OSI Pharmaceuticals Defends Its Drug
Matthew Herper, 08.20.02, 2:18 PM ET
forbes.com
OSI Pharmaceuticals Chief Executive Colin Goddard has a hard task ahead of him: to prove to investors that his company's drug, Tarceva, will not befall the same fate as a similar cancer pill being developed by AstraZeneca. Monday, AstraZeneca said its drug, Iressa, didn't make chemotherapy any more effective--and OSI shares sank 56%, to $14.05, on the logic that if Iressa didn't work with chemo, Tarceva wouldn't either.
As its stock fell, OSI (nasdaq: OSIP - news - people ) scrambled with its partners, Genentech (nyse: DNA - news - people ) and Roche, to differentiate their drug, Tarceva, to investors. "This is bad news for AstraZeneca (nyse: AZN - news - people ) and Iressa, and we absolutely understand that it has implications for us and that to a large degree people have drawn conclusions about the class," Goddard says.
At issue is a scientific surprise that could determine whether drugs like Tarceva and Iressa become blockbusters with peak sales above the $1 billion mark. Both pills inhibit a receptor for a protein called the epidermal growth factor (EGF) that many tumors seem to depend upon to grow. In early-stage clinical trials, these drugs, as well as injectible antibodies developed by Abgenix (nyse: ABGX - news - people ) and ImClone (nyse: IMCL - news - people ), seemed to cause tumor growth to slow or shrink.
But most cancer drugs are given as part of drug cocktails, packaged together with chemotherapies to slow, stop or reverse a tumor's growth. AstraZeneca's shocker Monday: Iressa, which had had an effect in 10% or more of non-small-cell lung cancer patients who had failed chemotherapy, did not seem to help at all when added to patients who were on chemotherapy. Now, Goddard says, his most important job is to prove that his EGF drug works.
"The most important trial we have is this phase-III single-agent study which compares daily Tarceva with best-supported care," says Goddard. In cancer, best-supported care simply means caring for patients' symptoms after options for treatment have run out. "If these drugs are capable of increasing survival," Goddard says, "we should see a benefit in that study."
But OSI and its partners have a whole quiver full of studies testing Tarceva in a variety of cancers, with and without chemotherapy. It is tracking patients in these trials to see if genetic differences in their cancers could account for whether or not Tarceva works. Then there is another difference, Goddard says. It could be that Iressa simply did not knock EGF out well enough. "Both ourselves and Abgenix have advocated hitting the target hard."
When EGF drugs are working strongly, patients usually develop a skin rash because EGF is also over-expressed in the skin. Abgenix Chief Medicial Officer Gisela M. Schwab brags that in doses being used in phase-II clinical trials, 100% of patients using Abgenix's EGF drug developed this rash; no other side effects have been seen. Tarceva seems to cause this rash in more than two-thirds of patients; Iressa only causes it in about half.
But investors are getting understandably anxious. If AstraZeneca is right, then all of the EGF drugs could see their market severely limited until doctors and drugmakers learn to use these compounds in chemotherapy. That could seriously damage sales. "We all think and hope that Tarceva has blockbuster potential," says Goddard. "But undoubtedly, a company like AstraZeneca needs blockbusters, while a company like OSI needs a successful drug on the market."
The unfortunate reality is that it is simply not clear how good a target EGF is, and it won't be until more clinical data is public. AstraZeneca has said its trial failed, but it has released no specifics, and it will be a while before OSI's clinical tests are done. In the meantime, investors are left to guess whether they should sit and wait--or flee.
After 15 years of developing Tarceva, which began through a collaboration with Pfizer (nyse: PFE - news - people ), Goddard is willing to wait a little longer for answers. "When you have a day like yesterday and you lose half your value on somebody else's news, that's frustrating. But drug development is a marathon, not a sprint." |
