ArQule, Inc. ( ARQL - Snapshot Report ) and partner Daiichi Sankyo recently announced that former has enrolled the first patient for the phase III METIV-HCC (MET-high patients with tivantinib in HCC) trial of their oncology candidate tivantinib (ARQ 197).

The study, which will be conducted on over 300 patients at over 120 centers globally, will evaluate trivantinib for the treatment of patients suffering from hepatocellular carcinoma (HCC) who have previously received one or two prior systemic anti-cancer therapies.

The primary endpoint of the trial is overall survival (OS) while the secondary endpoint is progression-free survival (PFS).

We note that ArQule reached a Special Protocol Assessment (SPA) agreement with the US Food and Drug Administration (FDA) for the phase III trial of tivantinib in patients with HCC in Oct 2012.

ArQule will receive a $15 million milestone payment from Daiichi Sankyo as per its license agreement. We note that ArQule and Daiichi Sankyo signed a license, co-development and co-commercialization agreement in Dec 2008 for tivantinib. The agreement covers US, Europe, South America and the rest of the world but excludes Japan, China (including Hong Kong), South Korea and Taiwan.

We remind investors that ArQule suffered a setback last month when it announced disappointing phase II results on tivantinib which was being evaluated as a combination therapy in patients with refractory or relapsed colorectal cancer (CRC).

The study failed to meet its key endpoint of progression-free survival (PFS); median PFS was 8.3 months in the tivantinib arm compared with 7.3 months in the control arm (irinotecan and cetuximab plus placebo). The secondary endpoint of objective response rate (ORR) was also not statistically significant compared to the control arm (45% versus 33%).

ArQule currently carries a Zacks Rank #3 (Hold). Pharma stocks that currently look attractive are Valeant Pharmaceuticals ( VRX - Snapshot Report ) , Salix Pharmaceuticals Ltd. ( SLXP - Analyst Report ) and United Therapeutics Corporation ( UTHR - Analyst Report ) with a Zacks Rank #1 (Strong Buy).