(Adds share move, further analyst comment)
By Bill Berkrot
NEW YORK, Feb 22 (Reuters) - U.S. regulators approved Genentech Inc’s DNA.N cancer drug, Avastin, for the treatment of breast cancer, the company said on Friday, adding a potentially significant new revenue source for the medicine.
Genentech shares jumped nearly 9 percent in extended trading as most industry watchers had expected the Food and Drug Administration either to delay a decision or reject the medicine for this use.
Avastin, already approved to treat colon and lung cancer, is considered Genentech’s most important drug by Wall Street analysts. It had U.S. sales of $2.3 billion in 2007, and one analyst estimated its use for breast cancer treatment could add nearly $500 million a year.
The FDA decision comes after the U.S. biotechnology company said last week that a study of Avastin in combination with chemotherapy significantly prolonged progression-free survival in breast cancer patients.
An FDA advisory panel in December had narrowly voted to recommend rejecting Avastin for breast cancer, saying data from an earlier study were insufficient to establish that the benefits of the drug outweighed toxicity risks in this patient population.
Analysts had widely expected the FDA to delay its decision while it reviewed the new data submitted from a study sponsored by Roche Holding AG ROG.VX, which holds a majority stake in Genentech and sells Avastin outside the United States.
“It’s much better than what the market was expecting,” Jason Kantor, an analyst for RBC Capital Markets, said.
“Following the panel, people took a very bearish view of Avastin for this indication,” he added.
Kantor had said last week that the drug could be worth an additional $480 million in 2009 if approved for breast cancer.
When the new positive data was announced last week, Kantor said he estimated Avastin sales would increase by $92 million in 2008, based on an assumption it would not be approved until May. Kantor said he would likely raise his 2008 sales estimate again now that it has been approved earlier than he expected.
The drug was approved in combination with paclitaxel chemotherapy for the treatment of patients who have not received chemotherapy for their advanced breast cancer.
The Roche study tested Avastin in combination with a different chemotherapy agent.
“With Avastin plus paclitaxel, we can increase the time a woman’s cancer is kept under control, and offer a biologic option to women who previously were limited to chemotherapies alone,” Dr. Kathy Miller, who led one of the pivotal Avastin breast cancer studies, said in a statement.
Kantor said he expected the approval news to lift the entire biotech sector.
Investors had become wary that a more conservative FDA was going to start demanding overall survival data before approving any cancer treatments. That is considered to be a much higher bar than progression-free survival data — or time patients live without their disease advancing.
“This will reverberate positively throughout the industry,” Kantor said.
Shares of South San Francisco-based Genentech jumped 8.9 percent to $77.99 in extended trading from their New York Stock Exchange close at $71.59. (Additional reporting by Kim Dixon in Washington; Editing by Braden Reddall)