Keryx Pharmaceuticals' Perifosine on Track for Failure

Strategic Insights -

Keryx Pharmaceuticals' colon cancer drug, perifosine, is expected to fail when the results of a phase III clinical trial are announced in early 2012. This prediction is shared by Dr. Mark Ratain, a University of Chicago oncologist and professor, who points to the company's market value and the history of phase III trials for micro-cap cancer drug stocks. Ratain's outlook is based on an analysis of 59 phase III trials conducted by micro-cap cancer drug developers over the past decade, which found a 100% failure rate for these companies.

Key Takeaways:

  • The phase III colon cancer study of perifosine is expected to report top-line results in the first quarter of 2012, which makes Keryx a micro-cap cancer drug stock with a low probability of success.
  • The analysis of 59 phase III trials conducted by micro-cap cancer drug developers over the past decade found a 100% failure rate for these companies, with no positive trials among 21 micro-cap companies.
  • The median market capitalization was approximately 80-fold greater for the companies with positive trials vs. companies with negative trials.
  • Keryx has a market value of approximately $200 million, making it a micro-cap cancer drug stock that is likely to follow the same pattern as other micro-cap companies with failed phase III trials.
  • The fact that perifosine demonstrated a significant survival advantage in a randomized, controlled phase II colon cancer study does not necessarily mean that the phase III study will be successful.

Statistics:

  • 100% failure rate for phase III cancer drug trials conducted by micro-cap cancer drug developers over the past decade.
  • 21 micro-cap companies had no positive trials among them.
  • The median market capitalization was approximately 80-fold greater for the companies with positive trials vs. companies with negative trials.
  • Keryx has a market value of approximately $200 million.
  • Perifosine demonstrated a significant survival advantage (17.7 months vs. 7.6 months) in a randomized, controlled phase II colon cancer study.

Sources:

  • "Editorial: Biotech industry's 'failed promise' of cancer research" by Dr. Mark Ratain and Adam Feuerstein, Journal of the National Cancer Institute (September 2011).
  • "Biotech stock mailbag: Research backs shorting micro-cap cancer drug stocks" by Adam Feuerstein, TheStreet (October 2011).