Dr. Patrick Soon-Shiong isn't a big fan of the word "vindicated," but sometimes he just can't resist uttering it. And who can blame him? In January, the U.S. Food & Drug Administration approved Abraxane, a new cancer-treatment drug made by American Pharmaceutical Partners (APPX ), which Soon-Shiong founded.
During a 10-year battle to get the drug to market, Schaumburg (Ill.)-based APP weathered lawsuits from investors who thought Soon-Shiong was hyping the Abraxane's prospects, attacks by short-sellers who were convinced APP's stock would plummet, and even fraud accusations from Soon-Shiong's own brother, who was once his business partner. "People thought it was blue-sky, crazy, impossible," Soon-Shiong says of the new drug.
Indeed, at times Abraxane seemed like an unobtainable goal. The drug is a reengineered form of Taxol, a popular chemotherapy treatment used for some forms of cancer. Although Taxol is effective, it has such high toxicity that its label warns of "severe hypersensitivity" and "fatal reactions." The reason: Taxol has to be dissolved in an industrial-strength solvent that causes most of the dreadful side effects. Soon-Shiong's idea was to ditch the solvent and attach the drug to tiny nano-particles of protein instead -- an idea that had been tried unsuccessfully by others.
As APP came close to filing for FDA approval last spring, company execs boldly predicted Abraxane would get "priority review," meaning the agency would hand down an answer in 6 months as opposed to the usual 10. When the FDA declined to put the drug on the faster schedule, jittery investors started bailing: APP's shares fell from $42 in May, 2004 to $29 in November.
Plus, APP was hit with class actions, charging that it was promising Abraxane could be given without allergy-preventing medications, even though some patients in the clinical trials had received other drugs, such as steroids, to head off bad reactions.
Then, vindication. The FDA approved Abraxane for use in breast cancer patients who had failed other therapies or relapsed within six months. Also, the agency said, the drug wouldn't have to be given with preventative medications, which in and of themselves can cause dangerous side effects.
While APP had a fairly strong business making generic drugs before, analysts expect Abraxane to push revenues up 50%, to $609 million, this year. Profits could double, to $120 million. In mid-March, the few remaining lawsuits against APP were dropped. Its stock closed at nearly $52 a share on Mar. 30.
Analysts believe APP's business -- and its stock -- have plenty of room for growth. That's because Abraxane could eventually be used in even broader clinical settings. One example: Physicians at Memorial Sloan-Kettering Cancer Center in New York are preparing to test it for what they refer to as "dose density." Normally, chemo treatments such as Taxol have to be given to patients gradually, in measured doses over several months. Otherwise, side effects such as low blood pressure and allergic reactions can turn deadly.
But some oncologists hope that because Abraxane is less toxic, they might be able to bombard tumors with very high doses given, say, every week instead of every two weeks. "We think we can dramatically increase the effectiveness" of the chemo, says Dr. Larry Norton, deputy physician-in-chief in charge of breast cancer programs at Memorial Sloan-Kettering. "We know that giving high doses closer in time can have a profound impact on breast cancer."
Furthermore, APP might be able to apply its technology to other cancer-fighting drugs. Solvents are a problematic ingredient in several chemo treatments. APP is now testing its protein-based delivery method on three drugs to treat breast, lung, and colon cancers. Analysts have an average price target of $60 on the stock, though that could increase if APP's technology proves promising beyond Abraxane.
Soon-Shiong isn't quite out of the woods yet. APP still has to prove it can manufacture Abraxane at a high enough rate to meet demand. As a "nanoparticulate," Abraxane's molecular structure is quite a bit more complex than the other drugs APP makes. Investors are rarely kind to biotechs that fail to live up to the manufacturing challenge -- and APP won't escape punishment if it can't keep up.
Despite the risks, Soon-Shiong feels confident enough now to say that tricky word. "I feel vindicated," he says. "But more importantly, I'm very excited." If the bold plans he has to extend the Abraxane concept pan out, no doubt Wall Street will continue to turn cartwheels, as well.
By Arlene Weintraub in New York