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The SEC disclosure is only two sentences long, and on the surface doesn't seem that bad:

"On March 6, 2012, Merck Serono, a division of Merck KGaA of Darmstadt, Germany, informed Oncothyreon (Nasdaq: ONTY  ) that the Independent Data Monitoring Committee (DMC) for the phase 3 START trial of Stimuvax in non-small-cell lung cancer (NSCLC) met and the DMC recommendation is to continue the study. Final results from the study are expected in 2013."

Trial continuing, results next year, what's the big deal? It's that investors were hoping for the data now, today, instantly after the DMC took an interim look at the data, and the delay sent shares of Oncothyreon down 40%.

Ironically, longer cancer drug trials are usually viewed as a good sign for a company. Keryx Biopharmaceuticals' (Nasdaq: KERX  ) and Aeterna Zentaris' (Nasdaq: AEZS  ) investors, for example, are hoping a longer trial is a sign that the biotechs' drug candidate, perifosine, is keeping colon cancer patients alive longer.

But when a company builds an interim look into their trial, there's a hope that the trial will be stopped early because the drug is working so well. The lack of an early conclusion also breeds worries that the trial will ultimately fail, which likely contributed to the stock plunge today.

But the way that interim peeks at clinical trial data work is that there's a higher statistical threshold required to stop the trial early, because each time you look at the data, you increase the likelihood of finding what you're looking for. So Stimuvax didn't work really well, but it's still possible that the drug works well enough to ultimately pass the trial when more patients report out next year.

Stimuvax doesn't need superb survival data to get on the market and have meaningful sales. NSCLC patients have few options, and Merck KGaA and Oncothyreon are testing Stimuvax after chemotherapy so it won't have to compete with those drugs. Just barely passing its clinical trial with an incremental increase in survival will be good enough.

On the other hand, there's a reason there a few options: NSCLC is one tough cookie. Beyond Pfizer's (NYSE: PFE  ) Xalkori, which treats only patients with a certain mutation, I can't think of any drugs approved to treat lung cancer recently. Oncothyreon is still a risky stock to own, but it's just got a heck of a lot cheaper.

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Fool contributor Brian Orelli holds no position in any company mentioned. Click here to see his holdings and a short bio. Motley Fool newsletter services have recommended buying shares of Pfizer. 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 (3) | Recommend This Article (9)

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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On March 06, 2012, at 7:34 PM, boardwalk97 wrote:

    A very good assessment of the Simuvax trial on your part.

  • Report this Comment On March 06, 2012, at 11:43 PM, Itsagame999 wrote:

    I am not quite sure what you mean that there are not many drugs approved for NSCLC. I know that Cisplatin, Carboplatin, Alimta, Navelbine, Irressa, and Tarceva are approved. There are others that are in late stage trials. I certainly hope that Simuvax is a winner for it will give my wife another option.

  • Report this Comment On March 07, 2012, at 12:10 PM, BioBat wrote:


    He doesn't say 'not many drugs approved', he said few options and not many drugs approved recently. Platin's, taxols and other mitotic inhibitors are essentially 60 year old drugs, some of which have been slightly modified over the years but are essentially the same things discovered in the 1940s/50s. Iressa and Tarceva (as well as Cetuximab) were the first round of targeted therapies approved in lung cancer but they were first approved 8-9 years ago. And still, lung cancer remains the leading cause of cancer mortality in North America and Europe with a 5 year survival rate under 20%.

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