UPDATE 3-Avastin, Tarceva combo delays lung cancer advance

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LOS ANGELES, Feb 2 (Reuters) - A late-stage trial found that combining Genentech Inc's DNA.N Avastin with cancer pill Tarceva, which is co-marketed with OSI Pharmaceuticals OSIP.O, extended the time patients with advanced lung cancer lived without the disease getting worse.

The news, announced by Genentech after markets closed on Monday, sent shares of OSI up 10.6 percent in extended trade, while Genentech shares rose 2 percent.

Genentech said the trial was stopped early after an interim analysis found that combining Avastin, known generically as bevacizumab, and Tarceva, or erlotinib, significantly extended the time patients with non-small cell lung cancer lived without their disease advancing.

The findings are “likely to lead to volume acceleration for Tarceva,” Morgan Stanley analyst Steven Harr said in a research note on Monday. “The fact that the trial was stopped early is an indicator that the clinical benefit is likely quite significant.”

Avastin, given by injection, is designed to cut off blood supply to tumors. Tarceva, an oral pill, acts by a different mechanism to inhibit cancer cell growth.

An earlier study, Saturn, showed Tarceva delayed disease progression when given as a single agent immediately following treatment with chemotherapy, compared to placebo.

In this latest trial, called Atlas, patients were initially treated with Avastin plus chemotherapy followed by the addition of Tarceva to Avastin in the maintenance phase.

Genentech and Switzerland's Roche Holding ROG.VX, which markets Avastin and Tarceva overseas, said in October that another study of the combined therapies did not show an increase in overall survival, compared with Tarceva alone.

But the companies said that trial too showed an increase in the time patients lived without their disease getting worse as well as the better response rate for the treatment combination.

Harr estimated that positive results from the Saturn and Atlas trials add about $200 million a year to OSI’s revenue over the next several years.

“We plan to discuss these data with the (U.S. Food and Drug Administration) to determine next steps,” Hal Barron, Genentech’s senior vice president, development and chief medical officer, said in a statement.

Roche, the world’s largest maker of cancer drugs, wants to buy Genentech, which is already majority-owned by Roche. An initial $89 per share bid was rejected by Genentech in mid-August and Roche last week said it planned to take a lower $86.50 per share offer directly to shareholders.

Shares of OSI, which closed at $36.39 on Nasdaq, were trading at $40.23 after hours. Genentech shares, which closed at $82.10 on the New York Stock Exchange, rose to $83.70.