Genentech Provokes Doctors Ire With Costly Avastin Trial
The 2,710-patient trial, whose results are expected in April, may show that 12 months of Avastin added to six months of chemotherapy can reduce the risk of colon cancer recurring. The test is part of a $1 billion campaign by the South San Francisco-based company to expand the uses of Avastin, already approved for advanced colon, lung and breast cancer
The drug, among the most expensive cancer medicines at a yearly wholesale cost of $52,800 a year, generated $4.8 billion in 2008 sales. Revenue may rise by $2 billion annually should the drug gain use against newly-diagnosed colon cancer, said Jason Zhang, an analyst for BMO Capital Markets in New York. A positive result may increase Genentechs value as the company fends off a hostile tender offer from Roche Holding AG.
“I was furious” about the study design, said Leonard Saltz, a research oncologist at Memorial Sloan-Kettering in New York who consults for Genentech, in a telephone interview. Saltz said in an interview that testing a drug for six months has been “standard practice for such a study for the last dozen years.
“It is a significant expense issue, and it is a convenience and psychology issue,” said Saltz, noting that the drug should first have been tested for half a year before testing it for a year. “I was very disappointed.”
Fair Question
Saltz and Alan Venook, a researcher at the University of California, San Francisco, both said they dont believe the study was designed just with profit in mind, and Venook praised the trials lead scientist, Carmen Allegra, the division chief of hematology and oncology at the University of Florida Shands Cancer Center in Gainesville.
Still, Venook said, “Its a fair question to ask. While I believe they want to help patients, they also have a fiduciary responsibility to their shareholders to get the best returns they can within the context of legal and ethical practices,” he said. “If I worked for Genentech, it would be my job to develop studies that would help them sell as much drug as possible.”
The study, called C-08, has emerged as a key point of contention between Genentech and Basel, Switzerland-based Roche Holding AG, now pressing a hostile tender offer.
Roche, which already owns 56 percent of Genentech shares, said its $86.50-a-share bid is based in part on a financial model giving the study 55 percent odds of success, compared to Genentechs 61 percent estimate. A Genentech board committee has said the company should be priced at $112-a-share. The Roche offer expires March 12, before the trial results are reported.
Swiss Army Knife
A positive finding is also critical to Genentechs long- term push to aim Avastin at a wide variety of early-stage tumors, making the drug a virtual Swiss army knife drug for cancer. Avastin is Genentechs “single most important value- driver over the next year,” said Mark Schoenebaum, a Deutsche Bank analyst in New York, in a telephone interview.
Monthly Price
The median monthly price of cancer treatment in the U.S. surged six-fold to $5,988 from $1,052 in the early 1990s, according to Peter Bach, a researcher at Memorial Sloan- Kettering Cancer Center in New York and former senior policy adviser at the federal Medicare program. Advances in treatment have not improved at the same pace as their costs, he wrote in a report in the Feb. 5 New England Journal of Medicine.
“With each advance in treatment, the magnitude of the increase in the cost of treatment exceeded the magnitude of improvement in efficacy,” wrote Bach, who consults for Genentech and other companies. He urged lawmakers to consider strategies for containing costs of cancer drugs such as having Medicare compare effectiveness of the medicines it pays for.
Cancer doctors buy Avastin and are allowed to charge the manufacturers price for the drug plus 6 percent. For advanced colon cancer patients who meet certain financial criteria, Genentech capped Avastins cost at $55,000.
The company hasnt announced what it would charge for Avastin as an adjuvant, or early-cancer, treatment.
Both Saltz and Venook say its also unknown whether longer use of Avastin, which fights cancer by crimping blood-vessel growth, may produce delayed side effects 15 years later if such patients are cured of their cancer.
Long-Term Effects