Washington Editor

The FDA approved a new lung cancer drug, Tarceva (erlotinib), but a surprise in the agency's authorization might have driven down share values in the companies that developed it - OSI Pharmaceuticals Inc. and Genentech Inc.

Specifically, the FDA noted that survival was much greater in patients who had high levels of epidermal growth factor receptor (EGFR). Such language could lead to fewer prescriptions than previously thought, according to some reports, although concerns over the drug's competition might prove more problematic to Tarceva's sales growth.

"I actually think the concern about EGFR prescreening is more background noise than anything else," Patrick Flanigan, an analyst at Fulcrum Global Partners LLC, told BioWorld Today. "If it does limit who's eligible for the drug, it's likely going to only play out in the second-line lung cancer setting, where doctors have other treatment options. But in the third-line setting, I think it's a moot point."

Instead, he forecasted a slower-than-expected launch because he does not see the drug as clearly differentiated from its competitor, Iressa (gefitinib, from AstraZeneca plc). He acknowledged that Tarceva has a survival advantage, but added that any labeling benefit would be short-lived.

"We expect positive Phase IV data on Iressa in a very similar patient population that looks at survival," Flanigan said. "Those data are expected sometime in the first quarter of next year."

So in spite of the approval, shares of OSI (NASDAQ:OSIP) fell 9.5 percent, losing $6.09 to close at $58.16 Friday on a down market day. Correspondingly, shares in Genentech (NYSE:DNA) dropped 99 cents to close at $48.89.

Nevertheless, both firms indicated their delight with the approval, which they characterized as the fastest on record. It came almost two months earlier than expected following a priority review at the FDA. The new drug application, which was filed this summer, was granted Pilot 1 status under the agency's Pilot 1 Program for continuous marketing applications. The product also had previously been given fast-track status. (See BioWorld Today, Aug. 3, 2004.)

"Today's news marks an important milestone for Tarceva, and something of a coming of age for OSI Pharmaceuticals," its CEO, Colin Goddard, said in a conference call. "However, most importantly, it brings a valuable and important new therapy for patients suffering from lung cancer in the United States."

Tarceva is indicated for patients with locally advanced or metastatic non-small-cell lung cancer after failure of at least one prior chemotherapy regimen. The small molecule is designed to target the human epidermal growth factor receptor 1 (HER1) pathway, and OSI and Genentech said it would be available next week. Melville, N.Y.-based OSI, which took a lead role in the regulatory filing process, is responsible for manufacturing, while South San Francisco-based Genentech will spearhead commercialization efforts.

Outside the U.S., Tarceva's rights are controlled by F. Hoffmann-La Roche Ltd., of Basel, Switzerland. The product remains under European regulatory review, and approval there is expected in the second half of next year.

The drug's U.S pricing, for 30-day supplies, will total $2,026 for 150-mg doses, $1,783 for 100 mg and $648 for 25 mg. Flanigan projected that for OSI, total worldwide sales could reach $188 million for its 2005 fiscal year, which ends in September. Looking longer term, he said total worldwide sales could grow to $861 million for its 2009 fiscal year.

Earlier this month, OSI raised $445 million through the sale of 6.9 million shares in a public offering. (See BioWorld Today, Nov. 12, 2004.)

The daily-use oral tablet is the only drug in the EGFR class to demonstrate in a Phase III trial an increase in survival in advanced lung cancer patients. Its approval was based in part on results from that randomized, double-blinded, placebo-controlled pivotal study in second- and third-line patients. Data showed that those who received Tarceva had a median survival of 6.7 months compared to 4.7 months in placebo patients, a 42.5 percent improvement (p<0.001). The findings also indicated a hazard ratio of 0.73 in comparing overall survival; such a ratio of less than one indicates a reduction in the risk of death. In addition, 31.2 percent of the study's Tarceva patients were alive at one year compared to 21.5 percent in the placebo arm. (See BioWorld Today, April 27, 2004.)

The EGFR findings noted by the FDA stem from an analysis of about one-third of the 731 patients in the pivotal trial. Their tumor cells were examined to determine whether they had high or low levels of EGFR, and among the nearly 55 percent who had high EGFR, the effect on survival was much greater than in low EGFR patients.

Flanigan said the EGFR association might not prove too limiting since it's only been shown in a relatively low number of patients thus far, an overlap in hazard ratios implies that the data could be an artifact of the study, and patients who did not express EGFR still showed tumor reduction. He added that data on other EGFR inhibitors, such as Erbitux (cetuximab, from ImClone Systems Inc.) and ABX-EGF (panitumumab, from Abgenix Inc. and Amgen Inc.), suggest that there is no correlation between EGFR expression and response. Lastly, he said that no reliable, off-the-shelf EGFR diagnostic exists.

The FDA, which drew fire last week over allegations of drug safety oversights, nevertheless said the relationship would be further explored in the future. Flanigan noted that Phase IV studies would stratify patients based upon their EGFR expression levels to better determine any connection.

In the pivotal trial, the most common adverse reactions in Tarceva patients were rash and diarrhea. A rarer side effect is serious interstitial lung disease, including fatalities, in patients receiving Tarceva for lung cancer or other advanced solid tumors.

The partners, which are evaluating the drug for other oncology indications, have completed a Phase III study of it in pancreatic cancer, and additional early stage trials of Tarceva are being conducted in other solid tumors. The pancreatic cancer trial, which tested the drug's use as a first-line therapy in combination with gemcitabine, met its primary endpoint of survival improvement. Goddard said the company plans to file a supplemental new drug application early next year. (See BioWorld Today, Sept. 21, 2004.)

"We believe that this demonstration of survival benefit in two cancers that are widely recognized as among the toughest to treat both validates the broad potential of the EGFR class in the treatment of cancer, and clearly distinguishes Tarceva as a unique and highly competitive agent in the class," he said.