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CHICAGO -- How much confidence does Genentech ( DNA) have in its new cancer drug Avastin? Enough to sponsor bus shelter ads around town, crowing about the arrival, after years of setbacks, of a drug that cuts off the blood supply to tumors.

"It's about time," the bright outdoor ad shouts. "Anti-angiogenesis: ASCO 2003."

Anti-angiogenesis -- the technical term for the process in which a drug blocks the formation and growth of new blood vessels to tumors -- finally appears to be a reality. Today, Genentech took the wraps off results from a phase III study that shows Avastin, when used in combination with chemotherapy, greatly improves survival for patients with metastatic colon cancer.

Patients who received Avastin plus standard chemotherapy survived a median of 20.3 months, compared to 15.6 months for patients taking standard chemotherapy alone. For those without calculators, this translates into a 4.7-month survival benefit in favor of Avastin.

"To my knowledge, this is the largest increase in survival from the addition of a single agent," says Dr. Gwen Fyfe, Genentech's vice president of Hematology/Oncology."

Genentech first announced the positive Avastin results on May 19, but release of the actual data was held back until it could be unveiled at the American Society of Clinical Oncology annual meeting. Investors, of course, haven't waited -- bidding up shares of Genentech 66% and adding about $13 billion to the biotech firm's market value since May 19. Genentech shares closed Friday at $62.61.

The phase III Avastin study enrolled 800 patients who suffer from metastatic colon cancer but who had not yet received chemotherapy. Many analysts believe that the addition of Avastin to current front-line chemotherapy regimens for these patients could translate into peak Avastin sales of between $700 million to $1 billion in colon cancer.

As I said above, anti-angiogenesis drugs have had a checkered history, and Avastin is no exception. Before this success, the drug failed a late-stage trial involving breast cancer patients. It's also had toxicity problems in studies involving lung cancer patients.

Fyfe says the strong data in the colon cancer study lends credence to the medical theory that says mucking up the formation of blood vessels in tumors is most effective when done earlier rather than later. This may explain why Avastin seems to prolong survival in front-line colon cancer patients, but was not effective in breast cancer patients who had already suffered through multiple relapses of their disease.

Fortunately for Genentech, drugs used in early cancer-fighting regimens are also more lucrative from a commercial perspective, which explains why people are so excited about Avastin's potential.

Whether the Avastin data justifies Genentech's current stock price -- which some believe already prices in Avastin peak sales of $2 billion annually -- is a hot debate and one I examined in an earlier story.

The next step for Genentech will be to gather the Avastin data and ready it for filing with the Food and Drug Administration. The company is hoping for Avastin approval by the end of the first quarter of next year, says Fyfe.

"This study fulfills all the regulatory requirements for approval," she says.

One challenge, however, will be to ramp up the Avastin manufacturing process to meet commercial demand. Genentech plans on transferring Avastin to its large-scale Vacaville, Calif. drug-manufacturing facility, from its current home in South San Francisco. This will require FDA approval.

As expected, Genentech also released data Sunday that expresses the Avastin survival benefit as a "hazard ratio" indicating a reduction in the relative risk of death between the two arms of the study.

The Avastin hazard ratio was in the range of 0.63 to 0.65, which means that colon cancer patients taking Avastin plus chemo have a 50% increase in their chance of survival compared to patients taking chemo alone. The study was powered to show a 33% increase in the chance of survival.
Adam Feuerstein writes regularly for RealMoney.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. He invites you to send your feedback.