Topotarget (CPH: TOPO) ended 2011 with just over 114 million DKK in cash. The company is guiding for pre-tax loss in between 75 and 95 million for 2012, which would leave it with 35-55 million in cash at year’s end. This does not take into account any potential milestones.
The big brother partner of Topotarget is Spectrum Pharmaceuticals (NASDAQ: SPPI) and the companies have been guiding for PTCL NDA filing within 2012. Upon such a filing, Topotarget would be eligeable to receive one million shares in SPPI plus a double-digit million USD in cash.
Internet message boards have been filled with calculations how the trial should meets its high primary end point of around 60% improvement in progression-free survival (PFS). This has pushed the price up as investors have been dreaming of, if not approval, but at least potential large of-label sales in CUP.
Topotarget now pretty much put an end to such hopes when it stated for the first
time flat out that the trial will not serve as basis for registration (as opposed to earlier statements that it is unlikely to serve as basis of registration) due to limited statistical powering.
Topotarget further said that a 20-40% improvement in PFS is likely to warrant further studies in the indication. In the teleconference, Topotarget clarified that it does not mean the company expects such a result and that 68 events still haven't been reached.
The company in its current incarnation certainly cannot be blamed for overhyping its prospects. Partner Spectrum, indicative of both different national mindset and a large war chest of cash from profitable operations, tends to be far more positive about Belinostat’s potential. The stock is selling on the news and has retreated over 7% for the day.
Dear friend, you have relly made too much of out thin air. There has never been any intention that the CUP-trial would be used for registration-filing, and previously the company have repeatedly stated that 60% improvemnet is 'a very high hurdle rate', which means that the goal for the study was set very high at the beginning. Today they have said that even 20-40% would be a good result that will encourage them to proceed to a phase III trial. Previously they have also stated that if the very high hurdle rate at 60% is reached it would be foolish not to try a registration with FDA, in spite of the fact that the study was not actually meant for that.
ReplyDeleteWe actually got the most remarkably good information from TOPOTARGET yesterday.
1.
Firstly, it was confirmed that the code of the CUP-study is not yet broken. That means that 68 patients have still not left PFS because their disease is still stable. Cfr:
http://www.redeye.se/aktiebloggen/topotarget/68-%E2%80%93-important-number-topotarget-investor
2.
Second, we learned that this is not due to any unsuspected reasons like an extreme percetage of patients having left the study. This number, it was stated in the telephone conference, is 'normal'.
To conclude: It is now about 15 months since the last patient was enrolled i the study (35 months since the first). Since the CaP treatment in this indication has never reached more than 6,5 months median PFS, there must be a dramatic improvement in the treatment with BelCaP.
This is a now unique case of risk/reward actually.
Hello!
DeleteI concur with you that the company has never said the study will be used in a regulatory filing. The blog post also does not claim company has made any such statements. However, biotech investors often get their hopes up way too high and Topotarget perhaps wanted to tame those a notch. The taking away of the word "unlikely" is the gist here, squashing any such hopes.
You are also correct that there wasn't any new negative comments in the interim report. The continuing negative reaction is most likely a case of sell the news.
In the past couple of weeks, there were 1-2 larger buyers, which had driven the price. This must have raised some retail investors hopes of big news coming at the interim filing, which hardly ever happens. I personally refrain from making any investment recommendations. In the nervous world of investing, issues that come out of "thin air" often have large implications on the short term stock price. I try to explain these.
The market is totaly misjudging yesterdays information, and also the value of Topotarget. Belinostat might be the best HDACi there is. SPPI offerd $350 million to share the only the American and Indian market, and have already payed $30 million for this part. Raj knows what he is doing. However today the whole company is worth ca $70 million, in spite of the fact that everything is now pointing in very favourable directions. The CUP-trial now seem to exceed every possible expectation. How come the market values to $70 million what Raj thought a bargain for $350 million?
ReplyDeleteCorrection:
ReplyDeleteHow come the market values to $70 million what Raj thought a bargain for $350 million to share only a minor part?
Well of course the 350 million is conditional on clinical success on reaching other predetermined goals. Just like in risk-reward calculations for an investors, to cut some corners Spectrum basically took a risk of 30 million as far as the upfront payment goes (plus 70/30 cost sharing for PTCL trial) for potential large rewards.
DeleteThe uptake here is that if PTCL trials meets primary endpoint as determined in the SPA agreement and SPPI files the NDA, the milestone to Topotarget is rather substantial and at current run-rate the finances should be sufficient to reach that time. The fact that the timeline for PTCL trial was pushed back a mile in the past two years likely rattled some investor confidence as well.
Another can of worms is how the FDA will view these results, in light of the recent dislike on single-arm studies, particularly in indications where there isn't "a large unmet medical need". While at the time of the SPA, that was clearly there, subsequent drug approvals in PTCL might have changed the agency's thinking. In my estimation these approvals led to the fact that PTCL trial became a "hard to enroll"- study.
In so far as the risk-reward calculations from investor's point of view are concerned, I would argue the current financial theory does not properly account for diminishing marginal utility and the fact that a private investors will be risk-averse both in general and from the point of view that they often cannot afford to lose the entire investment, even if the odds are "favourable".