Proof of Concept? You Bet!

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Phase 2 trials are often called the "proof of concept" stage, but some phase 2 trials are run better than others. Having the confidence to infer a successful phase 3 trial from positive phase 2 results is only possible if the phase 2 trial was run properly. Otherwise it isn't really "proof," now is it?

Threshold Pharmaceuticals' (Nasdaq: THLD  ) phase 2b trial of TH-302 in pancreatic cancer is a textbook example of how to run a proof of concept trial. Investors seem to have noticed, sending shares up more than 40% yesterday and another 15% today.

First and foremost, a placebo control is essential to know whether a drug works. Single-arm trials that compare the drug to some historical measure of efficacy are difficult to interpret because you don't know if the trial enrolled the same types of patients as the historical average. And cancer treatments are continually getting better, so historical averages tend to be behind the curve.

Combining TH-302 with Eli Lilly's (NYSE: LLY  ) Gemzar compared to Gemzar alone resulted in a 63% improvement in progression-free survival, a measure of how long it takes for a tumor to begin growing again. And nearly twice as many patients responded to the combination as those who took Gemzar alone.

The other thing to look for in a proof of concept trial is a dosage effect. If the higher dose works better, it's extra evidence that the results didn't happen by chance. Running multiple doses in a phase 2 trial isn't always possible, especially in cancer trials where the maximum tolerability might be discovered in a phase 1 trial, but Threshold was able to test two doses and claimed that the higher dose resulted in greater efficacy than the lower dose, although it's saving the details for a medical meeting.

Based on the phase 2 data, I think it's a safe bet to assume a phase 3 trial will be successful. The key thing investors should confirm is that Threshold and its partner Merck KGaA (OTC: MKGAY) enroll the same types of patients in the phase 3 trial as they did in the phase 2 trial that was just reported. Aeterna Zentaris (Nasdaq: AEZS  ) and Keryx Biopharmaceuticals (Nasdaq: KERX  ) , by contrast, only enrolled a subset of patients that were enrolled in the phase 2 trial into the phase 3 trial for their colon cancer drug perifosine, which has investors feeling a little uneasy as we approach the trial results expected in the next month or so.

Threshold is the prototypical biotech multibagger, up over 300% since the beginning of the year. Fool analysts think they've found another health-care company with just as much upside. You can read about it in their new free report, "Discover the Next Rule-Breaking Multibagger." You can get your copy for free by clicking here.

Fool contributor Brian Orelli holds no position in any company mentioned. Click here to see his holdings and a short bio. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Read/Post Comments (9) | Recommend This Article (6)

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  • Report this Comment On February 22, 2012, at 4:00 PM, Hope4GoodFuture wrote:

    Dr. Orelli,

    I don't have much experience w/ the drug approval process so have a stupid question. With a well constructed trial like THLD's, where results were significant even when combining the small, less effective dose with the higher, more effective dose, do we ever get to a point where the company and FDA agree that it's in the public interest to skip the Phase III and approve off of the phase II results? Is the issue here that PFS is not good enough- they need to see OS?

  • Report this Comment On February 22, 2012, at 4:14 PM, Troy2008 wrote:

    The subset in the KERX/AEZS Phase 2 trial that responded the BEST are being used in the Phase 3 trial. Logically that will produce BETTER results in the population in the P3 trial.

    I'm not feeling uneasy about the P3 at all.

  • Report this Comment On February 22, 2012, at 4:55 PM, portefeuille wrote:

    Merck KGaA (OTC: MKGAY)


    Hardly any "caps" game players have made a call on Merck. No interest for anything non-U.S.. Oh well, hehe ...

    There are currently 50/1200 MRK:GY/THLD shares in the fund with break-even of around -48.63/-8.39 EUR/USD.

  • Report this Comment On February 22, 2012, at 6:41 PM, BlaisPascal wrote:

    what happened to my post?

  • Report this Comment On February 22, 2012, at 6:49 PM, BlaisPascal wrote:

    Dr. Orelli being that we're almost at 2/3 of the first quarter and the 360th patient has not died, where in time(march,april ...) would you say that the probability of a positive phase 3 trial be!

  • Report this Comment On February 22, 2012, at 6:50 PM, BlaisPascal wrote:

    sorry that question is for Perifosine

  • Report this Comment On February 23, 2012, at 8:30 AM, Itsagame999 wrote:

    Dr. Orelli, I too have the same question that was asked above. If they used only a subset of the phase 2 trials, my assumption was that they learned something from the phase 2 trial that the drug worked best on patients with a certain make up. Many failing phase 3 trials that I have seen is that they try to encompasse to much of a population of patients that have different make ups and they fail the overall test. In the case of the drug Tarceva, it was very effective with the subset of patients who had the EGFR mutation but was a failure for patients that did not have this. This should have been discovered in the PH2 trial and it should have designed the the ph3 trial accordingly. ONTY took a big hit for this mistake.

  • Report this Comment On February 28, 2012, at 1:16 AM, TMFBiologyFool wrote:

    Hope4GoodFuture: Companies can get approved without comparing a drug to anything else with a surrogate endpoint such as PFS, but usually only if there aren't any drugs approved for the indication. It's called an accelerated approval and requires additional post-marketing studies to gain full approval.

    Troy2008, BlaisPascal and Itsagame999: When you change the parameters between phase 2 and phase 3, it becomes a lot harder to predict the outcome. Perifosine patients could be living longer or maybe placebo patients are. The signal seen in the phase 2 data could be real or it might be an artifact.

    I'm not saying the trial will fail, but there's more uncertainty than you would normally find.

  • Report this Comment On March 07, 2012, at 11:32 AM, Troy2008 wrote:

    Sorry, that just doesn't apply here. It's like saying we did a study with 10 dogs and 10 cats, all the cats died and all the dogs were cured. Now lets run a huge study and use 1000 dogs. How do you think it's going to turn out.

    The drug being used in the control arm has been used and tested many times for decades and the groups never magically live longer. It's been 7.5 months since the last patient was enrolled. The placebo group is probably mostly all gone by now. The drug is working.

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