Clinical trial failure equals stock value diminishment for startup bio-pharma companies

Startup bio-pharma companies are extremely over-valued in term ofstock price, simply because of the potential investment return from success of their clinical trials. Once these trials fail, the company’s value plunges significantly. Here is the latest example of it.

Merck (MRK), known as MSD outside the United States and Canada, and Endocyte, Inc. (ECYT), today announced that the Data Safety Monitoring Board (DSMB) of the PROCEED trial has completed a pre-specified, interim futility analysis and the DSMB recommended that the trial be stopped because vintafolide did not demonstrate efficacy on the pre-specified outcome of Progression-Free Survival (PFS) in patients with platinum-resistant ovarian cancer. As a result, the stock price of Endocyte, Inc dropped by 62% overnight.

The DSMB did not identify any safety concerns for the patients enrolled in the trial. Based on the DSMB recommendation and while further review of the data is conducted, the Companies have taken steps to notify investigators that screening and randomization of participants in the trial

kinase inhibitors will be suspended.

PROCEED is a Phase 3 randomized, double-blind clinical trial, evaluating vintafolide in combination with pegylated liposomal doxorubicin (PLD) compared to PLD plus placebo for the treatment of folate receptor-positive, platinum-resistant ovarian cancer. The primary endpoint of the trial was PFS as measured by RECIST v 1.1 (Response Evaluation Criteria In Solid Tumor) criteria in patients with all target tumor lesions positive as assessed by etarfolatide imaging agent.

The only other BTK inhibitor with sufficient data to infer this is AVL-292 [CC-292] and this agent does not look as good. This very well may be a defect in the drug and not the target. Other second- generation molecules are coming forward that do look quite good and this has the potential to make the field very similar to CML where we have several tyrosine kinase inhibitors that can really help patients.

Key questions are going toNutlin-3a relate to the mechanisms of resistance, and how those will influence our decisions about whether to use BTK inhibitors sequentially or in combination with other novel agents. So far, some early reports suggest that mutations of the target cysteine in BTK are a cause of relapse, so it is plausible that dual pathway inhibition with another targeted agent might suppress the development of such clones. In addition, we will need to determine if BTK- independent clones may grow out as a mechanism of resistance.

The most significant questions are: What is the role of tumor microenvironment versus direct tumor effect? What are the immune-modulating effects of BTK inhibitors and is this predominantly on the BTK or ITK target? How do we combine these in a rational way to cure CLL and other diseases?