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Why CTI BioPharma Corp Is Surging Higher Today

By Todd Campbell - Mar 9, 2015 at 1:45PM

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Positive results for CTI BioPharma Corp's myelofibrosis drug sent shares higher.

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What's happening: Shares in CTI BioPharma Corp (CTIC -3.77%) jumped by 10% earlier today following the release of phase 3 trial data for its bone marrow cancer drug pacritinib.

Source: CTI BioPharma

Why it's happening: CTI BioPharma has reported that pacritinib, a JAK2 inhibitor which is being co-developed with Baxter International (BAX -1.81%), met its primary endpoint in phase 3 trials as a therapy for myelofibrosis.

In the 327 patient trial, pacritinib patients saw a reduction in spleen volume that was greater than the reduction reported in patients in the control group who were being treated with physician-specified best available therapy, excluding other JAK2 inhibitors. Importantly, pacritinib appears to have been successful in treating people with very low platelet counts -- a patient population that has traditionally been difficult to treat.

The primary endpoint of the trial was a 35% or greater reduction in spleen volume from baseline to week 24. After week 24, patients in the control group could switch to the pacritinib arm. Overall, 79% of the control group ended up crossing over to pacritinib treatment.

The phase 3 results came from one of the two trials evaluating pacritinib. If results from the second trial, which will go head to head with best available therapy that may include Incyte Corp.'s JAK2 drug Jakafi, confirm this first trial, then CTI and Baxter could file the drug with the FDA for approval. The second phase 3 trial has an estimated primary completion date for final data collection of April 2015.

Now what: Last August, the FDA granted pacritinib fast-track designation, which could eventually mean a speedier evaluation. However, the company will need to deliver positive results from its second phase 3 trial and file for approval first, so we're still a ways away from commercialization.

If pacritinib does make its way to market, there's no guarantee that it will be a commercial success. Pacritinib could be a better alternative to Jakafi in low platelet patients, but that's not necessarily a large patient population. Investors should also recognize that Jakafi, which won FDA approval in 2011, posted sales of $358 million in 2014, so pacritinib may not prove to be a blockbuster. Even if its sales do outperform Jakafi's, CTI will split profit in the U.S. with Baxter and will receive a single digit royalty on ex-U.S. sales from Baxter.

Regardless, since CTI is still able to receive $302 million in potential milestones, this could be an intriguing stock, especially given that its market cap is just a bit north of $403 million.  

Todd Campbell has no position in any stocks mentioned. Todd owns E.B. Capital Markets, LLC. E.B. Capital's clients may or may not have positions in the companies mentioned. The Motley Fool recommends Baxter International. 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.

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Stocks Mentioned

CTI BioPharma Corp. Stock Quote
CTI BioPharma Corp.
CTIC
$5.61 (-3.77%) $0.22
Baxter International Inc. Stock Quote
Baxter International Inc.
BAX
$60.27 (-1.81%) $-1.11
Incyte Corporation Stock Quote
Incyte Corporation
INCY
$73.83 (-0.05%) $0.04

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