy within six months of first treatment, compared to best supportive care. Overall survival is the primary endpoint, and the trial is being conducted under a Special Protocol Assessment process. Fast-track designation has been granted by the FDA.

Clearly this is a very sick patient population, but many analysts are hopeful of a positive result, based on encouraging phase II data and pre-clinical evidence suggesting that picoplatin is active in tumours resistant to other platinum agents.

Partner needed

Poniard hopes to file the drug with the FDA before the end of the year, for approval in 2010. However, to run further trials and launch the drug, a partner will be needed; the company finished the first quarter with $60m in cash which will last into the first few months of 2010 (Companies still desperate for a partner, June 19, 2009).

Sanofi-Aventis has been named as a good fit, given that it already markets Eloxatin. Last month, a US court ruled the drug’s patents were unenforceable, and although the company is appealing analysts believe sales have already peaked at almost $2bn last year; by 2014 sales are seen at $373m. Picoplatin could represent a useful replacement product, and easily slot in.

Analysts are currently forecasting sales of $171m by 2014 for picoplatin, with royalties to Poniard of $59m. Clearly those numbers have scope to rise if positive phase III data is generated, representing a tempting product for both large and mid-sized oncology players.

Purely pivotal

Although it appears that picoplatin has the potential to be active in more than one cancer, failure in lung cancer will be a big blow and shares in the company will plummet.

Still, some analysts have suggested that recent promising results in colon cancer should help mitigate disappointment if the Spear trial fails. This is true to a certain extent, as metastatic colon cancer is viewed as the most valuable indication being trialled. However, an expensive pivotal study in a first-line setting in combination with Avastin would be required next, meaning progress without a partner looks almost impossible.

Given Poniard’s fairly limited cash reserves, an unwelcome predicament in this climate, investors will find it hard to look beyond lung cancer if the data are negative. This outcome will make a heavily back-end loaded licensing deal look more likely than a takeout, or perhaps a stepped acquisition with milestones built in.

Positive data, however, means investors will be hoping for a clean takeover. With a current market value of only $229m they will also be hoping for a decent premium and Poniard shares, which are currently at a two-year high, should carry on climbing.

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