this is a better analysis then any response I could make to your questions
From Alex To -- ROG.VX: Avastin Setbacks (Notice the Plural on Setbacks)
• The FDA oncology advisory panel voted just now to remove the breast cancer
indication from the Avastin label. Avastin was initially approved for the first-line
treatment of metastatic breast cancer in 2008 through an accelerated review based on an
initial trial demonstrating a large benefit in progression free survival. The panel
decided that the 2 confirmatory trials completed since the accelerated approval did not
confirm the magnitude of the PFS benefit seen in the initial trial. Further, none of the
trials demonstrated a survival benefit.
• Current sales of Avastin are about $6 billion. The US sales of Avastin attributable
to breast cancer are about $800 million to $1 billion. About $500 million of the breast
cancer sales are "on-label" for first-line usage, while the rest is off-label
for second-line and beyond. Now, it is likely the $500 million is going away. We think
the off-label use will dwindle as well, as payers will be unlikely to want to pay and
doctors will be afraid of liability.
• The other casualty is the potential for Avastin label expansion in ovarian cancer.
As in breast cancer, a pair of recently completed Avastin ovarian cancer trials showed
only PFS benefit. The overall survival endpoint was not reached. Previously, Roche had
indicated it was planning on filing for the ovarian indication based on PFS data. Now,
considering the panel discussion of the Avastin breast cancer experience, the chance of
Roche getting through in ovarian based on PFS alone is slim to none. Ovarian cancer could
have fetched $1 billion in US Avastin sales for Roche.
• We know it is unkind for us to mention this, but we couldn't resist. Avastin is
perhaps the #1 reason for Roche buying Genentech last year. Yet, the colorectal adjuvant
trial that was to dramatically expand Avastin sales failed within weeks of the deal
closing. Then, Avastin label expansion trials failed, one after another. The approval for
GBM in May was a positive. Now, Avastin sales face a decline with the removal of the
breast cancer indication. The future for an expansion in ovarian cancer is in doubt. So,
supposing Genentech were still freely trading today, where would the stock have been? $50
instead of the $95 Roche paid last spring? Much of the recent decline in Roche's stock
could be explained by this discrepancy.
• However, as we previously mentioned, the next main catalyst for Roche is the data
flow of dalcetrapib. The possibility of a mega-blockbuster looming on the horizon should
allow Roche's stock to make a bottom. Until, of course, there isn't a mega-blockbuster.
We haven't seen enough data on dalcetrapib to make a bet one way or the other yet.
Alex To, MD
AI
