Voila:
Telik Inc
Rating Change; Downgrade to Sell on Flawed Studies
Downgrading to SELL on Flawed Studies
We are downgrading TELK to SELL from NEUTRAL as we believe the
risk/reward is negative. Although data from three Telcyta studies are expected in
mid-’06 we believe the studies may be insufficient for approval because the trial
designs are flawed or the endpoint will be difficult to hit. And, we do not believe
the market opportunity for the drug is meaningful.
ASSIST-3’s Primary Endpoint May Not Be Clinically Important
ASSIST-3, which is testing Telcyta in 2nd line ovarian cancer is unlikely to be
sufficient for approval because the primary endpoint is response rate, not survival.
A recent FDA panel stated that in the setting of 2nd line ovarian cancer, survival
data is needed for approval because response rate does not correlate with survival.
ASSIST-2 Flawed Due to Comparator
ASSIST-2, testing Telcyta in 3rd-line lung cancer vs. Iressa, is also a flawed study
because Iressa is no longer used in that setting because the drug failed to show a
survival benefit in a Phase III trial. Even if Telcyta is superior to Iressa, it is
meaningless because Iressa does not work in 3rd line lung cancer.
ASSIST-1 Targeting Small Market
ASSIST-1, testing Telcyta’s ability to improve survival in 3rd line ovarian cancer
as a single agent vs. chemotherapy is unlikely to show a benefit. Telcyta has
shown only a modest response rate as a single agent and no single agent drug has
shown a significant survival benefit in 3rd line ovarian cancer. Also, we estimate
the potential US market for 3rd line ovarian cancer is only $60-160 MM.
$5 of Upside, $13-14 of Downside Depending on Outcomes
If all three trials succeed, we estimate there is only $5 of upside in the stock, but if
all three fail, there could be $13-14 of downside.
Eric Ende
Comment available. |
