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Why This Fund Manager Is Short Ziopharm

Again, take a look at the slide representing PFS data from the phase II study. The red curve is the patients treated with the palifosfamide combination. The blue circles above the red line represent "censored" patients. These are patients who are excluded from the PFS analysis because they were either lost to follow up or had not completed enough treatment cycles to be included in the analysis. It's a bit hard to count, but there are either 15 or 16 blue circles (censored patients) in the palifosfamide-doxorubicin arm of the study before median (50%) PFS was reached. Thirty sarcoma patients were enrolled in the treatment arm, so 15-16 blue circles means half the patients were excluded from the analysis before median PFS was reached.

A little bit of patient censoring is relatively common in clinical trials. Censoring, or excluding, half the patients early in the trial (before median treatment effect is reached) is unusual and raises a red flag about the reliability of the data being reported. If those censored patients were included, the PFS reported for the palifosfamide-doxorubicin arm might have been significantly lower. In a larger trial conducted more rigorously, like Ziopharm's phase III study, it's reasonable to expect far fewer censored patients.

Early and frequent patient censoring was also a big problem for Peregrine Pharmaceuticals and the bavituximab second-line lung cancer study.

My fund manager source is further convinced the phase II study results aren't real because if you dig deep into the history of palifosfamide, which stretches all the way back to 1983 and its inventor Robert Struck, you find the drug's chemical structure is inherently unstable. Extrapolating data from ifosfamide papers like Santoro (Journal of Clinical Oncology, 1995) Palifosfamide doesn't penetrate cells well at all, so in order to have any tumor-killing effect, it must be administered at very high doses. Unfortunately, high doses can't be used because the drug causes kidney toxicity.

The palifosfamide dose used by Ziopharm in the phase II and phase III trials is ineffective. Proof? While supposedly increasing tumor response rate from 9% to 23% in the phase II trial, palifosfamide had no effect on other dividing cells such as leukocytes (white blood cells.) The incidence of leukopenia (a side effect of decreased white blood cells) was 17% in the palifosfamide-doxorubicin arm versus 16% in the doxorubicin arm. If palifosfamide was an active drug, the rate of hematological side effects such as leukopenia would be much higher.

Chemically and clinically, palifosfamide makes no sense. Therefore, my fund manager source believes the phase III study in sarcoma fails.

We'll know if he's right next week.

-- Reported by Adam Feuerstein in Boston.

Adam Feuerstein writes regularly for TheStreet. In keeping with company editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback; click here to send him an email.
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