Re: Tarceva: New Drug Against Lung Cancer

From: J (quad_at_privacy.net)
Date: 11/21/04 

Date: Sun, 21 Nov 2004 18:44:13 -0500

http://www.thestreet.com/_tscs/comment/adamfeuerstein/10195267.html
Tarceva Approval Only Half OSI's Battle

By Adam Feuerstein
Senior Writer
11/19/2004 7:00 AM EST
Click here for more stories by Adam Feuerstein

Last April 26, shares of OSI Pharmaceuticals (OSIP:Nasdaq - news - research) soared 139%, hitting
$98 per share, on word that its lung cancer drug Tarceva was able to prolong survival in patients
with the most advanced stage of non-small cell lung cancer.

Thursday night, the Food and Drug Administration approved Tarceva for sale. OSI shares trading
closed at $64.25. Can the company get back to its all-time high?

The answer depends largely on how well Tarceva performs in the non-small lung cancer market,
especially as it goes up against Iressa, a rival lung cancer drug from AstraZeneca (AZN:NYSE - news
- research) that's been on the market since 2003.

If doctors perceive Tarceva to be a stronger, more effective drug, it will steal market share from
Iressa and grow the market, too. But if doctors perceive both drugs to be equivalent, or if the
lung cancer market does not expand, OSI may have a hard time meeting Wall Street's more bullish
expectations.

The bull and bear case are reflected somewhat in the divergent Tarceva sales estimates carried by
analysts in their financial models. Looking beyond the 2005 launch year, sell-side estimates for
U.S. Tarceva sales in 2006 range roughly from $300 million to $600 million; the gap grows further
out, with some analysts forecasting well over $1 billion in U.S. sales in 2008, while others
predict only half that amount. (The longer-term estimates include assumptions that Tarceva is
ultimately used for treatment of other cancers. Remember, too, that OSI shares revenue and profit
for Tarceva equally with Genentech (DNA:NYSE - news - research).)

Tarceva and Iressa (both oral drugs) belong to a class of drugs that attempt to halt the growth of
cancer cells by blocking a key enzyme, epidermal growth factor, or EGF. ImClone System's
(IMCL:Nasdaq - news - research) Erbitux is also an EGF inhibitor, but it's an injectable drug, so
it works in a slightly different way. Erbitux is also approved only for colon cancer right now.

Iressa was approved on the basis of uncontrolled studies that showed the drug shrank tumors in
about 10% of patients who have failed all other treatments; the studies were not designed to
determine whether patients lived longer. AstraZeneca posted Iressa worldwide sales of $282 million
in 2003. In the first nine months of this year, worldwide sales totaled $309 million, up from $136
million in the first nine months of 2003.

Relevant Pages

  • Re: Tarceva: Effectiveness of New Drug Against Lung Cancer
    ... kinase damage, it is an excellent drug, with response rates exceeding 35%. ... For others, squamous cell patients, smokers, and others without identifiable ... >Tarceva, the newly approved lung cancer drug, might be Staats' best hope. ...
    (sci.med.diseases.cancer)
  • Re: Tarceva: New Drug Against Lung Cancer
    ... Tarceva is a drug that inhibits an enzyme, tyrosine kinase, associated with a Human Epidermal ... "FDA believes it is crucial for cancer patients to have many safe and effective treatment options ...
    (sci.med.diseases.cancer)