Teva Pharmaceuticals Industries Ltd. (TEVA) and OncoGenex Pharmaceuticals, Inc. (OXGI) recently announced that they have initiated a second phase III study with their oncology candidate, custirsen (OGX-011/TV-1011). The trial, SYNERGY, will evaluate custirsen as a first-line treatment for patients suffering from metastatic castrate-resistant prostate cancer (CRPC).
The controlled global study will be conducted with about 800 men who will be randomized to receive either docetaxel/prednisone plus custirsen or just docetaxel/prednisone. The primary endpoint is overall survival benefit.
Custirsen is already in another phase III study that was initiated in June 2010. This study, SATURN, is evaluating custirsen as a second-line therapy in patients with metastatic CRPC. Both phase III studies are being conducted under the US Food and Drug Administration’s (FDA) Special Protocol Assessment (SPA) program. Custirsen enjoys fast track status with the FDA.
Teva and OncoGenex have plans to conduct a third phase III study with the candidate. This study will evaluate custirsen for the first-line treatment of advanced, unresectable non-small cell lung cancer (NSCLC). The study is slated to commence in 2011.
Custirsen has been co-discovered with Isis Pharmaceuticals (ISIS) to inhibit cancer treatment resistance. Teva and OncoGenex entered into a global license and collaboration agreement for the candidate in late Dec. 2009.
In addition to making an initial cash payment of $60 million to OncoGenex, Teva could also pay up to $370 million on the achievement of development and commercial milestones. Additionally, Teva will pay tiered royalties in the mid-teens to mid-twenties range on product sales. While Teva will be responsible for all commercialization and development expenses, OncoGenex has retained the option to co-promote custirsen in the US and Canada.
The successful development of custirsen should not only help Teva strengthen its cancer product portfolio, it should also help boost its top-line given the demand for new treatment options for cancer. The National Cancer Institute estimates that approximately 217,730 new cases of prostate cancer will be diagnosed in the US in 2010.
Neutral on Teva
We currently have a Neutral recommendation on Teva, which is supported by a Zacks #3 Rank (Hold). While we expect the company to continue performing well thanks to new product launches, both generic and branded, we remain concerned about the intense competition and pricing pressure in the generics market.
Moreover, the Copaxone patent challenge remains a matter of concern. With Copaxone contributing more than 20% to total revenues in 2009, the entry of generic versions would have be a major setback for the company.
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