West Coast Editor

ImClone Systems Inc.'s Phase III miss with Erbitux (cetuximab) in non-small-cell lung cancer might have been due to a mid-trial protocol switch and wasn't a pivotal study anyway, but the failure could give a perceptual edge to Avastin (bevacizumab), Genentech Inc.'s VEGF inhibitor.

Shares of ImClone (NASDAQ:IMCL) dipped on the news, closing Thursday at $34.73, down $1.17. Genentech's stock (NYSE:DNA) ended the day down 56 cents, closing at $75.37. Despite strong second-quarter results, some Genentech analysts worried that sales might be flattening out.

New York-based ImClone and partner Bristol-Myers Squibb Co., also of New York, said the approved head-and-neck cancer drug Erbitux, tested with a taxane plus carboplatin in NSCLC, missed its primary endpoint of progression-free survival (PFS) in the 600-patient study, though secondary endpoints including response rate were achieved.

The open-label study, first designed with response rate as the primary endpoint, signed up about 300 patients, but researchers changed the trial protocol, chose PFS as the primary endpoint, and enrolled 300 more, noted analyst Han Li, with Stanford Group Co., in a research report. Li called the trial design "poor." ImClone officials could not be reached for comment.

Full data are expected this fall at the International Study of Lung Cancer meeting.

Two more Phase III trials are in progress, and another is pending for lung cancer, including a 1,100-patient frontline study called FLEX, with a primary endpoint of overall survival, due to report data in the fourth quarter of this year. Overseas partner Merck KGaA, of Darmstadt, Germany, is conducting FLEX.

A Phase III second-line study started in the first quarter of 2005 and still is enrolling. Called SELECT, that trial has PFS and overall survival as the primary endpoints, with results expected in the second half of next year. A third Phase III Erbitux trial, that one for locally advanced lung cancer, is expected to start after other Phase II and Phase III data with the compound are made public. Erbitux targets the epidermal growth factor receptor.

Wall Street is keeping an eye on chances for the approved colorectal cancer drug Avastin, also cleared last year for metastatic NSCLC. The drug's use in that indication probably depends more on physicians' opinion regarding data from the AVAiL study, disclosed at the June meeting of the American Society of Clinical Oncology.

Results disclosed at ASCO indicated Avastin might work better given at a dose lower than the 15 mg/kg approved for metastatic disease. The study, sponsored by partner F. Hoffmann-La Roche Ltd., of Basel, Switzerland, showed Avastin significantly increased PFS in advanced NSCLC at both doses tested in combination with chemotherapy, but patients who got the lesser dose, 7.5 mg/kg, showed greater improvement (33 percent) than those receiving 15 mg/kg (22 percent) over the chemotherapy-only arm.

If doctors start prescribing at that lower dose, Genentech could see a reduction in projected sales figures in that indication, though analyst Joel Sendek, of Lazard Capital Markets, maintained a "buy" rating, and wrote in a research note at the time of the ASCO data that any decline in dosage as a result of the AVAiL outcome "will be offset by an increase in duration of use and penetration as a result of an improved safety profile and confirmatory trial."

In a report Thursday, Robert Baird & Co. cited a survey conducted earlier this year by Interactive Clinical Intelligence Inc., showing that 44 percent of respondents believed that Avastin is the most promising new therapy for NSCLC. Baird modeled Avastin revenues in the NSCLC indication as $696 million this year, $900 million in 2008 and $1.025 billion in 2009.

But Erbitux should not be counted out. Partly because of the protocol switch, the latest Phase III failure is hardly a "perfect predictor" of prospects for the FLEX trial, according to Baird. Li, with the Stanford Group, has "low expectations" for the study, he wrote in a Thursday report, but conceded the NSCLC indication "remains a wild card."