As promised, Peregrine Pharmaceuticals Inc. has launched a Phase III trial (SUNRISE) of its lung cancer immunotherapy, bavituximab, in spite of a discouraging Phase II failure.

In June, the Tustin, Calif.-based firm reported that the drug, in combination with carboplatin and paclitaxel, failed to improve survival rates in Stage IIIb and Stage IV first-line non-small-cell lung cancer (NSCLC), compared to carboplatin and paclitaxel alone. The company has chosen to move ahead based on earlier, positive results in second-line NSCLC, rather than the more recent, discouraging results in first-line disease. (See BioWorld Today, June 28, 2013.)

Joe Shan, vice president of clinical and regulatory affairs for Peregrine, downplayed the second Phase II failure. Shan told BioWorld Today, “That trial was inconclusive in that the control arm behaved much better than historical expectations. There wasn’t much of a delta in efficacy.”

Shan admitted that it “seems counterintuitive” for a drug to be more effective in second-line NSCLC than in first-line disease. “It probably has a lot to do with the chemotherapies that we’re pairing with. Docetaxel turns out to be a more potent inhibitor of myeloid suppressor cells than paclitaxel, even though they’re in the same class of chemotherapies. Each trial is different. Results of each trial have to be viewed independently.”

Shan noted that the first-line NSCLC trial was open label, and had a larger proportion of patients outside the U.S. “At the end of the day it wasn’t statistically powered to show a small difference.”

Peregrine’s previous Phase II trial, in second-line NSCLC, showed stronger results. In September, the company reported interim data from its Phase IIb study showing a statistically significant improvement in overall survival for patients with refractory NSCLC receiving bavituximab plus docetaxel vs. those receiving placebo plus docetaxel (p = 0.0154). The data also showed a doubling of median survival in the bavituximab-containing arfms compared to the control arm.

The study enrolled 121 patients with second-line nonsquamous NSCLC following one prior chemotherapy regimen.

Peregrine presented its data at the Chicago Multidisciplinary Symposium in Thoracic Oncology, and investors went nuts, driving Peregrine’s stock price up about 46 percent in one day. The stock price had topped out at $5.39 when it was discovered that there were “major discrepancies” between some patient sample test results and treatment code assignments while preparing for an end-of-Phase II meeting with the FDA.

Peregrine attributed the discrepancies to an independent third party contracted to code and distribute investigational drug product. Peregrine’s stock price plummeted from $5.39 to $1.16.

Shan said that the trial had three arms, a low-dose arm, a high-dose arm and a placebo arm, and that the vial coding discrepancies affected two of the arms. “As a result, we had to pool that data from those two arms. We still had encouraging results from that trial,” Shan said.

Results from that Phase II trial, showing about a four-month difference in overall survival, were presented to several regulatory agencies as the basis for moving into Phase III.

The other justification for sticking with bavituximab, according to Shan, is its mechanism of immune modulation.

Bavituximab is deisgned to work by activating the maturation of dendritic cells and cancer-fighting macrophages, thus leading to the development of cytotoxic T cells that fight solid tumors. Specifically, the compound targets phosphatidylserine (PS), an immunosuppressive molecule present in the membrane of healthy cells. In the cells that line tumor blood vessels, PS turns over and becomes exposed, letting the tumor fly under the radar of the immune system. Bavituximab blocks the unhealthy PS signal.

The drug’s ups and downs have been a rollercoaster for the company’s investors. “It is now crunch time for Peregrine and the imminent start of the Phase III bavituximab study in NSCLC,” wrote Joseph Pantginis, an analyst with Roth Capital Partners. “Despite a financing overhang around the Phase III, we believe the company is well positioned to deliver on its goals.”

Pantginis based that opinion on Peregrine’s Phase II NSCLC data and strong immunotherapy mechanistic data, “both of which should act as strong forces in delivering a partnership for bavi.” A partnership could be crucial for getting Peregrine through its registration studies, which are estimated to cost about $60 million over the next three years.

The SUNRISE trial is a global, randomized, double-blind, placebo-controlled study designed to assess safety, tolerability and efficacy of bavituximab plus docetaxel in second-line NSCLC. About 600 patients with Stage IIIb/IV non-squamous NSCLC who have progressed after standard front-line therapy will be enrolled and randomized to one of two treatment arms. All patients will receive up to six 21-day cycles of docetaxel plus weekly infusions of bavituximab or placebo until progression. The primary endpoint will be overall survival.

Peregrine stock (NASDAQ: PPHM) closed at $1.42 Monoday, a gain of 4 cents.