Puma Biotechnology' stock soared Wednesday after the company reported positive trial results for its breast cancer drug, positioning the company as a potential takeover target.
The Los Angeles company's shares almost quadrupled to $233.43 at the close in New York, its highest price since the company began publicly trading in April 2012, and raising its market value to more than $7 billion. The biotechnology company's shares had gained less than 1 percent in the past 12 months through Tuesday.
The drug, neratinib, improved disease-free survival by 33 percent compared with a placebo in a trial of 2,821 women with early-stage HER2-positive breast cancer, Puma said Tuesday in a statement. Disease-free survival refers to the interval a patient remains alive and free of signs of the illness. The company said it would apply for U.S. regulatory approval in the first half of 2015 based on the results.
"The magnitude of benefits is among best-case scenarios that could be envisioned," Howard Liang, an analyst at Leerink Swann, said Wednesday in a note to clients. Eric Schmidt, an analyst at Cowen & Co., wrote that the trial "looks like a home run."
If the drug is approved, neratinib may be used in many early-stage breast cancer patients whose tumors are fueled by the growth promoting gene called HER2, which Schmidt said is a multibillion-dollar worldwide market. These patients are already often treated with Roche Holding's Herceptin.
Approval may lead to acquisition of Puma, Liang said.
"With a wholly owned asset in a large market and worldwide right rights now with further improved economics, we see full strategic options on the table for PBYI including a potential acquisition," Liang wrote.
Alan Auerbach, Puma's chief executive officer, sold his previous venture, Cougar Biotechnology, to Johnson & Johnson for about $1 billion in 2009. The experimental prostate-cancer treatment being developed by Cougar was approved by the Food and Drug Administration in 2011 and is marketed as Zytiga.
The drug generated $1.7 billion for Johnson & Johnson last year and sales this year are predicted to reach $2.2 billion, according to analysts' estimates compiled by Bloomberg.
Auerbach licensed neratinib from Pfizer in 2011 and raised $55 million that year from a private placement to fund development of the experimental drug.
Today, neratinib is Puma's only drug under development. It is also in clinical trials for other forms of breast cancer, lung cancer, and other HER2 mutated cancers.
The safety data from the breast cancer trial reported yesterday are still being validated, Auerbach said in a conference call. In prior studies, the drug "had a tolerable safety profile, with diarrhea being the main side effect," according to Asthika Goonewardene, an analyst at Bloomberg Intelligence, who said the data likely will be presented at the San Antonio Breast Cancer Symposium in December.