CHICAGO ( TheStreet) -- Exelixis' ( EXEL) experimental drug cabozantinib fully or partially cleared up bone lesions from prostate cancer in 76% of patients and reduced the pain that results when prostate cancer spreads to bones, according to updated results from a mid-stage study presented Monday.

Based on these and other findings from the phase II study, Exelixis said it intends to start by the end of the year a pivotal, phase III study of cabozantinib using a combined endpoint of pain reduction and clearance of bone lesions in heavily pre-treated prostate cancer patients.

The approval of new prostate cancer drugs have typically required that drugs show they can prolong the survival of patients, so Exelixis' trial design for cabozantinib has generated some controversy amongst investors. Exelixis CEO Michael Morrissey said the company intends to get clearance from the U.S. Food and Drug Administration before starting its phase III study.

Potentially complicating matters for Exelixis was the announcement Monday from Bayer that its prostate cancer drug alpharadin extended survival in a phase III study that enrolled prostate cancer patients similar to those to be enrolled in the cabozantinib phase III study.

The new data on cabozantinib were presented at the American Society of Clinical Oncology (ASCO) annual meeting.

Exelixis shares were down $2, or 18%, to $2.06 in Monday trading on typical post-ASCO selling as well as on concerns about the design of future studies planned for cabozantinib.

Among 108 prostate cancer patients with evidence of cancer spreading to their bones, 82 patients, or 76%, had either a partial or complete resolution of bone lesions.

Last February, Exelixis reported an 85% rate of partial or complete resolution of bone lesions from 62 patients in the same study.

Cancer that metastasizes, or spreads, to bones is a serious complication leading to fractures, increased pain and eventual death. While many cancer drugs can shrink or eliminate tumors in soft tissue, few if any have demonstrated an ability to clear up bone metastases.

Patients treated with cabozantinib who had partial or complete resolution of bone lesions also experienced marked reductions in pain and were able to reduce or eliminate the need for narcotic painkillers more than patients without resolution of bone lesions, researchers reported Monday. These findings of additional clinical benefit from cabozantinib were based on post-hoc, or retrospective, analysis of the study data, however.

"The study shows for the first time a correlation between the impact of changes in bone scans and signs of broad clinical benefit," said Exelixis CEO Morrissey, in an interview.

These data are what compelled Exelixis to seek initial approval of cabozantinib based on a study looking at resolution of bone lesions and pain reduction."It's an important medical need and plays to the strengths of the drug," said Morrissey.

The phase II study enrolled 171 patients with advanced, metastatic prostate cancer that was no longer responding to hormone therapy. Forty-three percent of the patients entering the study received prior treatment with Taxotere, a chemotherapy drug commonly used to treat advanced prostate cancer. Another 9% of patients had received treatment with Johnson & Johnson's ( JNJ) Zytiga or Medivation's ( MDVN) experimental drug MDV3100.

All patients enrolled in the Exelixis study were treated with cabozantinib for 12 weeks, after which 7 patients, or 4%, showed evidence of significant tumor shrinkage.

Another 136 patients, or 80% of patients had tumors that shrank by a small amount or remained stable after 12 weeks of treatment. Thirty-one of these stable disease patients were then randomized to continue treatment with cabozantinib or a placebo before the study's enrollment was halted to a high level of observed activity.

From week 12 onward, the patients who continued with cabozantinib treatment lived an average of 21 weeks before their tumors started growing again compared to 6 weeks for patients who were switched to placebo. As a result, continued treatment with cabozantinib led to an 87% reduction in the risk of tumor progression -- a highly statistically significant result.

The most prevalent, serious side effects of cabozantinib in the study were fatigue, hand-foot syndrome, hypertension, decreased appetite and nausea/vomiting. One cabozantinib patient died for reasons that have not been explained. Fifty-one percent of patients required at least one dose reduction of cabozantinib during the study.

Cabozantinib is a targeted cancer drug that works by blocking two different molecular pathways that tumors use to grow. Exelixis is developing cabozantinib on its own after Bristol-Myers Squibb ( BMY) return rights to the drug last year.

Exelixis' Morrissey says the company intends to retain full rights to develop and market cabozantinib in the U.S. and Europe but is considering a partnering deal for Asia.

Saturday at the ASCO meeting, Exelixis reported data on cabozantinib treatment in women with ovarian cancer.

--Written by Adam Feuerstein in Boston.

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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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