ArQule Shares Bottom Out After Encouraging ASCO Data

ArQule (ARQL) is a drug developer with a market cap of about $340 million. It has a pipeline containing five separate drugs. The most important of these (to investors) is tivantinib (ARQ 197), which is a c-MET inhibitor being developed for the treatment of hepatocellular carcinoma (HCC) as well as lung cancer (for which there are two phase III trials underway). HCC is the most common type of liver cancer in the world, responsible for more than 90% of the 749,000 new cases worldwide each year.

Tivantinib’s mechanism is based on more recent studies on c-MET, where researchers have found that the protein is used as a method of provoking angiogenesis in cancer cells. Angiogenesis is a term used to describe the growth of new blood vessels, which is a way that cancer cells feed the growth of a tumor.
Other proteins that have already been heavily studied, like VEGF, have been targeted by the angiogenetic inhibition drug market. The drug bevacizumab (Avastin) for instance, has been marketed by Genentech (RHHBY) with success. Tivantinib, among other new angiogenic inhibitors, are hence targeting c-MET in the hopes that this will disable one pathway by which cancer cells have been supporting proliferation.

On June 2nd, at the 48th annual meeting of the American Society of Clinical Oncology (ASCO), ArQule has released positive phase II study results for Tivantinib for the treatment of hepatocellular carcinoma conducted by Daiichi Sankyo. The phase II trials were conducted with 107 HCC patients who had inoperable tumors and had disease progression following first-line therapy, or were deemed incapable of tolerating first-line therapy. The primary endpoint was the TTP (time to progression) in the ITT (intent to treat) population, which was met with success.

A statistically significant 56% improvement relative to the placebo group was seen in the “time to progression”, or “test” population. Another encouraging statistic was the median TTP in the tivantinib arm, which was recorded as 2.9 months relative to the 1.5 months in the placebo arm representing a significant average slowing of HCC. This equated to a hazard ratio of .43.

The Monday following the Saturday (June 2nd) on which the encouraging phase II statistics were revealed, the stock jumped almost 3% and looked like it was set to begin a rebound after the ~20% drop it has experienced in the last month, but shares are once again back down to “bottom” levels.

A moderate 5.8% of the shares are being shorted right now, and it’s possible that shorts may be discouraged in anticipation of tivantinib’s interim phase III results for the MARQEE study (studying tivantinib in non-small cell lung cancer (NSCLC). This phase III data should be a major market catalyst looking forward, and should be released well before 2013.