Insightful analysis and commentary for the US and global equity investor
Contributors: Douglas McIntyre Jon C. Ogg

Previous Posts

Thursday, September 07, 2006

Abraxis at FDA for Breast Cancer Drug Abraxane Expanded Use

Abraxis BioScience Inc.(ABBI) has an important meeting today at the FDA. ABBI wants expanded approval to promote its Abraxane drug for wider use in breast cancer patients without a randomized trial. The drug was already cleared in 2005 to treat advanced breast cancer patients who have not benefited from combination chemotherapy or others who have had a relapse within six months of post-surgical chemotherapy.

According to the latest data Abraxane had $133.7 million in sales in 2005 after its approval in January 2005.

Abraxis based its request for wider use mostly on results of a study involving the use of Taxol in breast cancer patients and this meeting is at Abraxis's request.

Abraxane is an injectable form of the chemotherapy agent paclitaxel, a cancer drug that aims to interfere with cancer cell growth. AstraZeneca Plc (AZN) owns the rights to co-promote the drug in the United States. It also contains the same active ingredient as Bristol-Myers Squibb (BMY) Taxol, but supposedly combines in a naturally occurring protein that allows for better and more natural absorption.

The FDA issue at stake is if Abraxis' Abraxane should be approved for the adjuvant treatment of early breast cancer without randomized trials based primarily on results of the randomized study that was the basis for Taxol approval for this indication.

As far as the stock is concerned , this could be a decent win if ABBI gets the expanded approval. Unfortunately the stock since the end of july has climbed from $20 to almost $25.00, before trading down almost 1% today at $24.81. Based on options trading, it appears as though the options traders are only giving an "up to" $0.66 to $0.73 expected move based on the fact that this is an expanded use. It is very possible that this "expanded use" may be different than others because breast cancer treatments can easily be a blockbuster drug status (over $1 Billion in annual sales) if the treatment is widely used. That does not imply that Abraxane will be a blockbuster drug, but it is meant to highlight the importance of the drug class. This drug will still have somewhat limited use and acceptance, but the potential is there if they can get the FDA to play ball.

According to the National Breast Cancer Foundation: This year in America, more than 211,000 women will be diagnosed with breast cancer and 43,300 die. One woman in eight either has or will develop breast cancer in her lifetime.

ABBI has a market cap of $4.1 Billion. Analysts expect that it will have EPS for 2006 of $0.98 and for 2007 of $1.22. The company did post a significant loss last quarter, but that was due to a $130 million non-recurring item.

Predicting an FDA outcome can be, well, more than tricky and twice as dangerous. In June of this year it did receive Canadian approval for Abraxane to be used as also in first line breast cancer treatment and it has shown positive indications in lung cancer and other cancers as well. It is in various stages of trials for approval in the following areas: first-line metastatic breast and non-small cell lung, adjuvant breast, neo-adjuvant breast, malignant melanoma, ovarian, prostate, pancreatic, gastric, and head and neck.

More detailed information can be found at the company site HERE.

Jon C. Ogg
September 7, 2006

Powered by Blogger