Bayer’s Euphoria Around New Cancer Medicine Meets Skepticism

  • Unproven therapy could have $2.2 billion in sales, Bayer says
  • Drug will need to prove effective for mesothelioma patients

Bayer AG’s promises of soaring sales for its experimental pipeline of drugs -- hinging in large part on an unproven treatment for an uncommon cancer -- are being met with skepticism.

The German conglomerate is relying on positive signs in early human trials to predict more than 2 billion euros ($2.2 billion) in annual sales for anetumab ravtansine should it win regulatory clearance for using the medicine in treating multiple cancers, its oncology chief Robert LaCaze said in an interview this month. The vital first hurdle will be success in patients with mesothelioma, a tumor caused by asbestos exposure that affects the thin layer of tissue around key organs.

“Bayer is feeling a certain euphoria about the pipeline product anetumab, which I can’t comprehend at the moment,” said Markus Manns, who helps oversee about 275 billion euros in assets at Union Investment GmbH, one of the company’s top 20 shareholders. “Not much data has been published yet.”

Bayer, under pressure to show its drugs business won’t suffer as it seeks to buy agricultural chemicals giant Monsanto Co. for $66 billion, touted the treatment in a meeting with investors last month. The company is predicting 6 billion euros in peak annual revenue from experimental drugs it hopes to introduce within five years, with the largest share coming from anetumab. That failed to impress investors, leaving the stock languishing mostly unchanged.

“As with any drugs, you have to use caution and optimism at the same time,” LaCaze said. “There are some very intriguing early data that we saw that gave us that optimism.”

Some of the 16 mesothelioma patients who took the highest dose of anetumab ravtansine in the first phase of clinical trials remained under treatment for more than two and a half years, Bayer said this week. Such early-stage studies are designed to test whether a drug is dangerous and how much of it patients should take, not to determine with certainty whether it works. Still, the patients in the trial could normally have expected to live about four months on standard chemotherapy treatment, according to the company. 

Developed with technology from ImmunoGen Inc. and MorphoSys AG, the experimental therapy targets mesothelin, a protein on the surface of many tumor cells, to prevent them from growing and dividing. 

A higher number of copies of the protein are present in people with mesothelioma, which is why Bayer is initially targeting that population in its drug studies, though it has also been detected in patients with ovarian and pancreatic cancer. Just 2,000 to 3,000 people are diagnosed with mesothelioma each year in the U.S., and the disease will probably become less prevalent thanks to anti-asbestos building codes.

More Studies

Bayer now plans to study the drug’s effectiveness in 210 people whose cancers got worse after chemotherapy treatment, with results expected from the mid-stage study in November 2017.

If anetumab hits its 2 billion-euro target, it would become Bayer’s biggest oncology medicine by far, nearly on par with last year’s revenue from top-selling blood thinner Xarelto. The German company entered the cancer market just 11 years ago and now sells three therapies -- liver-cancer medicine Nexavar, bowel-tumor drug Stivarga and Xofigo for prostate cancer -- which jointly generated about 1.5 billion euros last year. The company boosted its peak sales estimate for Xofigo last month to more than 1 billion euros.

Stock Concerns

Bayer rose 1 percent to 90.40 euros at 11:06 a.m. in Frankfurt. The shares have slumped about 2 percent since the company presented its drug sales forecasts to investors on Sept. 20. The stock has been weighed down this year by concerns that its pursuit of Monsanto would prove to be a distraction while antitrust regulators decide whether to approve the transaction.

Bayer also faces stiff competition from other pharmaceutical companies. Cancer therapies account for almost one-third of the world’s 20 biggest drugmakers’ experimental pipelines, according to consulting firm Bain & Co. Newer players can gain a foothold by building market share in one or two types of tumors or focusing on a technology that can eventually be used more broadly, said Nitin Chaturvedi, a London-based partner with Bain.

“It’s a very credible path to leadership,” Chaturvedi said. “The leadership created through one vertical can be expanded.”

That is Bayer’s goal, with Chief Executive Officer Werner Baumann saying last month the company is pursuing a “focused leadership strategy.” One target is prostate cancer, in which Bayer has another new-drug candidate, ODM-201, in final-stage tests. Still, success doesn’t just mean carving out the right slice of the market -- it also requires the drugs to be effective enough to change treatment practice in the first place.

“Six billion of sales in 2021 is too far out to be realistic for us,” said David Moss, who helps oversee more than $238 billion in assets, including Bayer shares, at BMO Global Asset Management in London. “It’s icing on the top, if they work.”

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