ArQule, Inc. (NASDAQ:ARQL) took a real hit at the end of last week, as the company announced data from a late stage oncology trial. The data did not read out as hoped, and ArQule currently trades for a close to 20% discount to its Friday morning open price. The drug is the company’s lead asset, so the action is no surprise given the angle of the release.
ArQule management held a conference call alongside the release, and in an attempt to put together a near thesis on the stock, we sat in on the call. Here’s what was discussed, and how we interpret the tone of the call.
So, we’ll start with a quick look at the drug and the trial.
It’s called Tivantinib, and ArQule was investigating the drug by way of a phase III study in collaboration with Daiichi Sankyo, investigating safety and efficacy in a hepatocellular carcinoma (HCC) indication.
The drug in question is an oral inhibitor of the MET receptor tyrosine kinase. The mechanism of action of these types of drugs is somewhat complicated, but by way of a simplified explanation, these inhibitors stop what’s called ATP binding to MET. ATP is the energy transfer unit of the body – it is generally required in the key processes that underpin cell activity. Without the ATP-MET bind, the receptors associated with the process don’t undergo transphosphorylation, and this – by proxy – inhibits the process through which cells (and in this case, cancer cells) spread and metastasize.
Anyway, the MOS isn’t overly important for the purposes of this discussion. What is important is that the drug seemed to work when investigated in earlier stage trials, and proved reasonably safe and tolerable.
When carried through into a phase III, however, thing didn’t run so smoothly. For those not familiar with HCC, it’s just another word for liver cancer – the sixth most common cancer globally with 782,000 new cases annually and the second most common cause of cancer-related death with around 745,000 deaths a year.
The trial was looking at the drug against a primary endpoint of improving overall survival, and as readers have probably guessed by now, it failed this endpoint.
We don’t have the full spectrum of data yet – in fact, we don’t really have any details concerning the numbers. The company announced solely that the trial failed against its endpoint, and so at a glance there may be some scope for positive news when the actual numbers are reported.
That’s what we thought, anyway, and then we heard the conference call.
Management (by way of the press release announcing the endpoint fail) said initially that the call was planned to discuss the results of the trial. At the start of the call, however, Paolo Pucci, Chief Executive Officer of ArQule, said he would kick things off with a note on Tivantinib, before moving on to a discussion on the company’s prop pipeline.
We expected this note to address the potential for positive reveal when the real numbers hit press, but we can’t even really call what management said a discussion. He touched on the already known information, basically just saying that the drug missed its endpoint, and then said that the majority of the call would address the pipeline, since the prop assets would account for the primary development activity going forward.
In other words, it seems as though this is the end of the road for Tivantinib, at least in a liver cancer indication, and that the company’s value is now rooted in the prop pipeline assets.
We should get some degree of confirmation on this assumption near term, when ArQule makes the actual numbers available for analysis. From the call and the release, and using this information to form an opinion, we don’t think the added clarity is going to change the forward path.
So, what’s next?
Well, now its all about looking forward to the development of the ARQ-087 asset, which is currently under investigation as an intrahepatic cholangiocarcinoma (iCCA) therapy. Data just presented at Leerink (presentation available here) suggests it’s performing OK in a phase II, but then so did Tivantinib.
