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Pharmacyclics, Inc. (PCYC - Analyst Report) recently announced the enrollment of the fifth patient in a phase II study that is being conducted with ibrutinib in patients suffering from relapsed or refractory mantle cell lymphoma (MCL). With the enrollment of the fifth patient, Pharmacyclics is eligible to receive a $50 milestone payment from partner, Janssen Biotech, Inc., a Johnson & Johnson (JNJ - Analyst Report) company.

The single-arm, multi-center phase II study, SPARK (MCL2001), is being conducted in MCL patients who have been treated with at least one prior rituximab-containing chemotherapy regimen and who progressed after treatment with bortezomib. While overall response rate is the primary endpoint, secondary endpoints include overall survival rate, progression-free survival rate, and pharmacokinetic data.

Pharmacyclics and Janssen’s agreement dates back to December 2011. The companies are collaborating for the global development and commercialization of ibrutinib. Besides receiving a $150 million upfront payment from Janssen, Pharmacyclics is entitled to receive another $825 million on the achievement of development and regulatory milestones.

With the triggering of the $50 million milestone payment for the SPARK study, Pharmacyclics has already earned $100 million in the form of development milestones. This includes a $50 million milestone payment that was triggered earlier this month with the enrollment of the fifth patient in another study (RESONATE (PCYC-1112)) with ibrutinib.

The international phase III randomized, multicenter, open-label RESONATE study is being conducted in patients with relapsed or refractory chronic lymphocytic leukemia or small lymphocytic lymphoma (CLL/SLL).

We currently have a Neutral recommendation on Pharmacyclics, which carries a Zacks #2 Rank (short-term ‘Buy’ rating). We are positive on the company’s collaboration with Janssen for ibrutinib. Janssen is a suitable partner for Pharmacyclics. Janssen’s strong global presence bodes well for the commercialization of ibrutinib, once it is approved.

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