Late last year, when Onyx Pharmaceuticals Inc. and partner Bayer Pharmaceuticals Corp. disclosed their plan to hold off seeking approval of their kidney cancer drug sorafenib (previously BAY 43-9006) until they had Phase III data in hand, Wall Street blanched.

Some investors had hoped the firms would use Phase II data, and the market punished Onyx's shares by taking away a third of their value, ending the day at $27.34. But the stock had recovered somewhat by this year's meeting of the American Society of Clinical Oncology, at which Onyx and Bayer unveiled data from the Phase III study.

And it was favorable. Results of the trials showed sorafenib improved progression-free survival (PFS) from a median value of 12 weeks (2.8 months) up to 24 weeks (5.6 months), an outcome characterized by Hollings Renton, president and CEO of Onyx, as "remarkable." The Street apparently didn't think so, and clipped Onyx again - this time by just more than 14 percent, leaving the shares back at square one, closing at $27.29.

Since the decision about using Phase III rather than Phase II data, there had been other good news. In late March, Onyx and Bayer said they would use interim results from the Phase III trial, which had completed enrollment of more than 800 patients, rather than wait for the full trial to finish. The following month, the pair of companies said a planned interim review of data from the Phase III study led them to recommend all patients enrolled in the trials get the drug.

Fast-track sorafenib looks like a winner. With multiple mechanisms of action, the drug shows anti-proliferative and anti-angiogenic properties, blocking tumor cells by targeting the RAF/MEK/ERK signaling pathway at the level of the RAF kinase while targeting the receptor tyrosine kinases VEGFR-2 and PDGFR and their associated signaling cascades. It inhibited other tyrosine kinases, too, including FLT-3 and c-KIT. So, why the stock hit after the ASCO data?

Mainly because, ever since the delay brought about by the choice to use Phase III rather than Phase II, investors had viewed sorafenib as handicapped in a race with Sutent (sunitinib malate), previously known as SU011248, Pfizer Inc.'s multi-targeted kinase inhibitor originally from Sugen Inc. And because some - but hardly all - analysts viewed the sorafenib data as possibly not quite good enough.

In the wake of the ASCO news, Leerink Swann & Co. downgraded Onyx to "market perform." Wachovia Securities pushed the stock down to "market underperform." A.G. Edwards & Sons kept its "buy" rating but reduced the 12-month price objective from $39 to $35. Hibernia Southcoast Capital maintained its "hold" rating and kept a price target of $38.

Others apparently lined up with Renton in viewing the stock hit as a short-term reaction. Bear Stearns upgraded Onyx to "outperform," with a $40 price target. RBC Capital Markets maintained an "outperform" rating and raised the target price from $54 to $64. Piper Jaffray maintained "outperform" status for Onyx, with a target price set at $42.

Onyx and Bayer allowed that sorafenib yielded only 2 percent of patients who showed the 30 percent tumor shrinkage required by the formal criteria of the clinical trial protocol for a partial response, but noted that 75 percent of patients showed "some" tumor shrinkage. Renton said the company remained blinded to overall survival rates, but plans to file a new drug application based on the progression-free survival endpoint.

But then came Sutent. Data from a Phase II trial offered at ASCO showed the Pfizer compound won a time to progression of 8.7 months and much higher partial response rates - 40 percent compared to sorafenib's 2 percent, though the latter's side effects proved less severe. Potentially making the picture somewhat worse for sorafenib was the shell in Pfizer's second barrel, called AG013736, another compound that shows promise for kidney cancer. In a Phase II trial, AG013736 achieved a 46 percent partial response rate.

Howard Liang, analyst with A.G. Edwards, though, said the buzz at ASCO about AG013736 might have been reassuring for Onyx. "There [was] more talk at ASCO that this agent may not be in development" for kidney cancer, though Pfizer was holding its cards customarily close to the vest.

Regarding Sutent vs. sorafenib, analysts at Prudential Equity Group said Wall Street probably wanted a higher PFS from the latter because the Phase II trial with the drug pulled a time to progression (TTP) of 5.6 months. (Though TTP and PFS are not the same, they are "close enough to be compared," Prudential analysts said in a research report.) A portion of the Phase II trial patients were randomized to placebo for about 12 weeks.

"Because of that, the company in the past has suggested that those who never were randomized to placebo (equivalent to the Phase III treatment arm) should have a longer TTP," the Prudential report said. That, combined with would-be competitor Sutent's TTP in its Phase II trial of 8.7 months, makes sorafenib stack up poorly against Sutent, at least in the view of some.

Liang summed up the situation.

"I think most people in the market think Sutent is the more active drug, and that's probably true," he told BioWorld Financial Watch, noting that the disease is somewhat difficult to treat since "it's an indication where many patients were asymptomatic except toward the very end."

On the other hand, "as a physician, if I know there's a more benign drug [such as sorafenib], I might go with that until I find out it doesn't work," he added.

Liang called the ASCO data for sorafenib and Sutent consistent with previous results for both, but pointed to "the little-noticed median survival of 16 months for Sutent" as "less than exceptional," since the median survival for patients on placebo is around 12 months historically.

"True to the name of cytostatic,' sorafenib showed good ability to reduce the growth of tumor but large tumor shrinkage was rare," Liang wrote in a research report. "Survival data on Sorafenib may eventually come out, perhaps sooner than many realize," since Onyx and its investigators say they have a "modified plan" for survival analysis.

The recent crossover of patients from the placebo arm to the treatment group will make proof of survival benefit tough, but "overall survival of the sorafenib arm will likely be compared to Sutent's 16 months," Liang said, adding that he expects the difference in survival could be much smaller than 2 percent - as opposed to greater than 40 percent for the response rate.

"All is not lost for Onyx at ASCO," Liang declared. Data from a randomized trial showed that interferon and interleukin-2, which often are used in the first-line setting for kidney cancer, showed no benefit as first-line therapy, which could bode well for sorafenib (and Sutent) in that setting, despite the lack of data in previously untreated patients, he said. Also in the kidney cancer space is Avastin (bevacizumab), the widely admired colorectal cancer compound from Genentech Inc., which gained a TTP of 4.8 months in a Phase II trial cited by Prudential. Avastin is being developed for use in combination with Tarceva (erlotinib), from Genentech and OSI Pharmaceuticals Inc.

The road includes failures, memorably the Phase III blowup of AEterna Laboratories Inc.'s Neovastat in the fall of 2003. AEterna said a subgroup of earlier-stage kidney cancer patients demonstrated a significant survival benefit from the compound, which consists of anti-angiogenic components extracted from marine cartilage, but the company since has quit developing the drug in the renal indication.

For the moment, it appears the race is between sorafenib and Sutent. The latter reported at ASCO strong Phase III data against gastrointestinal stromal tumors (GISTs) that were resistant to Gleevec (imatinib mesylate) from Novartis AG. Sutent more than doubled survival and significantly reduced tumor growth and spread.

Wachovia analyst George Farmer wrote in a research report that Sutent and sorafenib could end up on the market simultaneously, although the kidney cancer label for Sutent will have to wait until the completion of Pfizer's trial in that indication targeted for sometime in 2006.

Late last week, Liang said "all kinds of rumors about what Pfizer has done" were floating around, including some saying the pharmaceutical giant already had submitted its drug for approval in the GIST indication.

"I think we have a reasonable idea where Onyx is," he said, and whatever happens, both products will be on the market "within a year," Liang predicted.