Breast Cancer: Seeking The Next Blockbuster

Includes: GSK, HALO, RHHBY
by: Peter Geschek

Herceptin (trastuzumab) is a certified blockbuster. It is made by Genentech, now owned by the Swiss company Roche (OTCQX:RHHBY).

In 2011 Herceptin's worldwide net sales were 5,253 million Swiss francs or $5.60 billion, (at the CHF/USD exchange rate of $1.0655 on Dec. 31, 2011) Herceptin is 14 years old.

It was approved for metastatic HER2-positive breast cancer in 1998 and for additional therapy in early-stage HER2-positive breast cancer in 2006. Herceptin is only recommended for people whose cancer is associated with a protein called human epidermal growth factor receptor 2 or HER2. It is estimated that around 1 in 5 cases of breast cancer are HER2-positive.

HER2 is present in all human cells, but in cases of HER2-positive cancers, the levels are unusually high. These high levels stimulate the growth of these types of cancers. Herceptin works by blocking the effects of the HER2 protein. At the same time it encourages the immune system, the body's defence against infection, to attack the abnormal cells.

Herceptin is considered a wonder drug by many because it extends life and prevents tumor recurrence in many women. However, it is ineffective for some women, and it stops working entirely after a time in others. Therefore the search for a replacement is continuous.

Another drug approved for this type of cancer is Tykerb (lapatinib), made by London based Glaxo (NYSE:GSK). Herceptin's annual sales of $5.6 billion in 2011 far exceed Tykerb's sales of $231 million. Tykerb is an oral drug for patients with advanced, metastatic, HER2-positive breast cancer.

Tykerb deprives the tumor cells of signals the cells need to grow. Unlike Herceptin, which is a large protein molecule that targets the part of the HER2 protein on the outside of the cell, Tykerb is a small molecule that enters the cell and blocks the function of HER2 and other proteins. Because the two drugs have a different mechanism of action, Tykerb can be used effectively in some HER2-positive breast cancers that are no longer responsive to Herceptin. Tykerb is used in combination with the chemo drug, Xeloda (capecitabine) also made by Roche.

Pricing: These treatments do not come cheap. For US patients, Herceptin's price tag is $4,500 a month, or $54,000 a year. Tykerb runs about $4,000 a month wholesale, and retail prices could be higher.

Biosimilars: Several companies are working on biosimilar versions of biological drugs and, if successful, may be able to reduce the price by 20-30%.

Biosimilars are the generic versions of biological drugs. The first biosimilar version of Herceptin is expected to appear on the market in 2014.

Celltrion, a South Korean company established in 2002, is conducting phase 1 and 2 clinical trials for a biosimilar Herceptin in Korea and a phase 3 trial in Romania. After the completion of the trials, the company plans to quickly launch the product in the local Korean market. Another company in the field is Glycotype GmbH, founded in 2001 in Berlin, Germany. The company is now developing a biobetter Herceptin, named TrasGEX. A biobetter is a product that not only matches the original, but supposedly surpasses it in some respects. TrasGEX entered clinical phase 1 in March 2011 and is currently recruiting patients in Graz and Innsbruck, Austria.

Roche counterattacks: In an attempt to counter biosimilars, Roche is working on an injected version of Herceptin, as opposed to the current method of IV infusion in a hospital environment.

Subcutaneous (injected) administration of Herceptin is less invasive and takes approximately 5 minutes instead of 30-90 minutes with IV administration.

Roche is conducting a phase 3 trial, the HannaH study, which is an open-label study involving 596 women with HER2 positive early breast cancer. The study was designed to compare the concentrations of Herceptin in the blood following subcutaneous administration of Herceptin SC versus IV infusion of the drug, and thereby evaluate the efficacy and safety of the two methods.

Herceptin SC uses the Enhanze Technology developed by Halozyme Therapeutics (NASDAQ:HALO), a San Diego company. With this technology some cancer therapies can be given to the patient in minutes instead of hours.

It allows the injection of large volumes of a medication under the skin fast. It works by reversibly breaking down a gel-like substance (hyaluronan) that forms a barrier in the tissues between cells under the skin.

The key is an enzyme called recombinant human hyaluronidase, which the company has patented. The enzyme degrades hyaluronan, a structural component of the subcutaneous space just beneath the surface of the human skin. This degradation creates a temporary window for the improved delivery of injectable biologics such as monoclonal antibodies as well as small molecules and fluids.

This way, large molecules (as large as 200 nanometers), may pass freely through the subcutaneous space. Herceptin is a very large molecule. The degradation is temporary, as hyaluronan reconstitutes to normal density within a few days. By using Halozyme's enzyme, many therapeutics that could normally only be injected intravenously can now be administered subcutaneously, which increases convenience for the patient, boosts efficacy, and reduces cost.

Perjeta: Roche is working hard on other fronts as well to stay ahead of the race. In June 2012 the FDA approved Roche's Perjeta (pertuzumab), a new anti-HER2 therapy, to treat patients with HER2-positive, late-stage (metastatic) breast cancer.

Perjeta is administered in combination with Herceptin and docetaxel, a drug used in chemotherapy. Docetaxel is the generic equivalent of Taxotere, a brand-name chemotherapy drug marketed by Sanofi (NYSE:SNY), whose U.S. patent expired in 2010.

Perjeta, a biological drug given intravenously, targets a different part of the HER-protein than Herceptin, and thereby increases its efficiency. Perjeta's approval is based on a single clinical trial involving 808 patients (trial id: NCT00567190).

The study measured the length of time patients lived without the cancer progressing, which is called progression-free survival (PFS). Those treated with a drug combination including Perjeta had a median PFS of 18.5 months, as opposed to those who received a combination with a placebo, who had a median PFS of 12.4 months.

The sticker price on Perjeta is $5,900 a month, or about $71,000 a year, Genentech says. Herceptin's price tag is $4,500 a month, or $54,000 a year. That's $115,000 for a year's worth of treatment.

Some predict Perjeta will become a blockbuster for Roche. Analysts polled by Thomson Reuters estimate that Perjeta's annual average sales may rise to $608 million or higher by 2016.

TDM-1: Roche's other drug, TDM-1 (Trastuzumab emtansine), which has not been approved yet, also has blockbuster potential. T-DM1 consists of Herceptin linked to the chemo drug DM1. The company that provides the linker technology and the DM1 chemo for the treatment is ImmunoGen (NASDAQ:IMGN).

Immunogen's TAP technology comprises a portfolio of highly potent cancer-cell killing agents that can be attached to antibodies for targeted delivery to cancer cells. The antibodies find the target and the TAP chemo payload kills them.

The TAP technology includes a portfolio of engineered linkers. Linkers are the key, because they have to be stable enough. Immunogen linkers keep the payload attached to the antibody while in the bloodstream and then control its release and activation inside a cancer cell.

Immunogen is contracted to provide the TAP technology to other companies as well, such as Bayer (OTCPK:BAYZF), Amgen (NASDAQ:AMGN), Novartis (NYSE:NVS), Sanofi (SNY).

Analysts expect T-DM1 to surpass $1 billion in global annual sales if approved. JPMorgan biotech analyst Cory Kasimov projects peak sales of the drug to reach about $3.5 billion and gives it an 85% chance of approval.

T-DM1 is currently being tested for second-line, first-line, and third-line treatment of HER2+ metastatic breast cancer in the EMILIA, MARIANNE and TH3RESA Phase 3 trials, respectively.

Roche is planning to use data from EMILIA in 2012 to apply for approval of second-line use in the US and Europe. The EMILIA trial compares T-DM1, used as a single agent, to Tykerb, used in combination with the chemo drug Xeloda.

Polls show that doctors in Western Europe prefer Herceptin to Tykerb even in second and third line settings, despite Tykerb's advantage as an oral agent. Herceptin is perceived as more effective, while Tykerb may present some reimbursement issues in Europe.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.