New Erbitux study to steal cancer spotlight

NEW YORK (CNNMoney.com) -- More than thirty years after President Nixon vowed to win the war on cancer, the battle rages on with no victor in sight. But that won't stop Big Pharma and biotechs alike from trying to entice investors next week with fresh reports on the hunt for a panacea.

The occasion: The annual meeting of the American Society for Clinical Oncology in Chicago. The confab, which starts June 1, is to the cancer treatment industry what the Detroit Auto Show is to carmakers. Each year the $30 billion industry showcases its next generation of cancer drugs.

This year, all eyes will be on Bristol-Myers Squibb (down $0.22 to $30.00, Charts, Fortune 500), which produces the cancer blockbuster Erbitux with biotech partner ImClone Systems (down $0.03 to $40.28, Charts). Erbitux is an FDA-approved treatment for some types of colorectal cancer as well as cancer of the head and neck. Last year the drug reaped $1.1 billion in sales.

But Erbitux has had a turbulent history, including multiple setbacks -- the first of which landed Martha Stewart and ImClone's former CEO in prison.

More recently, ImClone disclosed that Erbitux had failed a key trial involving a potentially lucrative treatment for pancreatic cancer.

Now ImClone and Bristol are betting on Erbitux's potential to extend survival, without the spread of cancer, in colorectal patients who have not been previously treated. (The drug is currently approved for patients who have tried and failed previous types of treatment.)

Next week the companies are set to reveal findings from studies related to this hoped-for use. The problem is, some of the results were leaked prematurely to the public -- and investors didn't like what they heard.

The "convincing chatter" about the Erbitux study suggested that the drug extended survival, without the cancer spreading, but only by less than a month, wrote Jim Reddoch, analyst for Friedman, Billings, Ramsey, in a May 17 note to investors.

ImClone's stock has slipped 2.5 percent since May 15, the reported date of the leak. Company shares have fallen 10 percent since May 4.

For its part, ImClone blamed the stock drop on a knee-jerk reaction to incomplete data. The company's chief medical officer, Eric Rowinsky, said in an interview the shareholders who dumped stock "saw data that was out of context" and ignored the fact that the studies were successful.

"I think that there's been a lot of premature judgment, and that's pretty sad," said Rowinsky, who did not discuss details of the study.

The Erbitux trials are just one of many cancer studies to be released starting next Friday.

Bristol is also expected to release study results involving Sprycel, its treatment for chronic myeloid leukemia, and three additional experimental drugs: ixabepilone for breast cancer; ipilimumab for melanoma and prostate cancer; and vinflunine for cancer of the lung and breast.

Bristol has conducted late-stage cancer studies of ixapepilone for breast cancer and vinflunine for lung cancer, so these are potentially closer to approval and market than most experimental drugs at ASCO. Barbara Ryan, analyst for Deutsche Bank North America, projects that annual sales in 2010 will total $200 million for ixabepilone and $175 million for vinflunine. These are not peak estimates, meaning the drugs have potential to garner more sales in the future.

Eli Lilly & Co. (down $0.13 to $59.40, Charts, Fortune 500) said it will release data on its experimental lung cancer treatment enzastaurin, but this is a phase 2 study, meaning that the drug still has to complete late-stage, or phase 3, studies before it is submitted to the FDA for possible approval. So potential market entry for enzastaurin is still years away.

Lilly also plans to release study results on additional uses and patient populations for two drugs that are already on the market: Gemzar, approved as a treatment for four types of cancer with $1.4 billion in 2006 sales, and its lung cancer drug Alimta, with more than $600 million in 2006 sales. The new studies could lead to additional sales for these drugs, assuming they win FDA approval.

Likewise, Pfizer (down $0.03 to $27.34, Charts, Fortune 500) plans to release phase 2 study results on its newly-released drug Sutent. Already approved for treatment of kidney cancer and gastrointestinal tumors, Sutent is being studied as a treatment for liver and lung cancer. But these too are years away from potential approval as extra indications.

Pfizer will also release phase 2 study results for three experimental drugs that could someday lead to new products. One is axinitib, a proposed treatment for cancer of the thyroid, liver, lungs and different tumor types. The other two are as unnamed potential treatments for melanoma and lung cancer.

Ryan of Deutsche Bank said the extensive list of ASCO presenters also includes Merck (up $0.20 to $54.35, Charts, Fortune 500), with phase 2 studies in an experimental prostate cancer drug called Zolinza, and Wyeth (down $0.13 to $58.29, Charts, Fortune 500), which could get an FDA decision by July 5 on its experimental kidney cancer drug Toricel.

Overall, analysts see 2007 as a slow year for ASCO. They point to the lack of experimental drugs in late-stage studies, which means that most medications in development are potentially years away from coming to market.

And that means it will be a very long time before Big Pharma can cash in -- and the war Nixon declared some three decades ago comes to an end.

The analysts quoted in this story do not own stock in companies they discussed. FBR makes a market in ImClone and Deutsche Bank does seek business with the drug companies it covers.