Following the failure of ArQule’s (ARQL) tivantinib in lung cancer, market attention shifted to the ongoing phase III in liver cancer. With a $173 market cap and $130M in cash, the market ascribes little value to tivantinib. In addition, the market completely ignores 2 additional clinical programs (both in phase I): ARQ092 is an Akt inhibitor that was developed with Daiichi Sankyo (Daiichi recently returned rights to ArQule) and ARQ087 is an FGFR inhibitor.
In contrast to tivantinib’s case, which was one of the first MET inhibitors to enter the clinic, ARQ092 and ARQ087 are 1-3 years behind other Akt or FGFR inhibitors, respectively. This means ArQule does not have a fast mover advantage, but it could benefit from read-across from similar programs developed by ArQule’s competitors.
A single success could dramatically change the sentiment towards an entire class of drugs, as can be seen with Pfizer’s (PFE) CDK 4/6 inhibitor, palbociclib (PD-0332991). Results from a phase II combination trial in breast cancer turned CDK inhibitors from a neglected area to one of the hottest target families in the industry.
There is a lot of activity around Akt and FGFR but clinical experience to date did not generate compelling results. Most notably, companies still haven’t found biomarker-defined populations or combination regimens for which selective FGFR and Akt inhibitors are active. Nevertheless, it is premature to assess these targets as most programs are in early stage development with a lot of new data expected in the coming years. If a competing Akt or FGFR inhibitor generates promising results, ArQule’s programs could become very attractive for investors as well as potential partners.
In particular, ARQ092 could be “discovered” by investors this year based on phase I results at AACR this week and positive read-through from other Akt programs, primarily Genentech’s GDC-0068. [Partnered with Array Biopharma (ARRY) ]
ARQ092 – AACR as a potential catalyst
I am becoming cautiously optimistic about ARQ092, despite Daiichi’s recent termination. A partner returning a program is never a good thing, however, when it comes to early stage programs, it is not necessarily based on negative results. In ARQ092’s case, phase I results will be published this week at AACR, so if there are any red flags, they should be made public soon.
2 things make me assume the phase I data are reasonably good (i.e. good safety and PK profile, proof of target inhibition and perhaps some efficacy signals).
The first positive indication is AACR’s intention to include ARQ092’s phase I in the AACR Annual Meeting 2013 Official Press Program. This guarantees the trial is not a complete flop and that perhaps results are encouraging.
The second hint can be found at Anthony Tolcher’s (START, San Antonio) presentation at TAT 2013 last month (see my meeting notes here). Tolcher gave a very interesting presentation titled “Dual combinations involving MEK inhibition” that also covered Akt inhibitors. (His presentation can be downloaded here)
He pointed out that optimal inhibition of the PI3K/Akt pathway should result in meaningful hyperglycemia (increased blood sugar) but to date this hasn’t been observed with most inhibitors. His conclusion was that available inhibitors simply could not hit the target strong enough. The only 2 exceptions he mentioned were Bayer’s BAY806946 (PI3K inhibitor) and ArQule’s ARQ092. Tolcher probably has first-hand experience with ARQ092, as he is one of the authors on the AACR abstract.
Positive read-through from Genentech
The TAT 2013 meeting also included positive preliminary data on Genentech’s Akt inhibitor GDC-0068. Rhoda Molife (Royal Marsden Hospital/Institute of Cancer Research, UK) presented results from a combination trial of GDC-0068 in combination with chemotherapy in a wide range of tumors.
Retrospective analysis demonstrated that patients with tumors harboring mutations in the PI3K-AKT pathway are more responsive to the combination. 6 out of 7 (86%) patients with a mutation had some degree of tumor shrinkage compared to 6 out of 20 (30%) patients without a mutation. Although this signal is from a small non-randomized heterogeneous trial, it certainly provides future direction for all Akt inhibitors. Molife also disclosed that a randomized phase II evaluating GDC-0068 plus chemotherapy in gastric cancer is about to start.
Source: Molife R. TAT 2013
Therefore, 3 catalysts related to ARQ092 are expected to occur in 2013:
1- Phase I trial that will position ARQ092 as a potentially best in class (or at least as good as) Akt inhibitor.
2- Additional results on biomarker–defined patient populations from Genentech’s study.
3- Better investor awareness to Akt inhibitors after Genentech starts a randomized phase II in gastric cancer.
If all the above materialize, ARQ092 could become ArQule’s growth driver this year. Assuming an enterprise value of $80M at the end of 2013 ($90M in cash at YE 2013), this could have a material impact on the stock.
Update – April 10th, 2013
Overall, the ARQ092 phase I data presented at AACR demonstrate strong Akt inhibition, evidenced by significant hyperglycemia (Grade 3) in 3 out of 4 patients at the highest dose cohort. The most important observation was the emergence of hyperglycemia before or in the absence of rash in most cases. This is somewhat different from previous Akt inhibitors, which have dose limiting skin toxicities before significant hyperglycemia appears.
So ARQ092 has proof of target inhibition and an intriguing safety profile that could enable more profound target inhibition. Nevertheless, it is too early to claim a differentiated clinical profile given the low numbers. It is important to mention AstraZeneca’s AZD5363, which also generated good p1 data including 2 partial responses in biomarker-defined patients (See AACR’s release). Overall, it was a good meeting for Akt inhibitors and the field is gaining momentum.
Arqule’s next challenge is showing efficacy in biomarker-selected patients. Will be interesting to see whether they will keep the drug or try to re-partner.
Portfolio holdings – April 7th, 2013