Tesaro Inc.’s stock took a hit Monday when it released results of two Phase III studies showing that while its chemotherapy-induced nausea (CINV) drug rolapitant was effective for treating the condition in the 24-hour to 120-hour period after chemotherapy, it did not improve symptoms in the first 24 hours, and also did not demonstrate sustained improvement after 120 hours.

Rolapitant, an NK-1 receptor antagonist, faces tough competition from Merck & Co. Inc.’s Emend (aprepitant), a drug in the same class. Emend is approved to prevent nausea for up to five days following chemotherapy.

In a conference call Monday morning, management expressed continued confidence in the product. “We believe we have an excellent commercial opportunity with rolapitant that is meaningfully differentiated in the marketplace,” said CEO Lonnie Moulder. That differentiation, he explained, is based on the long half-life of the drug in the body, lack of drug interactions common to other compounds in the class (e.g. CYP3A4 interactions) and availability of both intravenous and oral dosage forms.

The Waltham, Mass.-based company raised $86.3 million in its 2012 initial public offering to advance rolapitant. That offering was combined with an issue of 26.9 million shares of Series B preferred stock, for net proceeds of $58.3 million. (See BioWorld Today, March 27, 2012.)

Rolapitant dazzled with promising five-day activity in CINV prevention, with additional signs of rapid onset, longer duration of treatment and lower potential for drug-drug interactions than Emend.

Tesaro acquired the drug from Opko Health Inc., of Miami, for $121 million, including milestones, double-digit tiered royalties and a 10 percent equity position in Tesaro. Already through Phase II studies, rolapitant had been a Schering-Plough Corp. property, but Opko bought it for $2 million up front following Schering’s 2009 merger with Merck. (See BioWorld Today, Dec. 16, 2010.)

But Tesaro’s $200 million baby didn’t quite live up to those expectations in its much-anticipated Phase III program.

The first Phase III study enrolled 1,369 cancer patients receiving moderately emetogenic chemotherapy. About half of those patients were on anthracycline-based treatment for breast cancer. Participants were randomized to 200 mg of oral rolapitant plus a 5Ht3 receptor antaonist and dexamethasone or a control group receiving a 5Ht3 receptor antagonist plus dexamethasone without rolapitant. The primary endpoint was complete response, defined as absence of vomiting and no need for rescue medication during the period of 24 hours to 120 hours after beginning chemotherapy.

That trial met the primary endpoint, but it did not achieve statistical significance for secondary endpoints of achieving complete response in the acute (less than 24 hours) and overall phases of treatment.

The second study enrolled 555 patients receiving highly emetogenic chemotherapy, or regimens containing cisplatin at a dose equal to or greater than 60 mg/m2. Patients were randomized as in the first trial. And, as in the first trial, the drug achieved its primary endpoint of complete response in the delayed phase of CINV but did not meet statistical significance for the secondary endpoints.

Although Wall Street reacted strongly to the secondary endpoint miss – pushing Tesaro’s stock (NASDAQ:TSRO) down $9.33, or 24.75 percent, to close Monday at $28.37 – Jefferies analyst Eun K. Yang was unshaken. “As we’ve already assumed 85 percent probability for success, there is no change in our valuation from the positive top-line Phase III data for rolapitant,” Yang wrote.

Tesaro remains largely unswayed by the mixed trial results, with the exception that it will be taking a closer look at subgroups in its analysis, and will continue enrollment in a third trial of the drug in highly emetogenic chemotherapy, rather than closing enrollment at the end of the year as previously planned.

“This represents a $1.5 billion market opportunity in the U.S. alone,” Moulder said. Tesaro will press on with its plan to not only capture some of that market, but to expand it based on treatment guidelines for cancer patients recommending use of an NK1 antagonist, particularly for breast cancer patients receiving anthracycline therapy.

Other companies looking for a piece of the CINV market include Helsinn Group, of Lugano, Switzerland, and Mundipharma Pte. Ltd., of Singapore. Those companies have partnered to market a fixed-dose combination (NEPA) of NK1 antagonist netupitant and palonosetron, a second-generation 5-HT3 receptor angatonist, in a number of Middle Eastern, North African, and Asian countries. The FDA recently accepted for review a new drug application for NEPA.

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