Lung cancer is a tricky disease and there is a graveyard littered with lung cancer drugs that failed in clinical trial.
Targeted approaches like Xalkori from Pfizer (NYSE:PFE) and Tarceva from Roche (OTCQX:RHHBY) work for small segments of the patient population only, while large segments of patients are still waiting for new ideas.
In some other cancers, survival statistics are steadily improving, but in lung cancer, where three-quarters of the diagnoses are metastatic disease, there is not a lot of talk about 5-year survivals.
Slow progress, however, can be detected; since the mid-'90s when the benefits of chemotherapy were first proven, a modest but significant improvement occurred in overall survival.
Compared to no chemo, the overall survival at least doubled, and the latest approved drugs add some additional months to that.
Xalkori, made by Pfizer, is a pill taken twice a day as a single-agent treatment.
Xalkori works by blocking certain proteins called kinases, including the protein produced by the abnormal ALK gene. This ALK gene abnormality causes cancer development and growth. About 1 percent to 7 percent of those with non-small cell lung cancer (NSCLC) have the ALK gene abnormality and patients with this form of lung cancer are typically non-smokers.
Xalkori was approved with a companion diagnostic test that helps determine if a patient has the abnormal ALK gene. The test is a first-of-a-kind genetic test called the Vysis ALK Break Apart FISH Probe Kit, made by Abbott Molecular.
Xalkori is very effective in the target group; an "unheard of" 90% of lung patients in the select group appear to get some benefit from the drug.
The drug is not a miracle cure, however, while it keeps the lung cancer under control for a median of nine months, it has side effects including odd vision disturbances and leg swelling. Also, it has not been proven to extend lives.
And the cancer frequently returns. The New England Journal gives an example from Japan of a 28-year-old lung patient who initially responded to the Pfizer drug but five months later, the tumors "abruptly" started to grow again. The tumor had developed mutations that made it resistant to the drug.
Amazingly, the mechanism of resistance was published with the same article that contained the trial data.
Since a resistance mechanism is already known, various companies are busy working on an improved second generation drug, including Novartis (NYSE:NVS), Ariad (NASDAQ:ARIA), Cephalon and Pfizer itself.
The understanding of lung cancer itself is changing: what was previously believed to be an illness largely linked to smoking is now recognized by physicians as a complex disease with many subtypes.
This is the big news in oncology in recent years; the subtyping of cancer further and further. Subtyping calls for testing, whenever possible and personalized treatment.
For example, there is a fairly general consensus among doctors that every patient who is a nonsmoker with nonsquamous carcinoma should be tested for EGFR (epidermal growth factor receptor), which is treatable with Tarceva, and EML4-ALK, which is treatable with Xalkori.
(Squamous cell lung cancer is a form of the non-small cell lung cancer. Eighty percent of lung cancers are non-small cell lung cancers, and of these, about 30% are squamous cell.)
But beyond that there are a variety of approaches by different doctors as to whom should be tested.
Pfizer's experimental dacomitinib is a pill, a second-generation small-molecule inhibitor of the pan-epidermal growth factor receptor (EGFR).
It did very well in the Phase 2 data against Tarceva, a Roche drug.
Archer-1050, a Phase 3 study is testing dacomitinib against Iressa, made by AstraZeneca (NYSE:AZN) and Teva (NYSE:TEVA) and Archer-1009, another Phase 3 trial is testing the drug against Tarceva, and the data from the Archer trials are expected in the first half of 2014.
The drug, Reolysin, was infused in combination with chemotherapy drugs carboplatin and paclitaxel and it was tested on patients suffering from metastatic squamous cell carcinoma of the lung.
Squamous cell carcinomas account for about a fourth of all lung cancers.
However, Oppenheimer & Co analyst Boris Peaker says that the single-arm study was inconclusive and the spike in the company's stock price associated with this news was not warranted.
"Since the chemotherapy itself is highly active, it is difficult to estimate the impact that Reolysin is making," said Peaker.
Lung cancer medications are a tricky field for researchers and for investors alike. On the other hand, even modest results, assuming that they are real, can be hugely lucrative for all parties involved.
Pfizer had Xalkori on US market for more than a year now and it achieved $100 million from sales in 2012 primarily in the U.S. It is now approved and launched in the U.S., Europe, Japan and several other smaller markets, the latest approval occurred in China.
Sales of Xalkori are continuing to grow as adoption of the drug and the molecular testing accompanying it, continues to expand. The company started out with about a 10 percent testing rate, now the testing rate is over 60 percent.
Xalkori is a small fish in Pfizer's pond but it is an example of a new product line whose success Pfizer vitally needs to rebuild itself.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.