Cancer Drug Tarceva OKd

The Food and Drug Administration on Thursday cleared Genentech Inc.’s Tarceva for non-small-cell lung cancer, giving the South San Francisco-based company its second cancer drug approval this year.

Genentech said the once-daily pill was approved as a second or third treatment for patients with advanced lung cancer. It will cost $2,026 a month, less than half the price of competing chemotherapy treatments. But that’s 25% more than Iressa, a similar lung cancer pill marketed by AstraZeneca.

Tarceva belongs to an emerging category of targeted therapies that work by disrupting the molecular switches that spur tumor growth. Tarceva and Iressa take aim at the same target, the epidermal growth factor.

Although the pills are similar, only Tarceva has been shown to extend the lives of patients in a clinical trial. AstraZeneca is conducting a large study to see whether Iressa may also prolong patients’ lives.

Genentech Co-President Susan Desmond-Hellman said the survival advantage associated with Tarceva was considered when the company set Tarceva’s price. “One of the things that is really important to remember is that Iressa has not shown a survival benefit,” she said.

However, Tarceva has not outperformed two chemotherapy drugs -- Taxotere, made by Sanofi-Aventis, and Alimta, from Eli Lilly & Co. All three medications have added two to three months to patients’ lives in clinical trials. Taxotere costs $4,400 a month and Alimta $5,500, Genentech said.

The intravenous chemotherapy medications might have a marketing advantage among elderly patients because Medicare, the federal health program, covers drugs that are administered by physicians.

Still, many on Wall Street are optimistic about Tarceva’s prospects. Jennifer Chao of Deutsche Bank Securities said sales of Tarceva, which will begin in five days, could reach $260 million next year and $400 million in 2006, when Medicare should begin covering oral drugs.

Ian Clark, head of oncology products for Genentech, said 41,000 lung cancer patients were eligible for Tarceva but offered no predictions on how many would choose the pill over chemotherapy treatments.

Genentech will market the drug with its partner OSI Pharmaceuticals Inc. of Melville, N.Y. Genentech will record all U.S. sales, and the companies will split the profit.

The approval was announced after the market close. In regular trading, Genentech fell 43 cents to $49.88 on the New York Stock Exchange, and OSI was off $1.20 to $64.25 on Nasdaq. In after-hours trading, Genentech rose to $52 and OSI to $67.

In February, Genentech won FDA approval for colon cancer drug Avastin.