Novartis Boost Seen in Fast Approvals as Protection Ends

Just as Novartis AG (NOVN)’s best-selling medicines are losing patent protection, the company is poised to get a revenue boost from a U.S. program designed to speed life- saving therapies to patients with few treatment options.

Novartis, Europe’s biggest drugmaker, plans to seek approval to sell a new lung-cancer treatment as soon as next year after winning a “breakthrough” designation from the U.S. Food and Drug Administration. The breakthrough program is a response to demands from doctors and patients for quicker access to medicines under development.

Earlier entry to the $5.8 billion lung-cancer market would help Novartis, based in Basel, Switzerland, fill a growing revenue gap as best-selling products Diovan for hypertension and Gleevec for cancer face competition from generic copies. The heart drug started to lose patent protection last year; Gleevec will be open to copies starting in 2015. Together, they generated $9.1 billion in sales last year.

“This is really changing the whole development paradigm,” said Barbara Weber, a senior cancer drug researcher for Novartis.

In an early-stage trial of 88 patients, the drug, dubbed LDK378, shrank tumors in four-fifths of volunteers who had previously taken Xalkori, a rival treatment from Pfizer Inc. (PFE), according to data presented at the European Society for Medical Oncology conference last year.

Photographer: Gianluca Colla/Bloomberg

A sign sits on the side of the Novartis AG headquarters in Basel. Close

A sign sits on the side of the Novartis AG headquarters in Basel.

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Photographer: Gianluca Colla/Bloomberg

A sign sits on the side of the Novartis AG headquarters in Basel.

The results are “really remarkable,” said Alice Shaw, an oncologist at Massachusetts General Hospital, who led the trial of Novartis’s medicine.

Adding Time

The most frequent side effects were nausea, vomiting and diarrhea. Novartis plans to publish additional results on the drug at this month’s meeting of the American Society of Clinical Oncology. Still, due to the nature of the trials, the data can’t help doctors assess whether the drug will indeed prolong lives or slow cancer.

Shaw says studies indicate the drug will add time to cancer patients’ lives, though it’s too early to say for sure. The drug may also act on cancer that has spread to the brain, an advantage that Xalkori doesn’t have, she said.

The Novartis therapy was first tested on people who no longer responded to Xalkori, and is now entering trials with patients who haven’t yet tried the competing product.

Though Novartis hasn’t yet published its sales expectations for the drug, if it’s effective revenue could exceed the $360 million a year predicted by brokerage Helvea SA, said Herve Hoppenot, the company’s president of oncology. Xalkori may see annual sales of $831 million by 2017, according to the average of four analyst estimates compiled by Bloomberg.

Breakthrough Therapies

Novartis is considering seeking permission early next year to market the drug after two stages of clinical testing, Hoppenot said in an interview. That could make it one of Novartis’s fastest approvals, he said, matching the cancer drug Tasigna, which took three years.

Novartis fell 0.2 percent to 68.75 Swiss francs in Zurich on May 3. The stock has gained 24 percent this year including reinvested dividends, compared with a 20 percent return for the Bloomberg Europe Pharmaceutical Index.

New treatments for lung cancer fit the FDA’s profile of what it calls breakthrough therapies that the agency wants to offer to patients more quickly. Until now, the FDA has typically demanded three trials in people, testing about 1,000 to 5,000 patients. That usually takes six to seven years, followed by six months to two years to gain approval, according to the Pharmaceutical Research and Manufacturers of America.

Patient Demands

Instead, one or two trials with a few hundred patients may be enough for a company to start selling a drug, with later tests to confirm the FDA’s preliminary clearance. European regulators are also discussing a path to early clearance of drugs, according to the European Medicines Agency.

“At the end of the day, this is about giving in to patients’ demand for faster access,” said Helvea analyst Olav Zilian. “The proof that the drug works will have to be handed in later.”

Of patients with the most common form of lung cancer, called non-small cell lung cancer, 31 percent live for at least five years if the disease is caught early; for the most advanced form, the five-year survival rate drops to 1 percent.

While drugs such as Xalkori and Roche Holding AG (ROG)’s Tarceva have entered the market recently, they are often only potent in patients with a defined gene defect, and even then only until the cancer finds new ways of growing, leaving doctors with an empty arsenal.

Stomach Problems

“The issue is that patients do very well, but they do develop resistance in one to two years,” Shaw said of Xalkori. Shaw consults for companies including Novartis and New York- based Pfizer.

The program may help people such as Jessica Rice, who is taking LDK378 as part of a clinical trial. Rice was told she had lung cancer in November 2011, at the age of 30.

Rice tried chemotherapy, which failed to slow the disease, then Xalkori. While that worked, it caused intense back pain so she stopped the treatment. Since she started taking LDK378, she has suffered severe stomach problems, but since she’s in a trial she can’t take more than a few days off. If the drug were commercially available, that wouldn’t be a problem.

“I’m getting very sick,” said Rice, a former project manager for Citibank who lives near Philadelphia. “Once I go off the trial, there is no going back. I can’t come back to this to buy me a year of life.”

Rogue Proteins

Xalkori and LDK378 block rogue proteins made by a damaged copy of the ALK gene, a defect carried by about 5 percent of patients with non-small cell lung cancer. Until recently, those with the defective gene had no option other than chemotherapy, a grueling regimen that temporarily helped about one in 10 patients.

Targeted drugs like LDK378 are ideal for faster approval because they are less likely to cause the wide-ranging side effects seen from chemo. Doctors can determine which patients carry the defects and give the medicines only to those who might benefit.

“We used to have to treat 100 patients to benefit 10,” said Len Lichtenfeld, the American Cancer Society’s deputy chief medical officer. “Now we can demonstrate effectiveness right out of the box.”

Success Stories

Other therapies that have received the breakthrough designation since it was established last year include Pfizer’s breast-cancer drug palbociclib and Johnson & Johnson (JNJ) and Pharmacyclics Inc. (PCYC)’s ibrutinib for certain types of blood cancer. Xalkori was approved in 2011, before the FDA program was introduced.

Strong results in early trials don’t always translate into longer survival for patients, which is always going to be a risk with faster approvals, cautioned Charles Sawyers, chairman of human oncology at the Memorial Sloan-Kettering Cancer Center and a member of the Novartis board since February.

“I suspect there will be some files where the breakthrough will be a little too aggressive,” Sawyers said in an interview. “At least in cancer we’re going to have more success stories we’re proud of than mistakes.”

For Related News and Information: Targeted Cancer Therapies Boost U.S. Approvals to 15-Year High

To contact the reporter on this story: Eva von Schaper in Munich at evonschaper@bloomberg.net

To contact the editor responsible for this story: Phil Serafino at pserafino@bloomberg.net

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