Roche May Lose $1 Billion a Year on Avastin Change

Photographer: J.B. Reed/Bloomberg

Roche's colon-cancer drug Avastin. Close

Roche's colon-cancer drug Avastin.

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Photographer: J.B. Reed/Bloomberg

Roche's colon-cancer drug Avastin.

Roche Holding AG’s (ROG) top-seller Avastin may shed $1 billion in annual revenue if U.S. regulators follow a panel recommendation to revoke approval of the drug for use in breast cancer.

Scientific advisers to the Food and Drug Administration voted 12-1 yesterday to rescind Avastin’s clearance in breast cancer after finding the drug paired with chemotherapies didn’t work better than other medicines alone. The agency usually follows panels’ advice, though it isn’t required to do so.

Roche, Europe’s largest drugmaker, won FDA approval of Avastin for breast cancer in 2008 under an accelerated review that required the company to conduct trials proving the drug, with $5.97 billion in sales last year, slows progression of the disease. Tests failed to meet this goal, the FDA panel found. Withdrawal of U.S. approval could trim as much as $1 billion from annual sales by 2015, said Sanford C. Bernstein & Co. analyst Tim Anderson, in a report yesterday after the vote.

“Given the overwhelming majority against Avastin, we think there is a good chance the FDA will follow the committee’s advice,” Anderson said. He projected worldwide Avastin sales of about $6.5 billion this year, including approximately $1.2 billion from breast cancer. Eliminating U.S. breast cancer sales may cut Roche’s earnings a share by about 5 percent, he said.

No Expanded Use

Panelists also rejected Roche’s application to expand use of Avastin in breast cancer for pairings with more varieties of chemotherapy. Wider use from that approval could have pushed global breast-cancer revenue for Avastin to about $3 billion a year, said Martin Voegtli, an analyst with Kepler Capital Markets in Zurich, in a telephone interview yesterday before the panel vote.

“We are disappointed by the committee’s recommendation and believe Avastin should continue to be an option,” Sandra Horning, head of clinical development hematology/oncology at Roche said in an e-mailed statement today. “We will continue to discuss the data from the more than 2,400 women who participated in three phase III studies with the FDA.”

Roche, based in Basel, Switzerland, fell 6 Swiss francs, or 4.2 percent, to 137 francs at the 5:30 p.m. close of trading in Zurich. The stock declined 4.2 percent, the most in more than a year, July 16 after a FDA report concluded Avastin didn’t slow breast tumors in new studies as much as in earlier tests used to win approval.

“It is clear that the FDA do not believe Avastin adds a clinically meaningful benefit to patients,” said Dominic Valder, a London-based analyst with Evolution Securities, in a July 19 research report.

Sept. 17 Decision

“Today’s advisory committee vote does not change the current availability of Avastin for women with advanced breast cancer,” Charlotte Arnold, a spokeswoman for Roche’s South San Francisco, California-based Genentech unit, said yesterday in an e-mailed statement. The FDA will make a final decision by Sept. 17, she said.

Avastin is the first medicine to fight cancer by blocking the growth of blood vessels that feed tumors, a process called angiogenesis. It targets a chemical signal known as vascular endothelial growth factor, or VEGF. The treatment, also approved for brain, lung and colon tumors, costs about $50,000 a year. Avastin was developed by the company’s Genentech unit, fully acquired by the European drugmaker last year for $46.8 billion.

Most Common Malignancy

Breast cancer is the most common malignancy in females and strikes about 1 million women a year globally, according to the Geneva-based World Health Organization. Avastin is approved for about three quarters of women whose breast cancer has been recently diagnosed as having spread to other organs. It doesn’t include women who have a mutation to the HER2 protein, a known risk factor. Patients with HER2 mutations are eligible for another Roche drug, Herceptin.

The FDA’s 2008 clearance of Avastin for breast cancer overruled an advisory panel that concluded the benefit of slowing the spread of tumors wasn’t worth the risk of side effects including high blood pressure and death.

Approval was based on a clinical trial, called E2100, which showed Avastin slowed the spread of breast cancer by an additional 5.5 months when paired with paclitaxel chemotherapy, compared with the other drug alone, the FDA said in its report.

One trial completed since then, called Avado, showed that a high dose of Avastin paired with docetaxel chemotherapy extended the time patients lived without their disease worsening by 0.9 months, compared with treatment with chemotherapy alone, the FDA report said. A lower dose of Avastin gave patients 0.8 months.

Extended Life

A second trial finished after approval, called Ribbon-1, found Avastin combined with taxane or anthracycline-based chemotherapies stalled tumor growth by 1.2 months, compared with treatment with chemotherapy alone, the agency said in its review. Patients who got Avastin combined with Xeloda lived 2.9 months longer without their disease progressing, compared with chemotherapy alone.

“We have a far more comprehensive picture here of the role of Avastin than we had in 2008,” said Richard Pazdur, director of the FDA’s Office of Oncology Drug Products, told the panel before yesterday’s vote.

Drugs that win conditional clearance through the FDA’s accelerated-approval program can later be pulled from the market if subsequent data fails to show that a treatment increases long-term survival or slows progression of the disease while improving quality of life.

‘Overwhelming Majority’

While Avastin is expensive and doesn’t work as well as early trials suggested, the “overwhelming majority” of breast cancer specialists think the drug has a use in certain patients, Jack Scannell, a Bernstein analyst in London, said in a July 15 research note.

Breast-cancer patients may lose insurance coverage for Avastin if the FDA revokes approval of the treatment, said Francisco Esteva, a professor of breast medical oncology at the University of Texas MD Anderson Cancer Center in Houston.

“Even if we wanted to use it, patients would have to consider that it’s a very expensive therapy,” Esteva said July 15 in a telephone interview. “Without insurance support, I don’t think patients would be able to take it.”

To contact the reporters on this story: Molly Peterson in Gaithersburg, Maryland at mpeterson9@bloomberg.net; Dermot Doherty in Geneva at ddoherty9@bloomberg.net

To contact the editors responsible for this story: Reg Gale at rgale5@bloomberg.net; Phil Serafino at pserafino@bloomberg.net

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