European Trial Slows Genentech's Avastin

Genentech'sDNA cancer drug Avastin failed to prolong survival in patients with non-small cell lung cancer, according to updated results from a European clinical trial released Monday.

Genentech's most important cancer drug, Avastin is already approved as a treatment for non-small cell lung cancer based on a separate study conducted in the U.S., which showed that Avastin, used in combination with chemotherapy, prolonged patient survival by about two months, or 25%.

The new European data comes from a study called AVAIL that was conducted by Swiss drugmaker Roche, which sells Avastin in Europe. While the lack of a survival benefit in the AVAIL study does not put Avastin lung cancer revenue at risk entirely, some doctors may re-evaluate how they use the drug when treating lung cancer patients.

This is especially true as Avastin is expected to get some new competition in the lung cancer market from Erbitux, the cancer drug owned by ImClone SystemsIMCL.

Concerns about the lack of a survival benefit in the AVAIL study first surfaced April 14, sending Genentech shares lower. Genentech closed Friday at $72.72, and were trading around $72 in light pre-market trading Monday.

The AVAIL study tested two doses of Avastin in combination with the chemotherapy drugs gemcitabine and cisplatin compared to chemotherapy alone in patients with newly diagnosed non-small cell lung cancer.

Last year, results from the study's primary endpoint showed that both the low-dose and high-dose arms of Avastin plus chemo resulted in a statistically significant improvement in progression-free survival compared to chemo alone.

Overall survival was a secondary endpoint in the AVAIL study. Monday, Genentech confirmed that neither doses of Avastin plus chemo resulted in a statistically significant improvement in overall survival compared to chemo alone. However, patients in all three arms of the study reported a median survival of more than 12 months, which is longer than typically seen in these patients.

Given the strong survival benefit reported for Avastin in the U.S. study, it's highly unlikely that the new AVAIL data will prompt doctors to stop using Avastin to treat lung cancer. However, it could compel some doctors to switch to a lower dose of Avastin, which could pinch revenue.

This was the fear that surfaced last year when the first AVAIL results were released. However, since then, the high dose of Avastin has remained the standard of care, with relatively few doctors adopting the lower dose. Whether the negative survival data released Monday accelerates switching to low-dose Avastin remains to be seen.

In June, ImClone and its European partner Merck KGaA will present results from a phase III study of Erbitux in non-small cell lung cancer patients. The companies have previously reported that Erbitux successfully prolonged survival in these patients, but the precise extent of that benefit is being kept under wraps until the American Society of Clinical Oncology annual meeting.

It's expected that Erbitux will improve survival in lung cancer patients by at least four to five weeks. This would make Erbitux a significant player in the lung cancer treatment market, especially for patients who, for various reasons, are not eligible to receive, or cannot to, Avastin.

Also Monday, Morgan Stanley's European drug analyst issued a note to clients stating that an update from a previous study of Erbitux in lung cancer also showed a survival benefit in favor of the drug. Neither ImClone nor Merck KGaA would confirm the report to the Morgan Stanley analyst, but if confirmed, the data could provide more evidence to support Erbitux's role as a lung cancer treatment.