Avastin approval surprises Wall Street; may change future of cancer drug approvals

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Friday's approval of Genentech's Avastin to treat breast cancer caught many on Wall Street off guard and could represent a change in the way the agency measures the effectiveness of cancer medicines. 

Going against the advice of its advisory panel, the agency based its decision on measurements of tumor growth in patients using Avastin, not patient survival.

Wall Street analysts had widely expected the agency to delay its decision and review new data submitted from a study sponsored by Roche, which holds a majority stake in Genentech and sells Avastin outside the US.

“The news comes as a surprise, since the FDA's Oncologics Drug Advisory Committee in December voted five to four against approval for the drug,” wrote Friedman, Billings, Ramsey & Co. (FBR) analyst Jim Reddoch in a research note issued on Feb. 25.

FDA approval for drugs targeted at cancer patients who have never been treated before usually depends upon data showing that a drug extended, or improved the quality of, patients' lives. Avastin showed neither in a study submitted by Genentech, though the drug did slow tumor growth. Analysts on Wall Street believe the Avastin decision could open the door for more cancer drugs to be approved based on their tumor-shrinking ability.

Avastin is already approved to treat colon and lung cancer and is considered Genentech's most important drug by Wall Street.

In 2007, the drug had US sales of $2.3 billion. One analyst estimated its use for breast cancer treatment could add nearly $500 million a year.

“We are raising our US Avastin sales estimates in breast cancer, beginning this year out to 2012,” FBR's Reddoch said. “Our 2008 Avastin estimate is $2.6 billion. By 2012, we are forecasting nearly $860 million in U.S. breast cancer sales, translating into a 39% penetration of the market, up from Avastin's current 25% penetration. We are raising our price target to $76 from $67.” FBR will maintain its market perform rating, Reddoch said.
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