Ariad soars on sarcoma success

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Three weeks might not sound like a big deal, but it was enough to send shares in Ariad Pharmaceuticals to a five-year high.

Three weeks being the additional time patients lived without their cancer progressing, over placebo, in a phase III study of the company’s sarcoma therapy, ridaforolimus (MK-8669), partnered with Merck & Co. This read out means the trial unequivocally hit its primary endpoint and despite only limited top-line data being available so far, hopes are high that a more detailed presentation will show certain groups of patients benefit even more.

Upbeat

Ariad says partner Merck will present full data from the Succeed study at a medical conference and file for US approval later this year. This will trigger a $25m milestone payment, another reason for investors’ cheer.

On the surface, a 3.1 week improvement in progression free survival might not seem that impressive. The Special Protocol Assessment agreed by the FDA, approving the trial design, and the fact that this result was highly statistically significant helps alleviate concerns this might not be enough to impress the FDA.

The improvement is equivalent to a 28% reduction in the risk of progression, a read out that Ariad’s chief executive, Harvey Berger, describes as “highly clinically relevant”.

Despite only having seen the top line read out, Dr Berger gave an upbeat assessment of the study on a conference call yesterday. Secondary measures, including overall survival and safety, and sub group analyses remain critical, but listeners were left with the distinct impression more good news is on the way.

Hard to treat

Sarcoma patients are certainly hard to treat – most are exposed to several lines of chemotherapy and recurrence of the tumours, which grow in the bone and connective tissue, normally occurs after a few months. Ariad was testing ridaforolimus in a maintenance setting – after a patient’s disease has been stabilised by chemotherapy - in an attempt to delay the next progression.

In the trial, the drug managed to delay progression from a median 14.6 weeks to 17.7 weeks – giving the 3.1 difference – illustrating the challenge in treating these patients given the aggressive disease.

Interestingly, the same analysis conducted at the investigative sites, as opposed to the independent review, came up with a more impressive result, extending PFS by 7.7 weeks out to 22.4 weeks.

The company has no explanation for the discrepancy at this point, pointing out that both read outs are highly significant and saying that the progression free survival (PFS) figure in sub groups will be more relevant than the figure for the overall trial. Important sub groups include patients with sarcoma of the bone or soft tissue.

Closer look

As such, a closer look at these results is needed to determine how transformative this drug could be in sarcoma; a hint of overall survival benefit would be a huge win.

However, confirmation of phase III success was enough to prompt a round of analyst upgrades: Leerink Swann upped its price target from $6 to $10. Shares in Ariad were trading at $6.84 in early trade today, a 30% gain on last week’s close.

Analysts covering Merck remain more cautious: UBS commented that although ridaforolimus should win approval in sarcoma on these results they are waiting to see data in other indications before they lift numbers. The bank anticipates sales of $158m in 2015; EvaluatePharmaconsensus has sales of $231m by 2016.

Still, up to $65m in milestones from Merck are still possible in sarcoma, and of course royalties, so signs that Ariad's first drug could be on the market next year are certainly encouraging. At the same time, hopes are building around a follow on candidate, ponatinib, a new kinase inhibitor being trialed in leukaemia. This project is still wholly owned by Ariad, and success with ridaforolimus will help fund the progress of this project (Event - Expectations growing for Ariad's sarcoma drug, January 11, 2011); results from ponatinib's ongoing pivotal phase II study is keenly awaited although data is not due until early 2012.  

The jump in Ariad’s share price means the company’s market cap is approaching $900m, yet the royalty stream from ridaforolimus is currently valued at $300m, indicating the extent to which investors appear to be buying into ponatinib's potential.

Investors also appear to be assuming that ridaforolimus generates the milestones and royalties to fund ponatinib's development well into 2013 when it could gain approval and a lucrative partnership; a risky assumption to make before seeing the full data set for ridaforolimus and receiving FDA approval.

Trial ID NCT00538239 (Succeed)

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