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Genentech Drug OKd for Lung Cancer

October 12, 2006|From Bloomberg News

Genentech Inc. on Wednesday won U.S. approval to market its Avastin colon cancer drug as a treatment for lung cancer, potentially reviving sales growth for the biotechnology company's second-biggest product.

The Food and Drug Administration cleared Avastin to treat the most common form of lung cancer in combination with chemotherapy, the South San Francisco-based company said. Avastin helped lung cancer patients live more than a year in a study, compared with a median of 10 months for those on chemotherapy alone.

The clearance may help spur growth for Avastin after third-quarter U.S. sales fell short of analysts' estimates. Long-term sales of the drug depend on approval for additional uses, analysts say. Genentech and Swiss partner Roche Holding are testing Avastin on 25 types of tumors.

"There is a lack of growth in the colorectal cancer market," said Michael King, an analyst with Rodman & Renshaw Inc. in New York. "That market has been in hibernation."

King estimates Avastin sales for lung cancer will reach $396.5 million next year and $1.35 billion by 2010. Genentech received initial approval of Avastin two years ago, and the drug had U.S. sales last year of $1.13 billion.

For the third quarter, U.S. Avastin sales rose 34% to $435 million, missing Cowen & Co. analyst Eric Schmidt's estimate of $475 million.

Shares of Genentech, majority owned by Basel-based Roche, fell $1.45, or 1.7%, to finish at $84.15 on Wednesday. They've declined 9% this year. Genentech sells Avastin in the U.S. and receives royalties from Roche for other countries.

"We expect Avastin growth to reaccelerate over the next five years from new label indications," said analyst Douglas Chow of Caris & Co. in New York.

Lung cancer kills more Americans than any other type of cancer. The disease accounts for almost 30% of cancer-related deaths in the U.S., Genentech said, citing the American Cancer Society. About 60% of people with lung cancer die within a year of being diagnosed, according to the American Lung Assn.'s website.

Avastin's average cost for a course of lung cancer treatment is about $56,000, Genentech said. The typical monthly cost at the dose required for advanced lung cancer is about $8,800. The company said it's starting a program to cap the cost at $55,000 a year for eligible patients regardless of whether they have health insurance.

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