Genentech Gets Another Approval

The hardest thing to do for any biopharmaceutical company is obviously just bringing a drug to market. Drug makers though, can make this process easier or harder on themselves by trying to get their drugs approved with a broader label for more indications or to be used sooner in a disease's progression. Because of the conservative nature of the U.S. Food and Drug Administration (FDA) it's usually a smart idea just to bring a drug to market with one label, and then if additional clinical studies suggest it will be useful in other indications, then patient demand and awareness will drive off-label usage of the drug until it receives a broader label.

Drug developer Genentech (NYSE: DNA  ) has pursued this strategy for most of its top drugs, and it has paid off greatly for it. Today, Genentech finally received formal approval to market its breast cancer therapy Herceptin for the early stages of breast cancer before the disease has spread to other parts of the body in the 30% or so of sufferers of the disease that the drug is effective in.

While this formal approval to use Herceptin earlier in the disease's progression will most likely spur higher sales, sales of the drug have been gaining rapidly since the interim results of the trial that brought about this label expansion were announced in April of last year.

U.S. Herceptin Sales*

Y-O-Y Growth

Q3 2006

$302

40%

Q2 2006

$320

111%

Q1 2006

$290

123%

Q4 2005

$250

98%

Q3 2005

$215

70%

*In millions.

The announcement today about Herceptin reverses a setback that Genentech experienced earlier in the year with the FDA in its attempt to get the anti-angiogenesis drug Avastin approved to treat breast cancer as well.

Regardless of whether Genentech gets formal approval for its drugs in additional indications, it will be positive clinical trial results that spark renewed sales growth of its already-marketed drugs. With over 100 clinical trials of Avastin alone in more than 25 different cancer states, there will be plenty of opportunities for renewed sales growth with all of Genentech's long-marketed drugs.

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Fool contributor Brian Lawler does not own shares of any company mentioned in this article. The Fool has adisclosure policy.


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