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What happened

Puma Biotechnology (PBYI -5.85%) shares stumbled 20.5% today on reports that breast cancer patients taking its lead drug candidate, neratinib, still had stubbornly high diarrhea incidence rates, despite the co-administration of an anti-diarrhea prophylactic treatment.

So what

Neratinib has been filed for approval with EU and U.S. regulators for use as an extended adjuvant treatment for patients with early stage HER2 breast cancer who have already received Herceptin as an adjuvant treatment.

In trials, neratinib improved progression-free survival. However, a significant number of patients suffered diarrhea during trials, and that's raised concerns among industry watchers that the drug may fail to pass muster with regulators.

To address those concerns, the company's been conducting a mid-stage study evaluating the administration of loperamide, an anti-diarrhea medicine, alongside neratinib. Unfortunately, an interim-analysis released today shows that while adding loperamide improved the incidence rate of grade 3 or higher diarrhea, rates still remain high. 27% of patients receiving loperamide reported grade 3 or higher diarrhea versus nearly 40% in non-loperamide patients. 

In hope of getting the incidence rate even lower, today's interim report disclosed that the study has been expanded to include a cohort of patients who will receive loperamide and the corticosteroid budesonide. In 16 patients receiving that two-drug prophylaxis regimen, the rate of grade 3 or higher diarrhea dropped to 12.9%.

Now what

While today's news shows that there's more work to be done to improve neratinib's safety profile, investors might want to take solace that rates did drop in the loperamide group, and that rates fell dramatically in the small number of people given loperamide plus budesonide. Ultimately, I think that improving the rate to the 15% to 20% range would remove a lot of the risk that this drug will fail, so investors will want to keep an eye out for final data to see if the new two-drug combination can still hit that target when it's used in more patients.