After the company announced details of its phase 3 INNOVATE-3 trial at the American Society of Clinical Oncology (ASCO) annual meeting, shares of NovoCure (NASDAQ:NVCR), a red-hot medical device company focused on cancer, fell as much as 12% in early morning trading today. Shares were down about 10% as of 10:30 a.m. EDT.
The INNOVATE-3 trial is a late-stage program designed to test NovoCure's Optune device in combination with paclitaxel (more commonly known as Celgene's drug Abraxane) as a treatment for recurrent, platinum-resistant ovarian cancer.
Here are a few of the key details of the study design that were announced today:
- 540 patients will be enrolled.
- Patients will be randomized to receive either weekly doses of paclitaxel or weekly doses of paclitaxel in combination with Optune.
- The primary endpoint of the study will be overall survival.
- Secondary endpoints will include progression-free survival, objective response rate, quality of life, and a few other important measures of health outcomes.
NovoCure's investors should feel good about this study having clinical success, because a smaller phase 2 that tested Optune and standard-of-care chemotherapy in ovarian cancer suggested a more than doubling of the progression-free survival rate and an "improvement" in overall survival.
NovoCure's chief science officer, Dr. Eilon Kirson, shared these comments with investors regarding the study design: "After having a recurrence, women with ovarian cancer experience a median overall survival of only 13 to 14 months. Our preclinical research has demonstrated synergistic effects between Tumor Treating Fields and taxane-based chemotherapies."
So why are shares falling today if the news release was largely positive? A possible answer is that traders were expecting the company to share more-substantial news at ASCO than just the details of a phase 3 trial design. After all, NovoCure's stock has risen by more than 30% in the last three months alone, even after accounting for today's double-digit drop. The big jump could have been caused by traders who were bidding up the share price off of the belief that the company would have made a big announcement at ASCO, one of the most important medical conferences of the year.
NovoCure's stock has more than doubled over the last 12 months, so investors shouldn't be surprised to see shares give back a little bit of the gains today. In fact, I was surprised to see that the company's stock didn't get whacked earlier in the year after it produced worse-than-expected first-quarter results.
Overall, this Motley Fool isn't surprised to see that shares are pulling back today based on the lack of a more-substantial announcement at ASCO. If you were a bull on this business yesterday, I see no reason to change your tune today.