The share price dropped over 70 per cent to around $4.5 (€3.4) as the California based pharmaceutical company announced that Telcyta (canfosfamide) had failed in three separate clinical trials against ovarian and lung cancer.
"We believe management's timing of data disclosure raises serious red flags," Merrill Lynch analyst Eric Ende said in a report. "It is unusual for companies to withhold Phase III data for extended periods, especially negative data as was presented today."
David Miller, CEO of Biotech Stock Research, wrote on Minyanville.com that: "at the JP Morgan Healthcare conference in January 2006, they [Telik] told people at the breakout session the first two trials were already mature, but that they'd be holding those data until the third trial matured."
However, in a conference call, Dr Gail Brown, chief medical officer at Telik said: "we were blinded to these trials and had just a few days to analyse the data."
Dr Brown said that detailed analysis of the results could take anywhere between several weeks and several months.
Michael Wick, CEO of Telik, said the announcement of the results met the company's "commitment to have top-line data at year end."
Commenting on the delay in results, Wick said: "There has never been a clear cut randomised study in third-line ovarian cancer so any attempt to estimate what any of the drugs will do in that setting was, in my view, not based on historical fact."
The company reported that in a Phase III trial called ASSIST-2, Telcyta did not improve overall survival compared to AstraZeneca's now-withdrawn Iressa (gefitinib) in the third-line therapy of advanced non-small cell lung cancer (NSCLC).
Dr Brown said: "While obviously we are disappointed by this result, it is important to remember that third-line treatment of NSCLC patients has a very poor prognosis and it is difficult to have an impact on survival."
The ASSIST-1 trial tested Telcyta against ovarian cancer and again, did not improve survival compared to the control therapies (liposomal doxorubicin or topotecan). Telik admitted that the preliminary analysis revealed a number of internal inconsistencies that need to be further investigated. However, the company would not elaborate on these inconsistencies at this time.
Telcyta was also tested with carboplatin as a combination therapy in ASSIST-3. This trial also targeted ovarian cancer but the goal was to demonstrate overall tumour response, a lower standard than overall improved survival.
Telik believe the trial was compromised because 25 per cent of the patients were discontinued from treatment as clinicians decided the tumour was progressing or there was unacceptable toxicity, based on scans taken at the time.
However, Brown said that these patients had their treatment stopped prematurely because "independently reviewed scans demonstrated either stable disease or an objective response."
The lower standard in ASSIST-3 coupled with the removal of Iressa as a NSCLC treatment impacting on ASSIST-2 led to Ende, in a previous report, downgrading Telik stock from neutral to sell. Ende decided that even if all three trials were successful, it might not be enough for the US Food and Drug Administration (FDA) to approve the drug.
He also stated that: "we do not believe the market opportunity for the drug is meaningful."
Telcyta binds to glutathione S-transferase P1-1 (GST P1-1), an enzyme overexpressed in many cancer tumours and associated with a poor prognosis and resistance to certain chemotherapeutics. On binding it breaks down into two components. One fragment leads to cancer cell death and the other may remain bound to GST P1-1. This could limit the ability of GST P1-1 to inactivate other cancer drugs.
Telik intends to continue developing Telcyta and enrolment is ongoing for the ASSIST-5 trial of second-line use in ovarian cancer. However, the company will use the data from these trials to assess whether any changes should be made to the protocol and/or trial conduct procedures.
Despite this, and the fact that the company have completed Phase II trials of Telintra (Tlk199), a drug against myelodysplastic syndrome, a form of pre-leukaemia, investors are clearly wary and this is reflected in the share price.