The San Jose Mercury News (California)
A day after reporting a big surge in its quarterly profits, biotechnology giant Genentech won federal permission Wednesday to sell its popular drug Avastin — already approved for colon cancer patients — as a treatment for lung cancer.
“We’re definitely excited,” said Ed Lang, a spokesman for the South San Francisco company. “It’s a great day.”
Michael King, director of research for investment bank Rodman & Renshaw, said sales of Avastin for lung cancer should greatly bolster the South San Francisco company’s annual product revenues, which totaled nearly $5.5 billion last year.
“Our estimates are that it could add $1.4 billion by 2010,” said King, who owns no Genentech stock.
The U.S. Food and Drug Administration approved Avastin for advanced cases of the most common type of lung cancer, known as non-small cell lung cancer, which is believed to affect up to 89,000 people in this country, according to Lang.
And if Genentech executives succeed in eventually winning FDA approval to use the drug for other types of lung cancer, it could turn Avastin into a huge seller, said Shiv Kapoor of investment bank Montgomery & Co. He estimated the potential market for treating colon cancer patients in the United States at $1.8
billion a year, compared to about $3.9 billion for lung cancer.
“So it is very important for Genentech‘s growth,” Kapoor said.
Avastin has been widely hailed as Genentech‘s most promising product since the FDA approved it for sale in February 2004. It generated about $1.1 billion in U.S. sales last year. And it already has surpassed that in the first nine months of this year, racking up more than $1.2 billion.
Genentech has ambitious plans for the drug. It is studying Avastin’s potential use for 25 different types of cancer, including kidney, breast, pancreatic, prostate and ovarian cancer.
But Avastin isn’t cheap. It costs $4,400 a month for a typical colorectal cancer patient. And the tab for a typical lung-cancer patient receiving Avastin every three weeks is expected to be about $8,800 a month, Lang said. Since the average lung-cancer patient will likely use Avastin for a little more than six months, the total cost is expected to be about $56,000.
That has prompted complaints the drug is prohibitively expensive, particularly for patients with little or no health insurance. Mindful of such criticism, Genentech‘s executives revealed in July that they had begun meeting with patient advocates to discuss the matter.
On Wednesday, the company went a step further, announcing that it will cap Avastin’s price for eligible colon cancer and lung cancer patients at $55,000 a year. The company has yet to define what an eligible patient is, but Jamie Court of the Foundation for Taxpayer and Consumer Rights isn’t impressed.
“$55,000 is more than the median income,” Court said. “That’s not exactly a price break.”
On Tuesday, Genentech reported a 58 percent jump in its third quarter net income compared with the same period a year ago. But the increase wasn’t as much as some analysts had expected and Genentech‘s stock price fell $1.45 to $84.15 at the close of trading Wednesday.
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Contact Steve Johnson at [email protected] or (408) 920-5043.
