AstraZeneca Whale Racing With Minnow to Develop Lung Cancer Drug

The race to develop a new class of lung-cancer medicines is pitting one of the world’s biggest drugmakers against a five-year-old startup.

AstraZeneca Plc, the U.K.’s second-largest pharmaceutical company, and Clovis Oncology Inc. of Boulder, Colorado, both intend to seek approval from regulators next year. Both drugs, which target a form of the disease that has resisted treatment, have received breakthrough therapy designation from the Food and Drug Administration, meaning their review will be expedited.

While Clovis, with 109 employees, is tiny in comparison to AstraZeneca and its 51,500 workers, the company intends to market and sell the drug on its own, at least in the U.S. and Europe, said Patrick Mahaffy, Clovis’s co-founder and chief executive officer. Because the disease affects a limited population and any drug would be prescribed by specialists, Clovis doesn’t need an army of sales representatives, Mahaffy said. That helps even the playing field with AstraZeneca.

“It’s an area where small can compete with large,” he said.

The treatment that wins with doctors may have more to do with who’s first than with who’s bigger. That puts pressure on Clovis, which has yet to successfully develop a drug. At stake is a market estimated to be worth at least $3 billion in annual sales.

Being First

“This is a new area, and if you want to dominate, you have to be first,” said Mondher Mahjoubi, AstraZeneca’s senior vice president for global oncology strategy, in an interview.

AstraZeneca reported new results from its ongoing early-stage study of 253 patients at the European Society for Medical Oncology Sept. 27.

The update showed 70 percent of patients responded to an 80-milligram dose of its AZD9291 treatment, up from the 64 percent at all doses, it reported in May. That compared with a 20 percent to 30 percent response rate for patients receiving chemotherapy, according to the data presented at the meeting. In May, Clovis announced a 58 percent response rate in 72 patients who took its drug, rociletinib, in an early-stage trial.

AstraZeneca’s updated study also showed a median of 9.6 months of progression-free survival, compared with the more than 12 months for Clovis patients that the U.S. company estimated in May. Progression-free survival measures the time in which tumors shrink or aren’t growing.

Survival Measure

Clovis will update its findings at a medical meeting in Barcelona next month. Neither company’s studies is complete, however, and final results for both may not be known until next June.

Getting to market first isn’t all that matters. A difference in progression-free survival, even as little as a month, may determine which is more prescribed, said Charles Duncan, an analyst at Piper Jaffray, in a note to investors. That could help the market laggard catch up.

So far, lung-cancer experts don’t see much difference between the two medicines.

“I am equally enthusiastic about both drugs,” said Tony Mok, a professor at the Chinese University of Hong Kong and president of the International Association for the Study of Lung Cancer.

Resistant Cancer

The treatments are the first to target a reoccurrence in lung cancer which develops when some patients who have a specific gene mutation are treated with another drug that the cancer can eventually resist. About 10 percent to 15 percent of Caucasians with non-small cell lung cancer have the EGFR mutation, while about 30 percent to 40 percent of Asian patients have it.

The drugs would meet a significant need, Mok said. Now, the standard for care for these patients is chemotherapy, he said. The new medicines could add almost another year of life, he said.

Clovis and AstraZeneca are also testing the drug as a first-line therapy, meaning they would be prescribed upon initial diagnosis. If successful, they could dramatically expand their revenue potential.

AstraZeneca said in May that AZD9291 could reach annual sales of $3 billion for its share of the first and second-line markets. Goldman Sachs estimated a similar number for Clovis’s drug in a March note to investors.

Acquisition Potential

Success for Clovis could make the company an attractive acquisition target. Mahaffy, the CEO, has developed two other medical companies that were bought: Pharmion Corp., which was sold to Celgene Corp. in 2008, and NeXstar Pharmaceuticals Inc., which was purchased by Gilead Sciences Inc. in 1999.

Clovis put itself up for sale last year, and hired Credit Suisse Group AG and JPMorgan Chase & Co. to explore its options before withdrawing due to a lack of interest from potential buyers, according to a person familiar with the matter. Clovis had declined to comment on the report.

Mahaffy said that, despite his record, he wasn’t developing Clovis to sell it.

“I try to build sustainable enterprises,” he said. “I don’t believe you can sell a company. I do believe a company can be bought, and there is a difference.”

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