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.

Spectrum also confirms Belinostat reaches primary endpoint

As had already been made known by Topotarget (CPH: TOPO) a while ago, Spectrum Pharmaceuticals (NASDAQ: SPPI) confirmed that pivotal Phase 2 BELIEF trial of HDAC-inhibitor belinostat in peripheral t-cell lymphoma reaches its SPA determined primary endpoint of at least 20% ORR. Investors had been hoping for more disclosure before year-end but that will now come out in T-Cell Lymphoma Forum in San Francisco from January 24-26 next year. Spectrum expects NDA filing by mid-year 2013, which is also once again pushing the date further. Topotarget needs milestone payments with the next one from acceptance for review of the drug that would happen within 60 days from filing. PDUFA action date would then be in 2014.

Topotarget seeks the right path

Topotarget (CPH: TOPO) has now recovered much of the ground it lost following confusing cancer of unknown primary trial results released earlier this year, that had put not only the said indication but the entire solid tumour field use of the compound in question. The stock market price recovery follows further streamlining of the business and even a change at the helm with CEO Martelet leaving the company shortly after CUP data. Topotarget then hired ABG Sundal Collier to assist in exploring next steps for the company should take. Those could include sale, merger, a new ex-US partner or other capital injection.

Then just weeks after that it released information that the most important short-term catalyst, a pivotal trial in Peripheral T-Cell Lymphoma or PTCL was going to meet its primary endpoint. Topotarget’s partner Spectrum Pharmaceuticals (NASDAQ: SPPI) distanced itself from jumping into such conclusion, merely saying that a few patients continue on the study and it is satisfied with initial analysis of the data and replied journalists saying it is more conservative in its communications than Topotarget. There has been much speculation on why the two firms did not seem to be completely on the same page in this matter, but it does not necessarily have to mean there is any red herring on the table.

Today the Danish company released information saying that belinostat in combination with doxorubicin in soft tissue sarcoma met predefined protocol criteria to continue into further clinical development. The open-label non-randomized, multicenter, phase I/II trial was started to assess the efficacy and safety of the compound with dose level and toxicity and efficacy as primary and response and survival endpoints as secondary outcome measures

The aftermath of Topotarget fallout

Once the fact that the null hypothesis that the primary endpoint PFS in CUP-trial is the same in between two treatments or BelCaP and Carboplatin + Paclitaxel alone could not be rejected with statistical significance became known from the conference call presentation, it was evident that the long term potential of the stock was seriously put to question. It is now by no means a certainty that further trials in solid tumour indications will be started. This depends on what is observed from the primary tumours of the patients in follow-up evaluations, and if it can be observed that some subset of patients seemed to be benefiting from the drug.

Topotarget (CPH: TOPO) has previously been in trouble from its investor communication gaffes. At the moment those are handled by the CFO. Some investors could bail-out in the run-up to the conference call, since the company made no mention about the lack of PFS improvement in its early morning release beyond saying primary endpoint was not met, instead highlighting the Objective Response Rate improvement and a ”positive divergence in Overall Survival in Belinostat’s favour after 8 months of treatment”. The latter of those looks a lot less convincing from the presentation graphs although obviously warrants some looking into, while the statistically significant ORR improvement is odd in comparison to the other two facts, perhaps raising questions of how valid the endpoint really is.

Topotarget’s management commented they are surprised of the magnitude of the drop in the stock market price. They said that since the agreement with Spectrum Pharmaceuticals (NASDAQ: SPPI) is not affected by this news but instead rests mainly on the pivotal Relapsed or Refractory Peripheral T-Cell Lymphoma or PTCL trial results which are expected late this year after being pushed back due to slow enrolment, they thought of a less severe slide would ensue. Primary endpoint in this liquid tumour trial is; Objective Response Rate.

The fact that Spectrum Pharmaceuticals has said nothing of the trial is firstly typical for the company unwilling report of bad news. It raises questions on Spectrum’s evaluation of clinical potential of the assets it acquires following another late-stage bomb just months ago, when the company sidestepped any large impact by making a big acquisition. The said acquisition of Allos Theapeutics, where offer period was recently extended, netted an approved drug in PTCL, something that has to be re-evaluated by Topotarget investors as well. Many of them have gotten a harsh reminder of the risks with small-cap biotech completely dependent of binary events.

Topotarget CUP interim data out

Topotarget A/S (CPH: TOPO) is releasing top-line data from its and Spectrum Pharmaceuticals (NASDAQ: SPPI) drug candidate Belinostat in Open-label Randomized Phase II Trial this morning. In the trial the drug is in given in combination with Carboplatin and Paclitaxel or “BelCaP” and compared to Carboplatin and Paclitaxel chemotherapy alone in previously untreated patients diagnosed the Carcinoma of Unknown Primary or CUP. The trial has been fully Topotarget sponsored and run with Progression Free Survival measured by RECIST criteria as the primary endpoint.

Topotarget reportedly decided to make the cut-off after the events were happening slower than hypothesized based on typical disease prognosis. The total enrolment was 89 patients and the cut-off for interim analysis was understood by the investors to happen after 68 PFS events. The drug was given as IV infusion and orally. Across many Nordic stock exchange discussion boards, Topotarget has become the most discussed stock despite its rather miniscule valuation of less than 70 million Euros at market close yesterday. Many investors appeared to have extremely high hopes going into the data and were taking a major portfolio risk in their allocation at least according to their own words.

The top-line data released today shows that the trial did not meet the high primary endpoint of 60% PFS improvement. In the secondary endpoint of overall response rate, BelCap arm in the intent to treat analysis showed statistically significant benefit at 5% confidence level of 43.2% vs. 22.2% ORR (p-value of 0.025). The overall survival curve indicates a separation in BelCaP’s favour from eight months forward.

There is a conference call at 11.30 AM (CET), where more details are expected. It would have been preferable to have more colour on the results already in the release. It is perhaps likely, that the initial market reaction is one-off disappointment although one must keep in mind the low valuation and upcoming PTCL catalyst as well as the low statistical powering of this Phase 2 study as well as the heterogenity of the disease warranting closer analysis.

***UPDATE***

Topotarget started the day heavily in the minus as panic ensued. Going into the conference call, the stock had pared majority of the 50% decline but again slid as presentation slides became available. The difference in primary endpoint PFS was almost non-existant. Also thus far there is no statistically significant overall survival benefit to be shown, although there is some divergence from 8 months onwards, but that is nowhere near statistical significance and even if it were, the significance of such a matter would be debatable. BelCaP was mostly well tolerated but there was a greater incidence of grade 3/4 adverse events (25 vs. 19). The said comments about PFS events happening slower than expected is also not evident from the graphs.

Partner puts in a good word for Belinostat

Topotarget (CPH: Topo) continued its recent strong run after its partner Spectrum Pharmaceuticals (NASDAQ: SPPI) highlighted Belinostat data presented at the 2012 ASCO annual meeting in Chicago. Clinical results from Phase II Study in Relapsed and Refractory Aggressive B-Cell Lymphomas also referred to in here prior to the conference were commented in a positive light. Spectrum also touted Belinostat’s potential at the Jefferies 2012 Global Healthcare Conference last weekend. The presentation is available from their website.

While presenting its quarterly report numbers last week, Topotarget was asked if there were any changes in its relationship with the partner, and the response was that everything is business as usual. The company continues to patiently await results from its two main trials and has managed to cut costs considerably. If everything goes according to plan, the cash resources should suffice until the next milestones. There may also be an additional milestone related to the Totect divestiture coming to help out prior to any expected Belinostat milestones.

ASCO conference is a major trading event for biotech investors and often that year’s hot stocks tend to trade up going into the event and sell on the news on larger exchanges. Whether this debatable phenomenon extends into Nordic exchanges is less clear. For Topotarget investors need to be aware of the upcoming CUP-catalyst, where market expectations appear rather high.

Nordic ASCO stocks

The massive American Society Of Clinical Oncology 2012 ASCO annual meeting, which will be held June 1-5th in Chicago, will once again have numerous issues of interest to Nordic investors. Local companies featured include Active Biotech (OMX: ACTI) which together with Ipsen (Euronext: IPN; ADR: IPSEY) presents follow-up data from a phase 2 study with prostate cancer drug candidate tasquinimod in castration resistant prostate cancer. The new analysis has shown that overall survival after treatment has gone up to 34.2 months with the drug, which is higher number than the one reported earlier, vs. 30.2 months with placebo. The bone-metastatic subgroup OS is also 34.2 vs. 25.6 for placebo group. The company has a pivotal study with metastatic castrate resistant prostate cancer ongoing.

Bavarian Nordic A/S (OMX: BAVA) has new interim data from ongoing phase 2 trial with its therapeutic cancer vaccine candidate PROSTVAC (PSA-TRICOM ) in combination with Quadramet (samarium-153 EDTMP). In the study Quadramet is studied with or without PROSTVAC after docetaxel treatment in metastatic castration resistant prostate cancer. A commencing 1200 pts phase 3 trial in asymptomatic to minimally symptomatic prostate cancer patients will also be highlighted.

Algeta ASA (OSE: Algeta) got in updated final survival data from phase III, study of Alpharadin (radium-223 chloride) in castration-resistant prostate cancer patients who have bone metastases as a late-breaking abstract. The full text will be available on June 4th. There is trial in progress abstract from a I/IIa study with the same compound given with docetaxel to a similar patient population.

Topotarget's (CPH: TOPO) (and Spectrum Pharmaceutical’s (NASDAQ: SPPI) Belinostat is also featured. Promising data fom a phase 1/2 combination study with cisplatin, doxorubicin and cyclophosphamide in thymic malignancies, which while not a large market opportunity in itself, further underscores the drug's potential in combination treatment. Less impressive data from a phase 2 study with Belinostat as monotherapy in aggressive B-Cell Lymphomas has improved somewhat since while there were no objective responses in the first 22 patients, which led to the termination of the study, in subsequent follow-up two patients were confirmed with a partial response and two further patients have not progressed for over two years, which is no mean feat for a heavily pre-treated population. Topotarget wanted to underscore, that this study was in a completely different type of patients, as the pivotal PTCL trial.

Topotarget down as investors fear partner involvement, company responds on its website

Upon the recent failure of Allergan and Spectrum Pharmaceuticals bladder cancer drug apaziquone to meet primary endpoint and the ensuing change of rhetoric in SPPI's filings plus the simultaneous decision of SPPI to acquire Allos Therapeutics, which has a marketed drug called Folotyn for Peripheral T-cell lymphoma or PTCL, has made a dent in SPPI's partner Topotarget's (CPH: TOPO) shareholder value. The stock has slid almost 40% since the beginning of March, and capitulation wasn't far in the last two days.

The concerns are twofold. Firstly investors are afraid that since Topotarget's SPPI-partnered lead drug Belinostat is also studied for relapsed/refractory PTCL, the decision of Spectrum to acquire a drug already approved in the same indication, this might say something we do not know about how the pivotal study is progressing. Edison Investment Research, which provides very detailed reports with a simple registration, even went so far as to speculate that SPPI might return Belinostat's rights. While SPPI is still in good financial health, those who were speculating it to acquire Topo were silenced since the Allos purchase takes a good chunk of SPPI's cash.

Folotyn, like Belinostat, was studied and approved in the USA via single-arm studies. It's European approval was recently denied because EMA wants randomized trials. This was seen as negative for the leveraging of Belinostat's PTCL trial results. It was also presumed, that FDA might be less willing to approve another drug with relatively similar efficacy from the same company. On the other hand SPPI has shown ability to push through complex regulatory filings.

SPPI also made it clear it does not want to start numerous studies with a single drug and wants to keep clinical development in-house to get a better handle on the costs. Belinostat has shown activity against numerous cancer cell lines in-vivo and in-vitro. Some company might approach a potential blockbuster in another manner: start numerous phase 1-2 studies and invest upfront, and then leverage this into phase 3 studies in most promising indications or sub-populations.

Secondly following the apaziquone failure, the wording in Spectrum's quarterly report 8-K was changed (compared to March 1 8-K) also concerning Belinostat. The filing no longer mentions an NDA filing this year (the 10-Q filed this Friday, a day after the 8-K, however still does!). Since Topotarget's current burn rate takes it at best to around mid-2013, and there is a significant milestone involved, this has raised concerns about the financing. Some have even speculated this to be with malicious intent. The theory that it is simply of lesser priority, since Folotyn sales are expected to accrue from Q4 assuming the acquisition goes through, has a little more legs to it. Finally the wording switch could simply represent a change in overall rhetoric stemming from the apaziquone failure. Overall SPPI has a poor track record in clinical trials so far. It has done better with marketed drugs in increasing their penetration and approval for additional indications.

Topotarget seems to have changed its PR-policy following a recent high profile gaffe. The company responded to market rumours in rather obscure yet elegant way. It posted two short interviews with highly respected Jean-Louis Misset, the Chairman of Topotarget's Global Oncology Advisory Board, explaining the current state and future prospect of Belinostat, onto its website. These are not that visible up-front but active investors will certainly stumble on them (SPPI for example would have certainly used a press release in a similar manner if it had a similar share price action, but it seems a bit excessive).

Mr. Misset says that data from a phase 2 Cancer of Unknown Primary or CUP study is forthcoming within a few weeks. There has been plenty of speculation about this data as it may validate the drug in solid-tumour indications. Generally his words sounded rather bullish. He also mentioned that PTCL trial will report within a few months and furthermore that a (presumably late-stage) bladder cancer trial will be started this year. This might certainly have an effect on Monday trading.

While it has looked like SPPI has changed its rhetoric, it continues to say that it actually sees potential synergies between Folotyn and Belinostat due to a different mechanism of action. Belinostat is in general differentiated by its clean safety profile, allowing combinations with various drugs.

Topotarget loss as expected, company tames CUP expectations.

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.

Topotarget advancing in a run-up to ASH, announces reorganization plans

Topotarget (CPH: TOPO) has been feeling the heat from having a cash conscious partner that has done a good job creating shareholder value but has a little bit different incentives from those of Topotarget at the moment. The Spectrum Pharmaceuticals - Topotarget partnership is relatively unusual union of two Small Cap biotechs (although Spectrum may be jumping out of that territory), wherein Spectrum has obtained rights for Topotarget’s leading drug candidate Belinostat for milestones up to 300 million in North America and India (with the first right to negotiate in China). The companies are sharing study costs according to predetermined rules with 70/30 split for future development costs, so Topotarget needs to be on the same page with Spectrum for the initiation of new studies.

Spectrum has a deep pipeline and plenty of options for new studies to choose from. New studies on Zevalin and Fusilev potentially compete with new indication studies for Belinostat in priority reviews. Spectrum has verbalized a very tight cost control, apparently in part to fight short-sellers who were targeting the stock earlier this year.

For Topotarget everything hinges on Belinostat and it would be important for Topotarget to advance the drug in other indications to mitigate risk (the company views Belinostat a pipeline within a drug and still sees blockbuster potential in the drug with better safety profile as the differentiating factor vs. other competing drugs). Apparently the review on next indications will be done after data from the two main studies for Belinostat mentioned below will print and it is not completely inconceivable thought that Topotarget might have to try push ahead with some of those on its own via some creative way or a European partnership (NCI has been funding quite a number of studies as well). Topotarget wrote-down other pipeline drugs and is about to divest its marketed drug Totect for a small fee.

Topotarget is up more than 50% within the past couple of weeks. The company’s valuation had slipped to a very low number and it is still only just above 50 million Euros. Main catalyst for the rebound came from a presentation the company gave in Århus, where it said that the expected phase 2 data from Belinostat in combination with carboplatin and paclitaxel for cancer of unknown primary (CUP) is running late due to events happening later than expected. The odds that data would print very strongly increased considerably as a result.

The current hypothesis is that Belinostat is best suited for such combination treatment and has strong synergies with the aforementioned drug combination. Largest commercial opportunity for the drug is in the solid tumour field but Topotarget plans to forge ahead in lymphomas as well. Topotarget's posters for The American Society of Hematology meeting 2011 are an example of the wide ranging potential of Belinostat. Several early-stage data printouts are also expected within the next few months.

Topotarget’s reporting to shareholders has sometimes left a lot to be deserved. As an example in the third quarter conference call, CEO Martelet (who has a good track record and vast experience in the Histone DeACetylase inhibitors field and was hired to Topotarget precisely for that reason) sidestepped some of the questions from investors. This is in quite a contrast to Spectrum CEO Shotriya, who usually takes on such questions head-first. Of course for some of the questions regarding Belinostat's development, Spectrum is the party with the answers. With regards to Belinostat’s pivotal trial as a monotherapy in Peripheral T-Cell Lymphoma PTCL, both companies haven’t been doing a very good job estimating the timeline nor with the wording when it comes to continued delays. The trial was finally fully enrolled recently and should print data next year.

Topotarget announced reorganization plans earlier today. The company is further cutting staff, which resulted in a lowered guidance for this year and expected 9 million DKK savings going forward. While this is not a massive amount, Topotarget management believes that the company will be able to hang on until milestones from PTCL filing from Spectrum are due, which shows that the company still believes the SPA target of 20% ORR will be met. This was somewhat put to question by both the delays and a further fuzzy wording in the Århus meeting presentation on the Data Monitoring Committee interim analysis report (which includes futility analysis and concluded that the trial should continue).

After these latest cuts, Topotarget should in theory be in condition for M&A activity. However considering the current high risk involved, this would be another very unusual event. Topotarget will host a conference call on Thursday, December 8th at 14.00 CET on the reorganization. The market initially stared at the headline for a lowered 2011 guidance and Topotarget was down nearly 4% in today’s session.