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Biotech Stock Mailbag: Exact Sciences

OGX-011 is designed to inhibit a protein known as clusterin that plays a role in cell survival. By knocking out clusterin in tumors, OGX-011 makes cancer cells more vulnerable to chemotherapy and other tumor-killing drugs.

OGX-011 is being developed in prostate cancer as an add-on to Taxotere, the chemotherapy drug considered standard of care for patients with advanced disease. In a phase II study enrolling 82 patients and presented in 2009, the median overall survival for the men treated with OGX-011 plus Taxotere was 23.8 months compared to 16.9 months for men treated with Taxotere alone -- an improvement in survival of 6.9 months favoring OGX-011. Expressed another way, treatment with OGX-011 reduced the risk of death by 39% compared to treatment with Taxotere alone.

While this result was not statistically significant, the strong trend favoring a survival benefit for OGX-011 was compelling because the data came from a randomized, controlled trial.

Doubts cast upon the reliability of the phase II data centered mainly around the fact that OGX-011's survival benefit came despite the drug having little or no measurable effect on tumor progression compared to Taxotere alone. Fifty-eight percent of men treated in the OGX-011 arm reported a PSA response compared to 54% of men in the Taxotere-alone arm. PSA is a commonly used biomarker for prostate tumor growth. Progression-free survival was 7.3 months for the OGX-011-treated men compared to 6.1 months for the men treated with Taxotere alone.

Whether OGX-011 can pull a phase III "Provenge" and produce a statistically significant survival benefit in the absence of objective tumor response is a question that won't be answered until late next year.

The stellar cystic fibrosis data announced Wednesday by Vertex Pharmaceuticals (VRTX - Get Report) from a phase III study of the company's drug XV-770 prompted investors and analysts to forecast potential peak sales. My article on the VX-770 data pegged the drug's revenue potential in the $400 million to $600 million range, which, in turn, prompted a skeptical @carterkeller to tweet:

"Pulmozyme is not cheap and doesn't clear $300M US with everyone eligible and chronic therapy for life. Path to $600M?"

The sales math on VX-700 is fairly simple but it is built on assumptions, so kudos to Carter for being skeptical.

Start with an estimate of 70,000 cystic fibrosis patients worldwide, of which 4-7% have the G551D genetic mutation that will most benefit from treatment with VX-700. That leaves you with an addressable patient population of between 2,800 and 4,900 patients.
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