ImClone Systems (IMCL) and Bristol-Myers Squibb (BMY) said Apr. 4 that their cancer drug Erbitux can improve the odds of survival in patients on chemotherapy whose head and neck cancers have spread. Investors bid up ImClone's stock nearly 5% to $42.49 on the Nasdaq, while Bristol-Myers Squibb, which is responsible for most of Erbitux's development and marketing costs, rose 0.9% to $27.78.
The development is the latest hopeful sign for the tens of thousands of Americans destined to be diagnosed this year with cancers in areas that range from the thyroid to the tongue. The American Cancer Society estimated that more than 12,900 Americans will die this year from head and neck cancer, which most often strikes people older than 50 who have used a lot of tobacco or alcohol during their lives.
"When Erbitux was approved for head and neck cancer, it was not only hailed as the first new treatment for the disease in 45 years, but it was also the first drug approved to show a survival benefit in this population. Just one year later, this study adds to the growing body of clinical evidence with Erbitux in these patients," said Martin Birkhofer, M.D., vice president of Oncology Global Medical Affairs at Bristol-Myers Squibb in a statement Apr. 4.
So far, Erbitux has Food and Drug Administration approval for use in patients whose head and neck cancer has spread to other parts of the body, but only if earlier chemotherapy treatment hasn't worked. ImClone and Bristol-Myers Squibb said Apr. 4 that a study of 400 such patients showed that survival rates go up if you combine Erbitux with platinum-based chemotherapy as a first treatment.
The FDA had famously rejected ImClone's initial application for Erbitux, one of the first of a new generation of targeted cancer drugs, back in December, 2001, saying the clinical trial didn't meet standards and the patient data was sloppy. Erbitux finally won approval for the treatment of colon cancer in February, 2004, based on another clinical trial run by Merck KgGA of Germany (see BusinessWeek.com, 6/9/05, "Erbitux: ImClone Makes Headway"). Then, on Mar. 1, 2006, the FDA approved Erbitux in combination with radiation therapy to treat head and neck cancer.
ImClone, which is responsible for manufacturing Erbitux, has steadily improved its profits since then. It earned net income of around $371 million during 2006, compared to only $86 million in 2005, according to Standard & Poor's Equity Research. (S&P, like BusinessWeek.com, is owned by The McGraw-Hill Companies.)
Noting that the recent study suggests Erbitux could be used as a treatment for more head and neck cancer patients within the next 12 to 18 months, Rodman & Renshaw analyst Michael King raised his estimate for ImClone's earnings per share in 2008 to $1.84 from $1.73 and a target price on the stock to $48 from $44.
S&P equity analyst Steven Silver also hiked his 2008 EPS estimate for ImClone to $1.61 from $1.45 and target price on the stock to $42 from $39. But Silver kept a hold opinion on the stock, and raised a note of caution. "While we see momentum for IMCL in head and neck, colorectal and pancreatic cancers, we remain cautious about intense competition in each area," Silver warned.
ImClone's stock has surged 50% in the past month, while its rival Amgen (AGM) has suffered setbacks in recent weeks developing its own cancer drugs. In January, for example, the Thousand Oaks, (Calif.) biotechnology company said patients who received its colon cancer drug Vectibix, while using a chemotherapy treatment with Avastin, didn't show much response -- and in some cases, people had more diarrhea, dehydration and infection.
It remains to be seen how ImClone fares in its efforts to develop the best new drugs. In the meantime, cancer patients might benefit.
(Barney Brodie contributed to this report.)