Oncothyreon Shares Tumble on Lung Cancer Study Speculation

3/6/12Follow @xconomy

Seattle-based Oncothyreon saw its shares plummet today amid speculation among investors that its experimental lung cancer vaccine isn’t going to work.

Oncothyreon (NASDAQ: ONTY) shares fell 3.14 a share, or 37 percent, to $5.27 at 11 am Eastern today. The sell-off was triggered by news that Oncothyreon’s partner, Germany-based Merck KGaA, said an independent monitoring committee recommended that a study of 1,300 patients with non-small cell lung cancer be continued until final results can be made available, which are expected in 2013. Some investors had been hoping that the trial would be stopped early because the drug was demonstrating enough effectiveness to prove the value of the drug, Stimuvax.

The trial, known as Start, represents the latest test for the field of cancer immunotherapy, in which scientists seek to stimulate the immune system to fight cancer cells like a virus. The trial is designed to enroll patients with Stage III forms of non-small cell lung cancer, and is randomly assigning patients to Stimuvax or a placebo. Merck KGaA is shouldering the expense of the trial, but Oncothyreon has said it still stands to collect a “double-digit” percentage royalty on sales if the drug reaches the marketplace.

The trial is designed to measure how much longer patients can live on Stimuvax than on the placebo, and like any trial designed to measure survival, it’s hard to predict precisely when the results will arrive. The study was designed so that once 705 patients have died, researchers could get a statistically valid readout on the difference in survival time between the drug and placebo.

Researchers also designed the study so that independent monitors would have a couple of interim analyses of the data which could provide an answer before waiting for all 705 deaths to be recorded. While the companies and investigators remained blinded to the results, an independent committee taking those interim looks could essentially make one of three recommendations—stop the study early because the drug is clearly effective; stop the study early because the drug is unsafe or clearly ineffective; or continue the study until enough deaths have occurred to do the final analysis. The last option is the most common in cancer trials.

The second interim analysis, which was just completed, was based on the trial reaching at least 75 percent of the required 705 deaths, according to Simos Simeonidis, an analyst with Cowen & Co.

While some investors are speculating that the Oncothyreon drug will fail because it’s not demonstrating an obvious advantage after 75 percent of the required deaths, Simeonidis said it would be too soon to write the drug off.

“We believe that it is a very viable scenario that Stimuvax’s efficacy in START falls in between the “not high enough to trigger the stopping rules at 75% of the events, but high enough for the trial to be successful at the final analysis”, so we believe that the chances of a successful START outcome are still intact, and that today’s news should not necessarily be translated as a negative sign for START’s ultimate chances of success,” Simeonidis wrote in a note to clients.

Oncothyreon also reported its fourth-quarter and full-year financial results earlier today. The company plans to hold a conference call with investors at 4:30 pm Eastern/1:30 pm Pacific.

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  • http://no2smoke.posterous.com/ Wendy Smalliing

    As a former smoker, I don’t feel sad for Oncothyreon, but for the millions of people who would have benefited from their product. It’s obvious Stimuvax isn’t as effective as we all hoped, and that’s very disappointing, knowing how many people die every year, of lung cancer alone.