CTI BioPharma Corp (NASDAQ:CTIC) Making A Comeback

Source: biopharma-pr.com

Shareholders of CTI Biopharma Corp (NASDAQ:CTIC) were hit with some bad news earlier this month. CTIC received an oral communication from the FDA followed by a letter notifying the company that the company's IND for pacritinib has been placed on full clinical hold. As a result, the company withdrew its New Drug Application (NDA) as the company reviews the safety and efficacy data from the PERSIST-2 Phase 3 clinical trial and decide next steps. The news sent shares falling and created a buy opportunity for opportunistic investors because while on the surface, the news sounds bad when in reality it's just a temporary setback. That's why shares are now making a comeback.

The FDA's February 8, 2016, letter notes the interim overall survival results from PERSIST-2 showed a detrimental effect on survival consistent with the results from PERSIST-1. The deaths in PERSIST-2 in pacritinib-treated patients include intracranial hemorrhage, cardiac failure and cardiac arrest. The FDA made recommendations that supersede the recommendations made by the FDA in connection with the partial clinical hold imposed by the FDA on February 4, 2016.The current recommendations include conducting dose exploration studies for pacritinib in patients with myelofibrosis, submitting final study reports and datasets for PERSIST-1 and PERSIST-2, providing certain notifications, revising relevant statements in the related Investigator's Brochure and informed consent documents and making certain modifications to protocols. In addition, the FDA recommended that the company request a meeting prior to submitting a response to full clinical hold. Under the full clinical hold, all patients currently on pacritinib must discontinue pacritinib immediately and no patients can be enrolled or start pacritinib as initial or crossover treatment. All clinical investigators worldwide have been delivered a notice of the full clinical hold.Pacritinib is an oral tyrosine kinase inhibitor (TKI) with activity against two important activating mutations: Janus Associated Kinase 2 (JAK2) and FMS-like tyrosine kinase 3 (FLT3). Jakafi is currently the treatment of choice for MF patients. However, patients that have platelet count below 50,000 can only be administered 5mg twice daily dose of Jakafi. At this level, Jakafi is not as effective as at the highest dosage of 20mg a day. For patients with platelet count below 50,000, pacritinib could become the treatment of choice. Jakafi has also shown to have adverse myelosuppressive effects on a fair number of patients whose disease progresses to the point they also become transfusion dependent.Roughly 25% of the MF patient population have platelet levels below 100,000/uL or 50,000/uL. The company currently has a commercialization agreement with Baxalta. CTIC and Baxalta will jointly commercialize the drug in the U.S. and Baxalta has exclusive commercialize rights for all indications outside the U.S. for which CTIC will receive royalties on ex-U.S. sales.It's important for investors to keep a couple of things in mind. CTIC started PERSIST-1 trial with two groups, one on pacritinib and one control group. After 24 weeks they allowed whoever wanted from control group to crossover to pacritinib group. In view of an Independent Data Monitoring Committee (IDMC) they were advised not to allow crossover as this may confound the interpretation of safety as well as the evaluation of survival.The FDA is now simply reviewing the trial and its faulty design which after 24 weeks allowed for treated and non-treated patients to be in the pacritinib group. The FDA accepted the design originally but it now looks like they are understanding that the study would be invalid if they continue as is and they seem to be using the same terminology as IDMC in their earlier recommendation. Most likely, patients in the control group that experience progression of the disease are likely to want to crossover to pacritinib treatment and those in control group and who feel alright with the best available treatment are not switching to pacritinib. As a result, the pacritinib group after 24 weeks became a mix of patients skewing the trial results.The key for investors to understand is that it was the design of the trial that was faulty and not pacritinib. The FDA is actually doing CTIC a favor and allowing for the study to be corrected instead of continuing and the FDA having to reject the application. A rejection is that last thing shareholders want to see. Instead, management can now work with the FDA and modify the study so a rejection will be unlikely. The good news is that from the evidence we've seen, some patients were seeing benefits from pacritinib. This is great news and investors just need to be more patient. As CEO James Bianco said:

"While we were disappointed and surprised by the FDA's decision to place pacritinib's IND on full clinical hold, our priority and sense of purpose has always been to do what is best for patients. There remains a significant unmet medical need in the treatment of myelofibrosis, especially for those with low platelet counts. We continue to see the potential of pacritinib to help this patient population and we are committed to resolving the FDA's concerns in order to identify a path forward. Additionally, we plan to define the registration path for tosedostat, which recent interim data from a cooperative group study showed the potential therapeutic utility of this oral aminopeptidase inhibitor for older patients with AML and high-risk MDS. We ended the year with a strong financial position that we believe will enable us to achieve our goals in 2016 and beyond."

CTIC is well-positioned to weather the storm. As of December 31, 2015, cash and cash equivalents totaled $128.2 million, compared to $70.9 million as of December 31, 2014. Considering that it's current market cap is just $183 million, CTIC still looks like a great investment when one does a deep dive analysis and sees that the recent news is just a temporary setback and shares are a buying opportunity at current levels. We will be updating Insider Financial as soon as we know more. For continuing coverage on CTIC and our other hot stock picks, sign up to Insider Financial today and get our next hot stock pick!Disclosure: We have no position in CTIC and have not been compensated for this article.