Breast cancer drug faces FDA panel vote

NEW YORK (CNNMoney.com) -- Genentech Inc. faces a high-stakes decision by a government panel Wednesday over the cancer drug Avastin.

Experts advising the Food and Drug Administration will vote on whether Avastin should be approved as a breast cancer treatment in conjunction with chemotherapy. The vote will guide FDA regulators when they decide in February whether to add the treatment of breast cancer as one of the drug's approved uses.

Avastin has been on the U.S. market since 2004 and is approved to treat colorectal and lung cancers. Regulators in Europe have authorized its use to treat breast cancer.

Some analysts believe that FDA approval of Avastin for breast cancer could translate into at least $1 billion in annual sales for Genentech.

But data from an Avastin study released by the FDA on Monday failed to convince analysts that approval was assured because the drug got mixed results in extending patients' survival.

In the study, Avastin achieved its main goal of extending survival without the spread of cancer by 5.5 months. In a secondary measure known as "overall survival," however, the drug extended survival by less than a month.

"There was a slight increase; it just wasn't statistically significant," said Genentech (Charts) spokesman Ed Lang.

The study data also revealed cardiovascular side effects like hypertension and blood clots.

"[The Avastin study] met its primary endpoint, but the gold standard, which is [overall] survival, was not reached," said Rahul Jasuja, analyst for MDB Capital Group, who estimates a less-than 50 percent chance of a positive vote from the panelists. "It sort of become a problem of how the FDA is going to act."

Vasavi Vittal, an analyst at Atlantic Equities, said that Avastin should be approved for breast cancer "in theory" because the drug achieved the main goal of the study. But she added that the drug "does not have a good overall survival" benefit and has a "worse safety profile than standard chemotherapy."

Vittal said it remains to be seen whether Avastin will get past a "risk-averse FDA."

Bret Holley, analyst for CIBC World Markets, believes that the panel "is likely to have a positive opinion, but that will likely come with a requirement for additional studies," which can be costly and time-consuming.

If approved for use by breast cancer patients, Avastin wouldn't face much competition in the market. It would tap into a group of patients - those who do not have the HER2 positive gene - with fewer treatment options. For those patients, chemo is the only option.

By comparison, breast cancer patients who carry the HER2 positive gene - about one third of all patients - can use Genentech's Herceptin as a treatment or GlaxoSmithKline's (Charts) Tykerb.

Vittal of Atlantic Equities projects that a breast cancer approval could add an extra $1 billion in annual sales to Avastin by 2012, while Holley of CIBC projects an additional $1.2 billion.

Avastin is already a blockbuster. Sales jumped by more than a third during the first nine months of 2007 to about $1.7 billion, allowing Avastin to surpass the rheumatoid arthritis drug Rituxan as Genentech's biggest seller.

As a colorectal treatment, Avastin competes with Erbitux from ImClone Systems (Charts).

Based in South San Francisco, Genentech is the oldest biotech in the world and the largest in terms of market cap. Amgen (Charts, Fortune 500), based in Thousand Oaks, Calif., is the largest biotech in terms of annual sales.

The analysts interviewed for this story do not own stock in Genentech and their firms do not conduct investment banking services for the biotech.