ArQule ARQL analysts still see some upside to the company’s stock, despite this week’s brutal beat-down over disappointing clinical data for its lead product tivantinib.
Shares of ArQule sank roughly 50% on Tuesday after it and partner Daiichi Sankyo announced they were halting a key Phase III study for tivantinib in the treatment of lung cancer after data showed it was largely ineffective in treating the disease. The companies still intend to test tivantinib for other cancers.
To say the news had a chilling effect on the stock would be a vast understatement. As of Wednesday, shares of ArQule had fallen 55% since the beginning of the week and 59% year-to-date. The stock closed Wednesday at $2.29.
But analysts on Wednesday still saw signs of life in the stock.
Leerink Swann analyst Howard Liang, who now values the stock at $4 a share, thinks there is still hope for tivantinib as a cancer treatment.
“We believe that the failure of tivantinib’s MARQUEE trial in combination with Tarceva at interim analysis, while clearly a setback, has limited inference to the drug’s potential application in other tumors,” wrote Liang, in his note.
“We would expect partner Daiichi to announce a Phase III start for HCC (liver cancer) by year end 2012 or early 2013 and randomized Phase II readout on colorectal cancer could provide another opportunity for upside surprise given limited expectations,” Liang added.
Lazard Capital’s Ryan Martins largely concurred. Martins lowered his price target to $7 from $10, but maintained his buy rating.
RBC’s Adnan Butt was a bit more cautious, dropping his target to $6 from $11 and his rating from outperform to sector perform.
“In a nutshell, our positive view on ArQule pivots on four points: 1) tivantinib appears safe, 2) has activity, 3) there is a path forward in liver cancer, and 4) partner Daiichi appears committed,” wrote Butt.
“While we view ArQule shares as being undervalued, we are lowering our rating to Sector Perform as there is likely a time and news flow lag until the start of the Phase III trial program with only Phase II CRC (colorectal cancer) data that could potentially lead to near-term upside,” Butt added.
Needham’s Chad Messer was the most pessimistic of the group, downgrading the stock to a hold without a price target. The firm’s previous target was $11.
“While we do believe there is a good case to continue tivantinib development, we are concerned about the failure of the progression-free survival benefit to translate into overall survival and recommend staying on the sidelines until we see more data,” wrote Messer.
It is nice to hear that spin-artists have something positive to say. At least, they do not think ARQL will go bankrupt this coming Monday. Very hopeful!
ARQL has screwed up MARQUEE big time. They never have done c-MET pts testing and evaluation (remember Roche enrolls only c-MET+ pts for their trials. Roche has learned from their NSCLC Ph2 trial failure for general ITT population.
Where are we going from now? The company
* Is in a state of panic. The management do not market either company or its products/prospectives too well.
* Jap partners have very little if any experience of running oncology trials
* Market Cap is at their cash value. Nobody expects any good news from ARQL
* Previous trials (assuming ARQL did not lie) have shown that Tiva has shown highly efficacy in NSCLC and 2nd-line HCC. If it is a case, wrong pts were selected for MARQUEE. Remember C-MET is a targeted therapy. It is not for every single cancer patient.
* Accordingly to ARQL,
- They are evaluating ways of how to stop MARQUEE, evaluate its results, and see what they have in NSCLC. NSCLC Ph2 in KRAS-mutant pts is still going with NO plans to shut it down (FDA would not like it).
- MARQUEE results are coming
- HCC Ph3 trial will start soon
- mCRC Ph2 results will be available soon
The bottom line
Nobody expects any good news from ARQL but the results from MARQUEE (one can look at the trial as a large Ph2 with tons of info) and Ph2 mCRC are coming.
If any of these results are good then either ARQL goes back to $5-8 by Apr-May 2013 or will be bought out above $10.
If the coming results will be poor, ARQL will be a dead-investment for the next 2-3 years.
Finally, Ph 1 & 2 are exploratory clinical trials. There is no need to have double-blind Ph 1&2 when the results are unknown for a long time and researchers have no flexibility to evaluate and change/modify these trials as they go.
CRC results ABSOLUTELY critical. Going in ph3 HCC doesn't really matter...we know that's going to happen but we're faced then with 2 or 3 year wait....so CRC is only thing that can help now...and I've no idea what our chances are. 9 patients in ph 1 doesn't really provide any visibility. As for pipeline, braf and 621 (or whatever it is), my guess is they're on the shelf collecting dust. I'm disappointed with the situation but those last secondary buyers...they've got to be " really disappointed"...they got zyngad!