BOSTON -- I'm not one to shy away from controversy, so I'll get right to the point: I've spent a few days digging into Medarex's ( MEDX) skin cancer drug MDX-010. What I found wasn't very impressive. I don't believe the current phase III studies are going to yield positive data strong enough to warrant the drug's approval. The drug, which also goes by the name ipilimumab, just isn't very potent when used by itself (as monotherapy) in patients with advanced melanoma, or skin cancer. That's the conclusion I draw from a look at previously conducted clinical trials. If a drug fails to impress in phase II trials, it's hard to have much confidence in a successful outcome from phase III trials. That's conventional wisdom in the biotech sector -- and it usually serves investors well. Medarex shares had been moving strongly in the past three months as investors await the results from a trio of phase III monotherapy studies of MDX-010 in patients with advanced melanoma. The stock closed Friday at $15.55, off more than 6%. The data are expected before the end of the year, hopefully in September or October. These are registration studies, which means that if they're successful, Medarex and partner Bristol-Myers Squibb ( BMY) say they will file for the drug's approval with the Food and Drug Administration.
Obviously, the results are very important for Medarex in the short term. The company does have a deep pipeline of drugs in development, but has yet to advance any to approval and the marketplace. Because Medarex has so many drugs in development, the company is in a much stronger position than Dendreon ( DNDN), for example, which is totally reliant on the prostate cancer drug Provenge for its fortunes. If MDX-010 fails in melanoma, Medarex has a lot to fall back on -- that's important because while the stock could suffer in the short term, there are ample opportunities later for Medarex to succeed.
What sort of efficacy is good enough? In the past, an objective response rate of 10% (translation: 10% of patients report tumor shrinkage of at least 50%) has been deemed a minimal efficacy standard for cancer drugs in similar situations. More recently, FDA officials have been growing skeptical of such low response rates, especially in the absence of other data showing how patients might be benefiting. This year, especially, regulators have taken tough stances on cancer drug approvals (Dendreon and GPC Biotech ( GPCB) are just two examples.) The agency seems to want very strong evidence of efficacy, including concrete data pointing toward a survival benefit. Medarex hasn't given clear guidance on a response rate hurdle for the MDX-010 melanoma trial. But I'm assuming that an MDX-010 objective response rate in the mid-teens (let's say 14%-16%) puts the drug in a good position for approval. A response rate in the low-teens (11%-13%) puts the drug's chances for approval on the fence. A response in the single-digits, or even 10%, won't be good enough. You'll notice that my efficacy thresholds seem high. That's because Medarex is using a less stringent measure of tumor shrinkage for its MDX-010 study. The so-called WHO classification for measuring tumor response (the one being used by Medarex) generally results in higher response rate numbers than the so-called RECIST criteria, which is more commonly used.
Simply put: The response rates to be reported by Medarex from the MDX-010 study will be inflated a bit by using the WHO measurement system, probably by two or three percentage points. The problem is that when you dig into previous melanoma studies for the drug, the objective response rates reported (all using RECIST criteria, by the way) are in the 5%-10% range. That's not a very robust response, and it doesn't bode well for the upcoming phase III study.