West Coast Editor

Shortly before Christmas last year, when Serono SA signed a potential $290 million deal with CancerVax Corp., the drug at the center of the agreement - lead product Canvaxin, a Phase III compound targeting advanced melanoma - seemed like a gift for skin cancer patients, perhaps especially for those with the dreaded Stage IV disease.

Last week, that hope diminished somewhat. An independent Data and Safety Monitoring Board conducted its second interim analysis and found Canvaxin would not be able to show a survival benefit over placebo in Stage IV patients, and CancerVax discontinued the trial, which had enrolled 496 patients out of a planned 670.

The news sent CancerVax's shares into a tailspin, losing almost half their value, even though the firm and Serono (given the nod by the DSMB) are going ahead with the study in Stage III patients, which completed enrollment of 1,160 patients last year and is due for another interim peek in the third quarter.

In Stage IV melanoma, the cancer has spread to organs beyond the regional lymph nodes, commonly the lungs, brain, liver and intestines. The five-year survival rate is only 7 percent to 19 percent. In Stage III, the primary tumor has spread only to regional lymph nodes, and the five-year survival rate in those patients is between 27 percent and 70 percent.

Bennett Weintraub, analyst with Hibernia Suncoast Capital, called the Canvaxin trials "heroic."

"No one's ever done a trial like this in melanoma and no one's ever going to do one again," he said, pointing to the large number of patients who must be "injected, almost constantly, for years."

Serono took only a mild hit on the unfortunate Canvaxin results. Shares dropped 14 cents on the CancerVax news, as well as word that came the same day on another discontinued Phase III compound, onercept for psoriasis, for which a separate DSMB cited safety concerns.

On the upside for CancerVax, no safety issues arose in either of the Canvaxin Phase III trials - and the same couldn't be said for Serono's onercept. Since the Phase III psoriasis trial began in 2004, two patients developed sepsis and one of them died.

Still, the Geneva-based firm escaped a beating on Wall Street, thanks mainly to its marketed compounds Raptiva (efalizumab), recently launched for psoriasis in Europe, and the beta interferon Rebif, showing particular promise in the U.S. after the withdrawal of Tysabri (natalizumab) from Elan Corp. plc and Biogen Idec Inc.

What's next for Canvaxin? Final analysis of the Stage III melanoma trial, once 392 deaths have occurred, is expected in the middle of 2006, with a launch possible in the U.S. and Europe the following year.

"We took our probability of approval down from about 64 percent to about 33 percent," Weintraub told BioWorld Financial Watch. "These are both melanoma [trials], and you'd like to see the drug doing a little bit in Stage IV, even if it's not statistically significant."

Under the terms of the Serono deal, CancerVax got an initial $37 million cash payment, including $25 million in up-front signing fees and $12 million for Serono to purchase 1 million shares of CancerVax stock. The U.S. firm is eligible for as much as $253 million more through development, regulatory and commercial milestone payments.

CancerVax's annual report notes that Serono can exit the deal with 180 days' notice, but neither company would speculate about what might happen as a result of the Stage IV fizzle.

The landscape in melanoma is crowded. Among the drugs already used for advanced melanoma are Bayer AG's chemotherapy dacarbazine, Chiron Corp.'s Proleukin (interleukin-2) and Schering-Plough Corp.'s Intron A (interferon alpha). In Canada, Corixa Corp. markets Melacine, though that vaccine's development has been discontinued in the U.S. because of the cost and time of another Phase III trial to make it approvable.

Would-be melanoma warriors to fall by the wayside include Celgene Corp.'s Revlimid (lenalidomide) as a monotherapy, though the company is still pursuing the drug as a melanoma treatment in combination with others. Revlimid approval for multiple myeloma is pending. Genta Inc. was trying Genasense with dacarbazine against the disease until an FDA advisory panel in May turned thumbs down and the firm withdrew its new drug application. In September, Maxim Pharmaceutical Inc.'s Ceplene (histamine dihydrochloride) failed in Phase III against advanced melanoma that had advanced to the liver.

Plenty of later-stage compounds, though, remain in the race. Antigenics Inc. has the vaccine Oncophage, for which it reported in June Phase II data at the American Society of Clinical Oncology meeting. (At the same meeting, Genta offered Phase III data of Genasense plus dacarbazine in patients with advanced melanoma, showing that the treatment - while missing the primary endpoint of survival - increased progression-free survival compared with patients treated with dacarbazine alone.)

Medarex Inc.'s MDX-010, a Phase III antibody aimed at the CTLA-4 molecule on T cells, bagged the firm a deal with Bristol-Myers Squibb Co. valued at up to $530 million. MDX-010 is being tested with MDX-1379, a gp100 peptide vaccine. (See BioWorld Financial Watch, Nov. 15, 2004.)

Weintraub gives MDX-010 a 40 percent likelihood of approval. Like others in the clinic, MDX-010 is likely "not a direct competitor" with Canvaxin, he added.

"You could even say that it would work well with a vaccine," Weintraub said. "They might be synergistic, and that's why it's being tested with the gp100 product."

In cancer especially, but in biotech overall, "a lot of drugs complement each other [in cancer], or at least are not direct competitors," he said, citing Avastin (bevacizumab) for colorectal cancer and Tarceva (erlotinib) for non-small-cell lung cancer, which are being investigated in combination for cancer.

"Certainly [in melanoma], the vaccine approach doesn't mean that while you're boosting your immune system, you couldn't use other drugs to help it out."

High-dose Allovectin-7, from Vical Inc., also will be studied against metastatic melanoma under a special protocol assessment by the FDA, disclosed earlier this year. The drug is a DNA plasmid/lipid complex containing the human genome encoding HLA-B7, designed to augment immune response after being directly injected into the tumor, and the study will compare response rates of patients who get the drug to those given dacarbazine or temozolomide.

CancerVax noted that the Oncophage and MDX-010 trials do not require that patients undergo surgical resection to remove all clinically detectable disease before treatment starts, whereas Canvaxin trials do.

Also last week, Argos Therapeutics Inc. started a Stage IV melanoma trial with its RNA-loaded autologous dendritic cell vaccine. The drug is being tested in a Phase I/II corporate-sponsored trial for kidney cancer at five sites in the U.S. and Canada, and Argos is applying the same technology and process to the melanoma trial, to be conducted at University Hospital of Erlangen in Germany.

Velcade (bortezomib), the multiple myeloma drug from Millennium Pharmaceuticals Inc., has only yielded Phase I data so far in melanoma "with Phase II-type studies ongoing," Weintraub said.

"They've had some disappointments earlier, but Velcade plus chemotherapy worked pretty well in melanoma," he added, giving the drug a 20 percent chance for approval in that indication.

But the strongest melanoma compound in the works, Weintraub said, is probably BAY 43-9006, recently renamed sorafenib, from Onyx Pharmaceuticals Inc. and Bayer Pharmaceuticals Corp., who said in March they plan to file for FDA approval in kidney cancer based on interim Phase III data. Plans are in the works for a pivotal trial in melanoma.

Meanwhile, the nearest candidate to Canvaxin in CancerVax's hopper is SAI-EGF, for non-small-cell lung cancer, in a Phase I/II trial. In July, through a deal with the Cuban firm Cimab SA, CancerVax's subsidiaries got exclusive rights to complete development of three specific active immunotherapeutic (SAI) products that target epidermal growth factor (EGF) receptor.

"That's the reason we covered CancerVax in the first place," Weintraub said of SAI-EGF, although "it's very hard to get people interested" since the drug is so far back in the pipeline. He gave the drug a 39 percent chance of approval. Hibernia started coverage in January with a "buy" rating. Last week, the firm maintained its rating but reduced the price target from $19 to $12.

"Long term, I would say they are very attractive at $3," he said, although short term the outlook is less bright. "They might not have anything for the rest of this year."