OSI, Genentech Up on Cancer Drug

OSI Pharmaceuticals (OSIP Quote) shares rose nearly 2% after the company said its cancer fighter, Tarceva, has been accepted into a special program from the Food and Drug Administration for promising drugs.

The company said that its New Drug Application (NDA) for Tarceva, which has already been granted fast-track status by the FDA, had been accepted into the Pilot 1 program for continuous marketing applications. Under the program, OSI will be able to submit parts of its NDA, called "reviewable units," before submitting the entire application, which will speed along the approval process.

"We are pleased that Tarceva has been accepted as one of the first drugs to be reviewed under the new Pilot program," said Colin Goddard, CEO of the company, in a statement. "We are committed to working closely with the FDA to help demonstrate that this innovative program can help companies work together with the FDA to ensure a timely review of agents like Tarceva."

Earlier this month, Tarceva, a venture between OSI, Genentech (DNA Quote) and Roche, showed some promise in clinical trials, although the jury is still out on whether the drug is superior to other treatments. On June 5, a study showed the drug boosted survival rates in refractory lung cancer patients by two months, prompting Merrill Lynch to upgrade OSI to buy from neutral.

But in the wake of the same study, Bernstein downgraded Genentech and doctors have been concerned that Tarceva and AstraZeneca's (AZN Quote) oncology treatment, Iressa, are pretty much equivalent.

Because of fears that Tarceva's potential could be overstated, OSI shares have stumbled in the last two months. In May, the company posted a quarterly loss that was deeper than last year and missed Wall Street estimates for the fourth straight quarter.

In response to the news, shares of OSI rose $1.07 to $68.95. Genentech shares gained 39 cents, or 0.7%, to $54.54.