ArQule shares skyrocket on promising Phase II lung cancer data

Shares of Woburn, MA-based ArQule soared 57 percent in pre-market trading this morning as investors responded to the news that its lead drug in combination with Tarceva improved the median progression-free survival of patients with advanced, hard-to-treat non-small cell lung cancer enrolled in a mid-stage study by 66 percent.

The median PFS in the ARQ 197-plus-Tarceva (erlotinib) arm hit 16.1 weeks compared with 9.7 weeks in the erlotinib-plus-placebo arm, the company said in a statement. Improvement in median PFS was more pronounced in a sub-group of patients with non-squamous histology, where the median PFS was 18.9 weeks in the treatment arm versus 9.7 weeks in the control arm--a 94 percent improvement. The promising headline data sparked a big pre-market rally for ARQL, with the stock jumping $2 a share to $5.50.

"This is an important advancement," said ArQule CMO Brian Schwartz in a conference call this morning. Schwartz emphasized in a prepared statement that the Phase II data would represent a "meaningful clinical improvement over standard therapy" if replicated in a Phase III. "Phase III only puts the finishing touches on the drug," asserted CEO Paulo Pucci (photo). ARQ 197 is also being studied as a potential therapy for other cancers.

Some analysts, though, made the point that the data weren't all good. The data had to be adjusted to reach statistical significance. The company said the "difference in PFS between the two arms did not achieve statistical significance (hazard ratio = 0.809) by applying a log-rank test." Daiichi Sankyo partnered on the drug at the end of 2008, providing ArQule with a $60 million upfront along with sales and milestone payments.

Of course, Phase II success in lung cancer is no guarantee of a pivotal victory, as Novelos and Antisoma found out earlier this month. Both had high hopes for their own lung cancer programs before getting hit with late-stage trial failures. Lung cancer has proven to be a notoriously difficult disease to develop new therapies for.

- check out ArQule's release
- here's the story from Reuters