2 Biotechs, 1 Promising Cancer Drug

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It's not often you find two companies with market caps below $350 million partnered on a drug, but such is the case for perifosine, where tiny Aeterna Zentaris (NAS: AEZS) licensed the cancer drug to only slightly larger Keryx Biopharmaceuticals (NAS: KERX) .

Yesterday, the duo announced that they had completed enrollment in a phase 3 clinical trial testing perifosine in patients with advanced colorectal cancer.

X-PECTing success
I'm a sucker for a good clinical-trial acronym, and they really don't get much better than "X-PECT" (Xeloda + Perifosine Evaluation in Colorectal cancer Treatment), especially since the companies have a good reason to expect positive results.

As the name implies, the trial is testing perifosine in combination with Roche's Xeloda in patients who have failed other colorectal-cancer treatments -- including Sanofi's (NYS: SNY) Eloxatin, Amgen's (NAS: AMGN) Vectibix, and/or Erbitux from Bristol-Myers Squibb (NYS: BMY) and Eli Lilly (NYS: LLY) .

In a phase 2 trial, Xeloda plus perifosine improved median overall survival over Xeloda alone by 6.8 months. This was a small trial of only 35 patients, but it's still fairly impressive since that's a 62% improvement on Xeloda alone. Phase 3 data is typically not as impressive as phase 2 results, but there seems to be some leeway for less impressive results to still show a statistically significant effect.

The trial was run under a Special Protocol Assessment, or SPA, with the Food and Drug Administration. Essentially, an SPA means the FDA has agreed that the trial is sufficient for approval. If the trial meets its primary endpoint and nothing new crops up, the FDA should approve the drug.

With a primary endpoint of overall survival -- the gold standard in oncology -- it seems like a bit of overkill to have an SPA, but there's really no downside to having one. Just don't expect the presence of an SPA to increase the chance of a clinical trial success.

When can we expect results?
The companies will probably give us a timeframe in the coming months for their estimate of when the trial will be completed, but we can do some back-of-the-envelope calculations to get close.

The results will be revealed after 360 patients in the study die. It took less than 16 months to enroll the 430 or so patients in the trial. If you assume the patients enrolled steadily, the 360th patient was enrolled about three months ago; the enrollment probably accelerated as we went through the trial, but this is a rough estimate. The median survival of patients in the phase 2 trial was 10.9 months and 17.9 months, depending on whether the patients received perifosine and Xeloda or just Xeloda. Let's call it an average of a 14-month survival, which would happen approximately 11 months from now. Add in a month or two to crunch the numbers, and we should have the data this time next year.

Which one?
Both companies have drugs in development beyond perifosine, but if you're betting on the cancer drug as the near-term catalyst, I think Keryx is probably the more appropriate choice. The royalty structure wasn't disclosed in the licensing deal, but assuming the royalties are in the 10% or less range, Keryx will retain a majority of the financial benefit from perifosine in the U.S. market.

While I've focused on perifosine's potential in colorectal cancer, I'd be remiss if I didn't point out that it's also being tested as a treatment for a blood cancer called multiple myeloma. The success in colorectal cancer is important, but it would really take a failure of perifosine in both indications for it to be a complete flop.

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At the time this article was published Want to know the latest drug stock we've picked for the Fool's market-beatingRule Breakersnewsletter service? Take a look at all our recommendations with afree 30-day trial.Fool contributorBrian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. The Fool has adisclosure policy.

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