UPDATE 2-IDM Pharma bone cancer drug shows promise; shares soar

(Rewrites throughout, adds analyst's and CEO's comments; closing stock price)

By Esha Dey

BANGALORE, Feb 4 (Reuters) - IDM Pharma Inc (IDMI.O) said a late-stage trial of its drug for a rare bone cancer reduced risk of death by 30 percent, driving the shares up more than 50 percent on Monday.

Findings from the study, published in the Journal of Clinical Oncology, showed the addition of the drug, L-MTP-PE, to chemotherapy reduced the risk of death in patients with osteosarcoma -- a bone cancer that often affects teenagers, IDM said in a statement.

On Jan 25, the biopharmaceutical company said the European Committee for Medicinal Products for Human Use noted that the drug, formerly known as Junovan, suggested a possible clinical benefit in terms of survival.

The European health authorities had also given the Irvine, California-based company more time to respond to its questions on the drug.

IDM plans to submit an amended New Drug Application containing the latest findings to the U.S. regulators in the second half of 2008, Chief Executive Timothy Walbert said by phone.

Walbert said he expects the European approval to come in significantly before the U.S. Food and Drug Administration's approval.

The company expects a final opinion from the European agency on its marketing application in the third quarter and a final decision in the fourth quarter of 2008.

Shares of the company closed up 44 percent at $1.14 on the Nasdaq. Before Monday's gains, they had lost as much as 91 percent of their value since touching a high of $10.75 in April 2007.

WORK IN PROGRESS

In August last year, the U.S. health regulators declined to approve L-MTP-PE, which was granted an orphan drug status in the United States in 2001 and in Europe in 2004.

IDM is still working to gather patient follow-up data from the late-stage trial of the drug to respond to questions in the non-approvable letter, the company said.

In December, IDM said it was considering strategic alternatives as it expected significant additional costs to respond to the non-approvable letter.

Walbert said IDM is still considering all alternatives but declined to comment whether the company is in talks with anyone.

Reni Benjamin, an analyst with Rodman & Renshaw, said by phone that IDM is basically looking for a partner with sufficient cash to help in product development.