) -- An email from Peter Y. kicks off this week's Biotech Stock Mailbag:
Wondering if you could give your perspective on Merrimack Pharmaceuticals' (MACK - Get Report) chances of a successful outcome on their just completed enrollment for MM-398 in phase III trial for pancreatic cancer. Wondering how this might play into the Feuerstein-Ratain Rule?
MM-398 wraps the "old" chemotherapy drug irinotecan in spheres of liposomes, or fats, which is supposed to increase the absorption of the drug inside tumors where it can be most effective and minimize exposure in surrounding, healthy tissue, therefore reducing potential for side effects.
Merrimack's phase III "NAPOLI-1" study enrolled 400 patients with advanced pancreatic cancer that no longer responds to gemcitabine-based therapy. In other words, these are second-line pancreatic cancer patients. The patients are randomized to one of three arms: 1) MM-398 monotherapy; 2) MM-398 plus 5FU-leucovorin (a chemotherapy regimen); or 3) 5FU-leucovorin as the control. The study's primary endpoint is overall survival with progression-free survival and objective response rate as key secondary endpoints.
The MM-398 study completed enrollment at the end of August. Merrimack executives have guided to the release of top-line results in the fourth quarter or possible early in the first quarter of next year.
With that as background, let's see what the Feuerstein-Ratain rule says about the outcome of the MM-398 study. As a reminder, the F-R Rule says phase III studies of cancer drugs have a zero percent chance of success (100 percent failure rate) if the company sponsoring the study has a market cap of $300 million or less, measured four months before the study results are announced.
Merrimack's fourth quarter 2013-first quarter 2014 guidance for MM-398 data makes it harder to nail down a timeframe from which to calculate the company's market cap. I'm going to use January 1, 2014 as my target date because it's the midpoint of Merrimack's guidance.
Four months back from Jan. 1, 2014 is Sept 1, 2013, which puts Merrimack's market cap at just under $350 million. That places Merrimack outside the F-R Rule dead zone, but just barely. Vical and Ziopharm were similarly positioned ahead of their respective phase III studies recently and both failed.
The F-R Rule has proven to be very accurate to date, so I'd have to give MM-398 low odds for success in this second-line pancreatic cancer study. The company's recent below-market financing and subsequent stock sell off likely reflects low investor expectations for the MM-398 study.