Topotarget swings continue

Danish biotechnology company Topotarget (CPH: TOPO) provided scarce new data on the efficacy of its lone drug candidate Belinostat in PTCL last week but nonetheless made a massive near 80% jump within days. The market already knew that Belinostat did reach its primary endpoint of at least 20% objective response rate in relapsed/refractory peripheral t-cell lymphoma patients but took the ”efficacy update” as a major positive.

I am very hesitant to make same conclusion as the market seemed to do, that Topotarget saying efficacy is comparable to currently marketed competitors to mean that the ORR will come in the high twenties. Based on previous investor communications, low twenties would not be a surprise. Now it is an entirely different argument as to whether that is really a relevant matter on the drug’s actual sales numbers given its apparent safety benefits and synergies with other drugs as highlighted by ever increasing pool of data we are getting from various pre-clinical and early clinical studies, but a market effect it may have.

Tonight in the U.S. afterhours trading, Topotarget’s partner Spectrum Pharmaceuticals (NASDAQ: SPPI) is imploding on a massive sales warning on dwindling sales as its main revenue source is losing ground to a returning generic’s supply for a near substitute drug. At this moment it looks like the agreement is a ruse with Topotarget having a really favourable deal; no wonder it has been taking a while. Given that Spectrum’s market value is taking a hit, the fair value of the expected milestone that Topotarget is due from an NDA filing is down however, given that it is getting cash plus one million SPPI shares.

Spectrum said in its corporate update that it expects to file the NDA around mid 2012. On the other hand this news might provide further incentive for Spectrum’s management to work on Belinostat and re-focus on its pipeline but if it continues conservative investments, lesser revenues to fund clinical development weigh on the other side. Tomorrow on a yet another teleconference, this time in connection with the annual report release, we should learn more on how Topotarget’s finances are going into the expected mid-year trigger point and if they continue their wait it out type of a strategy.