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Novelos Pharmaceuticals, a tiny biotechnology company in Newton, could have a blockbuster drug on its hands. The company will soon release data from a Phase 3 clinical trial for its drug target to treat non-small-cell lung cancer, and investors have driven the share price (OTC: NVLT) from 76 cents on Dec. 10 to a high of $2.94 on Jan. 4.
The excitement is driven by the fact that the company extended the length of the trial because patients lived longer than expected. Lung cancer is especially virulent, and previous studies at other companies have found that the control group — those not receiving the study drug — have lived an average of 9.8 months. Novelos’ goal for the trial is to extend survival for the treatment group — the ones who would take the drug — by 25 percent to 12.5 months.
This survival length would put Novelos’ drug candidate, known as NOV-002, on par with Avastin, the only other drug approved to treat lung cancer in combination with chemotherapy. It is expected that the U.S. Food and Drug Administration will approve the drug if the company reaches this goal.
It is also expected that achieving this goal would turn NOV-002 into a blockbuster. Avastin, owned by Genentech, which was bought by Switzerland-based Roche last year, had sales of $2.7 billion in 2008.
Both Avastin and NOV-002 are used in combination with two chemotherapy drugs: Taxotere, owned by France-based Sanofi-Aventis, and Carboplatin, a generic produced by Israel-based Teva Pharmaceuticals.
Harry Palmin, CEO of Novelos, has said — and analysts agree — that clinical trials show that NOV-002 is less toxic than Avastin and may enable patients to take chemotherapy for longer periods. Palmin declined to be interviewed for this article.
Analyst Elemer Piros, of New York-based investment bank Rodman & Renshaw, thinks that NOV-002 may in fact show a longer survival rate than Avastin. Piros estimates that, on average, survival time was 15 months. But that includes both patients taking the drug target, and those taking the placebo.
“We don’t know how long the control group lived. If, for some reason, the control group lived much longer than we expect, then maybe the drug didn’t extend survival that dramatically,” Piros said. Piros says if the 25 percent survival extension is met, there will be a long line of pharmaceutical companies that want to buy NOV-002.
“You can imagine that for Sanofi, this would make a nice bundle with Taxotere,” Piros said.
He also expects that Stamford, Conn.-based Purdue Pharma LP, whose European division, Mundipharma, holds ex-U.S. rights to the drug target, would be a likely buyer of the company.
“The question with Novelos was always, ‘Can they keep the doors open long enough to get to the data?’ And now we know they can,” said Jim Molloy, an analyst at Boston-based investment bank Caris and Company.
Money has been a significant challenge for the company, but over the past year, Novelos has seemed to keep finding change between the sofa cushions. Novelos completed a $9 million private placement in August and won a $1 million grant from the National Institutes of Health in September. Still, the company had cash and cash equivalents of just $5.6 million on Sept. 30, 2009. Novelos trades on the pink sheets and closed at $1.97 on Jan. 13.
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