Cancer Fighting Trio

05/13/2005 12:00 am EST


Fred Hager


"There is good news in the quest to treat cancer," says Fred Hager and analyst Rick Currin. In the wake of positive news on cancer treatment Avastin, they discuss the impact on their holding in Genentech, plus two other biotechs indirectly effected by these developments.

"We recently profiled Genentech (DNA NYSE) noting that we believe the potential of Avastin was being underestimated by the market. Following our rating upgrade on the stock, the company reported positive Phase III news on Avastin in lung cancer, and the issue jumped some 18%. Despite this move, we remain bullish on the stock and have raised our price target to $105. Further, after reporting positive news on Avastin in lung cancer, the company also reported that Avastin in combination with chemotherapy showed benefits in metastatic breast cancer. 

"This positive news further validates the premise that an effective anti-angiogenesis drug serves to starve a cancer from developing by choking off the blood supply. More importantly it signals that Avastin, now eyeing three separate cancers (colon, lung, and breast), could be a drug to treat even more types of cancer. Genentech will seek FDA approval for Avastin in breast cancer, which could potentially move its growing market potential north of $5 billion. In addition, DNA is already looking at Avastin for additional areas of pancreatic, kidney and ovarian cancers.

‘In the case of breast cancer, Avastin was used in combination with paclitaxel, a common chemotherapy agent used in the treatment of breast cancer. Improvements of tumor-progression-free survival of more than four months were seen over chemotherapy alone. This combination of Avastin and paclitaxel may also prove to be quite beneficial to our portfolio holding, American Pharmaceutical Partners (APPX NASDAQ). The nanotechnology-oriented company already has its albumin bound form of paclitaxel approved by the FDA. 

"The most common current form of paclitaxel treatment is from the drug Taxol, which includes the toxic cremophor, which causes many side effects in cancer patients. American Pharmaceutical’s ABRAXANE drug, however, is free of cremophor. The approved use of paclitaxel and Avastin in combination could be a boon to APPX down the line. Meanwhile, unlike Avastin, ABRAXANE does not try to starve the cancer but feed it. The albumin coating on the drug looks like food to the cancer cells. The cancer consumes the albumin only to be dosed with the cancer killing (and cremophor fee) paclitaxel inside. The combination of starving the cancer with Avastin, while simultaneously offering what food it does take in as ABRAXANE, could be big news indeed in the treatment of breast cancer.

"While we are speaking of the life sciences stocks, Curis (CRIS NASDAQ) received an extension to its cancer program funding from Genentech. Curis is also working in the area of a signaling pathway called hedgehog, which has shown great promise. Genentech filed an IND application for a Curis co-developed compound for the topical treatment of skin cancer just weeks ago. Several cancers including pancreatic, skin, prostrate and lung have been linked to the abnormal expression of the hedgehog pathway. Perhaps more importantly in the long term than attempting to starve cancer cells will be the attempt to actually stop the cells from replicating.

"Research linking the hedgehog to so-called regulating ‘cancer stem cells’ is already underway. Unpublished research already suggests that a drug inhibiting the hedgehog can keep breast cancer stem cells from proliferating. Certainly cancer drugs based on hedgehog are a long way from market but extended collaboration with Genentech is a good sign that Curis is onto something of great interest in the never ending fight against cancer. In the meantime, additional funding from Genentech, milestone payments, and a topical skin cancer drug in the pipeline, help to put a floor under Curis, which is our small biotech favorite."

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