Muddled Data Dents Medarex Shares

The stock falls after disappointing news on the company's melanoma drug.
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Medarex

(MEDX)

reported top-line results from three pivotal studies of its skin cancer drug ipilimumab Monday, and the data appear to be -- on a downward sliding scale -- negative to frustratingly confusing.

In fact, Medarex didn't tell investors much in its ipilimumab announcement, which shouldn't be terribly reassuring to those who were waiting for definitive proof that the drug is the long-awaited panacea for skin cancer.

Yet hope springs eternal, so the company and partner

Bristol-Myers Squibb

(BMY) - Get Report

say they plan to seek approval for ipilimumab with the Food and Drug Administration in the first half of 2008.

Based on the little information provided in Monday's announcement, that quest isn't likely to have a happy ending.

Clearly, my bearish take on ipilimumab's chances for success in melanoma (at least this go-round) haven't changed much since early September, when I

predicted that the data from these three phase III studies in melanoma wouldn't be strong enough to warrant the drug's approval.

Medarex shares dipped $2.58, or 19%, to $10.77 in Monday's after-hours trading session. The stock closed the regular session down 2 cents to $13.55.

Without providing any detail, Medarex said Monday that the key ipilimumab phase III study failed to meet its primary endpoint, "which was to rule out a best objective response rate of less than 10 percent."

A study that fails its endpoint is never a good thing. But then, the statement, as written, seems designed to obfuscate. In English, Medarex is confessing that the observed response rate in the trial wasn't robust enough to rule out -- by statistical analysis -- a "true" response rate of less than 10%.

If that still has your head scratching, let me be even more clear: I'm betting that less than 10% of melanoma patients in this study reported meaningful reduction in the size of their tumors. Maybe the response rate edged up into the low-double digits (11% to 12%), but from a statistical perspective, that wasn't good enough to consider the study a success.

Going back to what I wrote in September, I find it hard to envision a scenario by which the FDA approves a melanoma drug that can't muster more than a 10% response rate in its key clinical trial. That's especially true in a situation where the study is conducted without the benefit of a comparator arm, as was the case here.

Medarex isn't providing any specific data on ipilimumab response rates. Instead, the company said response rates across all three studies ranged from mid-single digits to mid-teens.

In the past, Medarex executives insisted that the FDA has never placed a minimum response requirement on ipilimumab trials. Company supporters have pointed to this to support their belief that ipilumumab would win FDA approval even with less-than-robust efficacy -- especially since the melanoma patients in the studies had advanced disease that failed to respond to other treatments.

Yet Medarex seemed to contradict itself Monday by acknowledging that there, a 10% response rate hurdle existed in its key phase III trial. Ipilimumab couldn't get over it, so the trial failed.

The company is holding a conference call Tuesday morning, so perhaps some of these questions and inconsistencies will be answered. But more specific data isn't likely to be offered. My guess is that it won't see actual data from these trials until the annual meeting of the American Society of Clinical Oncology in May.

In the meantime, the debate over Medarex is likely to continue. The company and Bristol-Myers Squibb seem intent on seeking FDA approval, good data or not. If that happens, the debate will continue well into next year.

Adam Feuerstein writes regularly for TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback;

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