Shares of Genentech Inc. soared on Monday, 25th February 2008 on news that the Food and Drug Administration has approved its oncology drug Avastin for treating advanced breast cancer opening up a promising additional market for the drug.
Late Friday – 22/2/08, Genentech announced the FDA approved Avastin under its "accelerated approval" program, meaning Genentech will have to provide additional supporting data to receive full approval.
Specifically, the agency approved Avastin for the treatment of advanced breast cancer in combination with the chemotherapy agent paclitaxel in women who had not yet received chemotherapy. The drug is to be used for a type of cancer known as HER-2 negative.
Avastin is already on the market to treat colorectal and lung cancer. The drug also has been used to treat illnesses such as breast cancer in a practice known as "off-label" use, which allows doctors to legally use FDA-approved products for purposes other than what they are approved if they believe it will benefit the patient.
The FDA's decision comes just more than two months after an FDA advisory panel voted 5 to 4 not to recommend approving Avastin for breast cancer, because clinical data hadn't shown the drug extended lives. Yet the data did show that it was able to slow the growth of cancerous tumors for several months.
As a result, nervousness over the impending FDA decision has weighed heavily on Genentech shares, which have been some of the most highly valued in the industry over the years.
News of the December advisory panel vote sent Genentech shares tumbling almost 10% in one day. The stock has been trending slowly upward since that time, rallying 8% to $77.36 in after-hours trading Friday.
On Monday, Genentech shares shot up almost 10% to $78.49.
Also stoking Genentech shares in recent weeks was the release of clinical data showing Avastin increased the survival of breast-cancer patients when used with the chemotherapy drug docetaxel.
Cowen & Co. analysts said that because of the drug's sooner-than-expected approval for breast cancer, they were moving up Avastin sales estimates from 2009 to 2008, but keeping the peak potential sales estimate the same of around $1.5 billion in 2012.
RBC Capital Markets analysts said they were also raising their estimates to reflect an accelerated launch. RBC said its new 2008 and 2009 Avastin sales forecasts were $2.86 billion and $3.78 billion, up from its previous estimates of $2.69 billion and $3.48 billion, respectively. They also raised their price target for the stock to $84.
The RBC analysts also said they saw the FDA's move as a plus for the industry.