Tarceva: running in place?

One other note from the DNA earnings numbers: Tarceva sales grew 27% year over year and 7% sequentially (total: $107M). Very bad news for OSI. DNA is more motivated to push Avastin for solid tumors, so Tarceva is probably undermarketed by something between $500M and $1B.

I wonder if OSI can buy back their product from Genentech, perhaps financed by a big pharma sugar daddy like NVS. If you slap DNA's P/E on Tarceva, the price would be something like $21B (versus OSI's valuation of $1.9B) so I can't imagine this happening soon. Unfortunately, OSI's current valuation doesn't really argue for an acquisition by DNA, and that doesn't even take into account the potential anti-trust concerns of such a merger.

Are EGFR Inhibitors Only Useful in Certain Patient Groups?

It's becoming more clear that some targeted therapies can be even more finely targeted, as highlighted in this summary of EGFR inhibitors.

Consider these findings from Iressa trials:
"EGFR inhibition response rate to Iressa was 27% in Japanese patients compared with only 10% in non-Japanese patients, but that this difference was not as significant as the differences in response rate favoring women over men, patients with adenocarcinomas over squamous carcinomas, and healthier patients over less healthy ones (“performance status”, or the ability to perform the activities of daily living without assistance or significant symptoms). The US-based IDEAL-2 trial also showed women receiving iressa to be more likely to have symptomatic improvement (50% vs. 31%) and significant tumor shrinkage (19% vs. 3%) compared with men, and also that patients with adenocarcinomas were more likely to have symptomatic improvement (43% vs. 30%) and tumor shrinkage (13% vs. 4%) compared with those who had squamous tumors. "

Good news (in terms of tumor shrinkage, but NOT survival) if you're a non-smoking Japanese woman with an adenocarcinoma, bad news if not.

Kind of amazing that this sort of knowledge is only coming to light ~3 years post-FDA approval. (I'm not suggesting that approval be delayed, just that with any approval, there's still many important outstanding questions.)

This also brings to mind the question of who is likely to sponsor the development of the relevant intelligence and diagnostics to further segment patients. You might guess that the makers of EGFR inhibitors would, but is it in their best interest to EXCLUDE potential customers? (Plus, there's enough competitors among EGFR inhibitors that no one is likely to want to pay to develop this market for the benefit of their competition.

(That being said, I'm pretty sure that I've seen press releases announcing that AZ has sponsored EGFR biomarker development, with CST, I think.)

Tarceva in the news

Pricing to rise slightly.

The news that DNA is raising Tarceva pricing is interesting given that about a month ago, Genentech (DNA) announced a cap on per patient costs for Avastin, especially since both medicines are anti-angiogenic solid tumor fighters (though targeting different genes.)

There's probably 2 reasons for the difference:

1) Avastin is a monoclonal antibody, and much more expensive to produce.
2) Avastin is wholly owned by DNA, while Tarceva is partnered with OSI. OSI probably doesn't need to send the same social message that DNA does, and therefore is not as interested in capping costs. Or, OSI wants to raise prices to increase Tarceva's profile within DNA (and hence profitability).

(It's pretty clear that DNA is pushing Avastin harder than Tarceva. I'll illustrate this in a future post. Tarceva may be the better product in the long run, strictly due to patient compliance costs in consuming a small molecule (pill) versus weekly injections (Avastin.)

It's still hard to accept why OSI and DNA are both partners and competitors in this space and wonder how long this will last - with either DNA buying OSI, OSI buying out of the DNA agreement.

OSI has small molecules in development that could/would supplant Avastin, but they're years away


Somewhat related: NICE (UK health cost/benefit agency) just determined that Tarceva is not cost effective, and is therefore not available in England as part of NHS (public) medical care. Tarceva is, however, covered by the NHS in Scotland.

The decision isn't final, though.

This brings up a deep moral question. I guess I shouldn't be shocked that Britain has coldly run the numbers on Tarceva, and are willing (and able) to tell people who could benefit from Tarceva that the government doesn't find their additional time on this Earth, or improved quality of life to be a good investment.

Story: NICE gives thumbs down to Tarceva