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Switzerland-based pharmaceutical giant Roche (RHHBY) is busy preparing to defend one of its three major cancer drugs, Herceptin -- whose patent expires in 2014 -- from the onslaught of generic drugs. One of Roche's major oncology drugs, Herceptin is a treatment for patients sufferng from advanced metastatic breast cancer.
The worry on Wall Street is whether Roche will be able to effectively protect Herceptin's turf. Along with Roche's two other cancer drugs, Avastin and Rituxan, the three account for a combined 32% of Roche's group revenues. "The concern is understandable and the company's ability to defend these franchises is key to address investors' concerns," says Mark Purcell, the European pharmaceuticals analyst for Barclays Capital.
Roche has been accelerating efforts to do just that, including the development of drugs that are undergoing clinical studies specifically designed to protect Herceptin's market. They include Pertuzumab, a drug that seeks to treat adjudavant breast cancer, and a product named TDM1, designed for patients suffering from refractory breast cancer.
Confident that these drugs will produce positive results in their clinical studies, Purcell continues to rate Roche's stock as overweight. His optimism may be well placed as shares of Roche have performed well despite the headwinds it faces. The stock, which trades in the U.S. through ADRs, has climbed from $34 per ADR in December 2011 to $43 on Mar. 15, 2012 -- not far from its 52-week high of $45.65 hit in July 2011. Purcell and several other analysts expect the stock to go much higher. It traded at a five-year high of nearly $50 in 2008.
Although Roche's focus in on Pertuzumab and TDM-1, the drugmaker is also trying to find alternative products to enhance its defense strategy. One in which it has expressed some interest is in Neu Vax, which recently completed phase 2 clinical trials as a vaccine for breast cancer patients. Roche provided partial funding to the clinical study together with Galena and the Henry Jackson Foundation.
Developed by tiny biotech firm Galena Biopharma (GALE), Neu Vax is now in the initial phases of a third clinical study that. The clinical trial, which started to enroll patients in January 2011, is being conducted under an FDA-approved special protocol assessment, says Galena President and CEO Mark Ahn. The collaborators in both clinical trials include Dr. George Peoples, director of the Cancer Vaccine Development Laboratory and Deputy Director of the U.S. Military Cancer Institute, and Dr. Constantine Ioannides, former Professor of Immunology at the M.D. Anderson Cancer Center, and co-discoverer of Neu Vax.
The reason for Roche's interest in Neu Vax is the vaccine could complement or add to Herceptin's market in that it may well be able treat a segment of the breast-cancer patient population which currently isn't being helped by Herceptin, says Ahn.
"We reiterate our optimistic view on the study's outcome based on positive data from a randomized phase 2 study, where the 'target population' achieved 0% disease-recurrence after treatment with Neu Vax," says Roth Capital in a research report on Galena. Roth says it is encouraged by Galena's strategic initiative to conduct a separate combination clinical trial of Neu Vax and Herceptin in 300 patients, funded by Galena, Roche, and the Henry M. Jackson Foundation.
"A potential synergy of Neu Vax and Herceptin would make Neu Vax an attractive asset for partnering, and could lead to the expansion of the breast cancer patient protection for Herceptin," notes Roth Capital. In addiion, in light of the imminent expiration of Herceptin's patent, "a potential combination could extend patent protection for Herceptin," adds Roth.
Galena CEO Ahn says that Herceptin addresses only about 20% to 25% of breast cancer patients, specifically women who suffer from advanced and "highly expressed" breast cancer. On the other hand, he says, Galena's Neu Vax vaccine will be used for the rest of breast-cancer patient population that aren't beneficiaries or within the purview of Herceptin.
Ahn points out that Neu Vax doesn't compete with Herceptin as it attacks new cancer cells eliciting an immune response to the HER2 protein on the surface of cancer cells. Ahn contends that Neu Vax was proved to be safe and effective during its phase 2 clinical trials. Moreover, says Ahn, Neu Vax has shown promising data that suggests that it can treat individual cancerous cells without damaging healthy cells in breast cancer patients.
The cancer vaccine, says Ahn, forces the body's immune system to respond and work more efficiently, and then targets the cancerous cells without affecting normal cells.
The mortality rates of breast cancer have significantly increased over the last 10 years, he points out, with some 40,000 expected in 2012, or 18% of new cases. The deaths linked to breast cancer are often the result of the spread of cancer to other areas of the body.
Neu Vax has the potential to be transcendent in the treatment of breast cancer, Ahn argues, assuming its late stage trials prove to be as effective as its early testing.
