News of a Phase III failure sent shares of Maxim Pharmaceuticals Inc. into a downward spiral, losing nearly half their value Monday.

The shares (NASDAQ:MAXM) lost $2.90 to close at $3.04, a 48.8 percent fall, as investors reacted to a missed primary endpoint in a confirmatory study of Ceplene (histamine dihydrochloride). Specifically, use of the investigational drug in combination with interleukin-2 (IL-2) for advanced malignant melanoma patients with liver metastases failed to demonstrate an improvement in overall patient survival.

Maxim said it would continue to evaluate data from the trial, called M104, but the San Diego-based company did not hide from the setback as it plans to further assess the data's effect on already submitted regulatory applications in the U.S. and Europe.

"We're very surprised and perplexed by the outcome, as compared to the data we've seen in other trials," Maxim CEO Larry Stambaugh told BioWorld Today. "But preliminarily, we don't have any information that leads us to be able to explain it. We'll spend several weeks going through the volumes of data that come out of these trials, but initially it's clear that it's a negative trial and we don't believe that the trial will be supportive in seeking registration in either the U.S. or Europe for melanoma."

Maxim initially filed a new drug application for advanced malignant melanoma in 2000, but the FDA indicated that the company would need to complete a second Phase III trial in advanced malignant melanoma with liver metastases. Enrollment ended a year ago, and Maxim in November filed for approval in Europe.

Stambaugh said that despite the study's shortcoming and the ensuing ripple effect on the company's regulatory applications, he could not yet comment on whether the drug would have future in treating metastatic malignant melanoma.

"I think it's going to take additional analyses of the data, and longer follow-up, perhaps," he added. "Based on the previous studies, we thought that the drug had a lot of promise in melanoma. But this trial raises a question about that, and we're just going to have to analyze it further to know."

The M104 study was conducted under the FDA's special protocol assessment program to confirm results from an earlier Phase III trial, called M01, which demonstrated statistical significance at 12 months in a subgroup of advanced malignant melanoma patients with liver metastases. Follow-up data at 24 and 36 months in the entire intent-to-treat population of 305 patients randomized into the earlier M01 trial also demonstrated a statistically significant improvement in survival for patients treated with the combination of Ceplene and IL-2, compared to patients treated with IL-2 alone. The improvement in two- and three-year survival remained statistically significant in the subpopulation.

M104 began in 2002 as a multicenter, randomized and controlled study that eventually included 230 patients. Once fully enrolled, it continued until 191 deaths, a predetermined number. It was conducted under the same protocol as the M01 study, but enrollment was limited to advanced malignant melanoma patients with liver metastases. Findings related to secondary endpoints, such as progression-free survival, response rate, response rate in hepatic tumors and lack of disease progression, will be reported at a later date. On a positive note, M104 showed the combination therapy to be generally well tolerated, as safety was consistent with previous clinical experience.

Earlier this year, Maxim received FDA approval to provide Ceplene to melanoma patients, expanding U.S. access to the drug while investigation continued in M104. Stambaugh said he was not sure whether the expanded access program would continue, as the company also plans to discuss the matter with regulators. (See BioWorld Today, April 15, 2004.)

Despite the negative melanoma data, Maxim said the drug still holds promise in treating other cancers, as evidenced by findings from a Phase III trial for acute myeloid leukemia. The study showed that patients treated with Ceplene and IL-2 experienced a statistically significant increase in the primary endpoint of leukemia-free survival compared with subjects in the control arm. The company plans to pursue regulatory submissions in the U.S. and Europe for Ceplene's use in treating AML patients in complete remission. (See BioWorld Today, May 13, 2004.)

"We will refocus on applying first for AML now," Stambaugh said. "Initially we had indicated that it would be a supplement to an approval in melanoma, but since that's not going to be the case, leukemia will become the first filing toward approval now."

Maxim had been negotiating potential European marketing partnerships for Ceplene, and Stambaugh added that discussions would continue though their focus would shift toward launching Ceplene initially in AML.

The drug is being developed to maintain the integrity of immune cells, in particular T cells and natural killer cells, in cancer patients. The treatment aims at facilitating immune-mediated destruction of cancer cells, including leukemic cells, and also at improving the efficiency of T- and natural killer-cell-activating agents such as IL-2. Further AML data will be reported at December's American Society of Hematology meeting in San Diego.

The company also is studying Ceplene in Phase II trials in patients with hepatitis C and advanced renal-cell carcinoma. Stambaugh said Maxim would soon report response and survival data from the kidney cancer trial, which is nearly complete, followed by sustained viral response data from the hepatitis study in the first half of next year.

Other developments for Maxim going forward include plans to out-license compounds from its apoptosis discovery program, while it also expects an investigational new drug application to be filed on a compound licensed to Myriad Genetics Inc., of Salt Lake City.

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