FDA likely to approve Glaxo breast cancer drug

NEW YORK (CNNMoney.com) -- The Food and Drug Administration is expected to approve a breast cancer treatment from GlaxoSmithKline on Tuesday, analysts say.

The FDA is reviewing Glaxo's (up $0.23 to $55.82, Charts) tykerb, a breast cancer pill for patients who were previously and unsuccessfully treated with Genentech's (down $0.13 to $81.45, Charts) Herceptin, a $1.2 billion drug. There is little doubt that the agency will approve tykerb, since the drug was awarded fast-track priority status.

Tykerb and Herceptin are both designed for patients with HER2-positive breast cancer -- about 20 to 30 percent of all breast cancer patients. Tykerb, assuming it's approved by the FDA, would be used in conjunction with Roche's Xeloda, a form of chemotherapy.

Tykerb will take years to reach blockbuster-level sales, analysts say, because the drug would be initially approved for use in a relatively small part of the breast cancer population -- women who failed therapy with the intra-venous drug Herceptin.

But the British drugmaker is testing tykerb for additional indications in wider patient populations. In one of the more recent developments, Glaxo started a late-stage trial for head and neck cancer in February. In theory, this could lead to more approvals from the FDA and European regulators, resulting in additional sales.

"Initially it's going to be a very small indication - only patients that are failing (with) Herceptin - but they have plenty of other indications coming, to enlarge the label," said Irina Stratan, analyst for WestLB Research. "This is how it goes in cancer: you start with someone that (can't be treated with) other drugs, and then you move on."

Chris Schott, analyst for Bank of America, estimates that tykerb sales will reach nearly $1 billion in 2011. Gbola Amusa, analyst for Sanford C. Bernstein, believes that sales will peak at $1.5 billion the following year. Because tykerb and Herceptin work differently, both analysts believe that the two treatments could eventually be used in combination.

"There's a chance for everyone to be a winner with this market," said Amusa of Bernstein.

Amusa expects Glaxo's stock price to edge up 2 or 3 percent following the approval, even though it's widely expected.

"There's still some nervousness around the FDA decision simply because of the FDA's lack of predictability in recent times," said Amusa. "Despite expectations, the FDA could still ruin things."

Analysts tend to be bullish on Glaxo's pipeline. The company is awaiting a regulatory decision from European authorities regarding Cervarix, the company's experimental vaccine for the sexually-transmitted human papilloma virus, which causes cervical cancer.

Glaxo is expected to file an application for this vaccine to the FDA this year. Analysts consider Cervarix to be a potential blockbuster, and a likely competitor to Merck's (down $0.33 to $44.28, Charts) Gardasil, launched last year.

The analysts quoted in this story do not own shares of stock in the companies mentioned here. Bank of America Securities has provided banking services for Glaxo in the last 12 months.