Melanoma Therapy From Medarex May Be Next Big Thing
Investor's Business Daily
Friday June 8, 7:00 pm ET
Gloria Lau
Melanoma accounts for just 3% of all skin cancers, but it's the deadliest. The American Cancer Society expects melanoma to afflict nearly 60,000 Americans this year and kill 8,110.
When the cancer is local, it can be cut out. But once it spreads to other body parts, there are few options. Among them are two chemotherapy drugs: 30-year-old dacarbazine and its newer offshoot, temozolomide.
Of the advanced patients who take these drugs, fewer than 10% see tumor shrinkage. The average patient dies in less than a year.
"Both drugs do nothing to improve overall survival," said Janney Montgomery analyst Brian Rye. "We're talking about a disease where there are few, if any, good options for patients."
It's against this backdrop that biotech firm Medarex (NasdaqGM:MEDX - News) and partner Bristol-Myers Squibb (NYSE:BMY - News) brought midstage data on their drug candidate ipilimumab to the American Society of Clinical Oncology (ASCO) meeting last week.
Ipilimumab helped 8% to 25% of the more than 1,000 patients in various studies, says Christian Schade, Medarex's chief financial officer.
"So far, we are excited," Schade said.
Many patients whose tumors became undetectable have stayed healthy, Schade says. Patients whose tumors shrank 30% to 50% also saw their conditions stabilize for more than a year.
The firms recently finished pivotal phase-three studies and plan to release that data late this year. Then they'll file for Food and Drug Administration review.
The FDA has granted the drug so-called fast-track status, so the review time will be just six months. If all goes well, analyst Rye expects product launch next summer.
Rye sees ipilimumab drawing U.S. annual sales of $250 million to $300 million alone within a couple years.
Medarex and Bristol also hope to expand the drug to other countries and other diseases, such as prostate cancer.
"If approved in prostate cancer, it would more than double the market opportunity," Rye said. "If they're able to get (it approved) in a couple of other tumor types, ipilimumab would have billion-dollar sales potential."
The actual number of patients treated would be tiny. There are about 16,000 to 20,000 advanced melanoma patients, compared with some 22 million people with heart disease. But these drugs carry a much higher price tag.
"Someone might complain about paying $100 a month for a high blood pressure medication," AG Edwards analyst Al Rauch said. "But they won't complain about $1,000 a month for cancer therapies. Some, such as Avastin, cost up to $50,000 a year."
Rauch expects ipilimumab to price high. "Even $30,000 to $40,000" is not out of the question, he says.
In the U.S., Bristol would get 55% of operating profit and Medarex 45%. Outside the U.S., where Bristol would handle marketing, Medarex gets a royalty.
Rye says the royalty is likely 8% to 12% of sales, based on what he's seen at other companies. ImClone (NasdaqGS:IMCL - News), for example, gets a 9% to 10% royalty on non-U.S. sales of Erbitux.
Ipilimumab's lead rival in melanoma is Pfizer's (NYSE:PFE - News) CP-675206. Phase one and phase two data presented at ASCO show 30% to 50% tumor shrinkage in 10% of patients.
"A number of the patients have not relapsed and have a prolonged survival rate of a bit over a year, but it's a small number of patients," said Dr. Charles Baum, vice-president of Pfizer Global Research and Development and oncology clinical leader.
By the end of June, Pfizer expects to launch a late-stage study, which pits its drug against old-style chemotherapies. The study will include more than 600 patients, vs. the 100 in earlier studies.
"There's a need for new drug options," Baum said. "And our data are very encouraging. Hopefully by next year's ASCO we will have the results."
Both ipilimumab and CP-675206 are fully human antibodies and are not specific to any one type of cancer.
The body's immune system normally attacks all foreign invaders, including colds and infections. But in cancer, the body shuts down the immune system before it wins the fight, Rye says.
In theory, these two drugs turn off that emergency brake. That would let the immune system seek and destroy tumors.
Should Pfizer's drug beat Medarex's product to market, Medarex will still benefit.
Pfizer has to pay Medarex double-digit royalties on the technology behind CP-675206. Both Rye and Rauch expect a royalty of 20% of sales.
Rauch expects both drugs to become major players. By 2013, he sees them drawing several billion dollars in total revenue.
That would bring Medarex a welcome sense of security.
In February, the firm restated financial results from 2003 through the first quarter of 2006. Rye says this is a good step toward "normalcy" after an internal stock options probe and former CEO Don Drakeman's exit.
Still, he warns that there are many shareholder lawsuits in early stages. The authorities also aren't finished looking into the firm. |
