Yervoy Battles Melanoma, but Can It Become a Blockbuster?

In early 2011, the Food and Drug Administration approved Bristol-Myers Squibb's  (NYSE: BMY  ) drug Yervoy as a treatment for skin cancer melanoma. The drug marked the first approved treatment proven to extend the life of a person diagnosed with the disease. It marked a big leap forward in medicine as an early leader in immunotherapy, or the unleashing of the body's immune system on cancer.

A new approach to fighting cancer
By removing the body's natural emergency brake on the immune system, Yervoy allows the system to go into overdrive. The drug targets the CTLA-4 protein receptor on T-cells within the immune system, essentially turning off its ability to shut down attacks on melanoma.

In phase 3 trials, melanoma patients treated with Yervoy saw median overall survival of 10 months, compared to 6.4 months for patients in the control group. Importantly, more than 20% of patients in the trial lived more than two years, versus just 14% of untreated patients. And one in ten patients lived at least four years.

Importantly, the FDA approval not only covered those who had failed on previous treatment, but untreated patients, too -- making Yervoy a go-to first line treatment.

That's very welcome news for patients.
According to the American Cancer Society, 68,000 new cases are diagnosed in the United States and 8,700 deaths occur from the disease each year. Found early -- as a mole on the skin -- melanoma can be fairly easily removed. However, if the disease spreads, treatment becomes much more difficult.

Yervoy isn't cheap. It carries a steep price at $120,000 for a complete course of four infusions delivered over a three-month period. That price has made the drug a subject of debate, particularly in countries in place like Europe and Australia. Despite getting the nod from the EMA for use in the EU, the U.K. didn't approve reimbursement for the drug until late last year.   However, in a disease with few good options, Yervoy has been well received, generating $706 million in sales in 2012. In Q1, sales of the drug were up 50% to $229 million and sales reached $233 in Q2, up 44% from last year.

Competitors are vying for a piece of the pie
One of Yervoy's competitors in melanoma is Roche's Zelboraf, which generated $250 million in 2012 sales. Zelboraf was given fast-track designation and gained approval in August 2011 for patients with the BRAF600E mutation, which is found in half of advanced melanoma patients. Zelboraf, with a price tag around $66,000 for six months of treatment, also got reimbursement approval in the U.K. last year.

As a result, Zelboraf sales climbed 84% in the first half of 2013 from a year ago, according to the company's first half 2013 report.

Merck (NYSE: MRK  ) is developing a PD-1 immunotherapy for melanoma with its drug lambrolizumab. PD-1 is molecule closely related to CTLA-4, which Yervoy targets. Merck is expected to launch phase 3 trials for the drug this quarter and hopes phase 2 success will qualify the drug for breakthrough designation by the FDA.  If so, it could conceivably reach the market more quickly. In those phase 2 tests, 52% of patients treated with lambrolizumb responded.

Another competitor is GlaxoSmithKline  (NYSE: GSK  ) . Glaxo's Tafinlar and Mekinst, like Roche's Zelboraf, target melanoma patients with the BRAF mutation. Tafinlar blocks the BRAF gene, while Mekinst targets MEK, a protein that defends BRAF positive tumors. Analysts expect those drugs could generate a combined $600 million in sales for Glaxo by 2016. In phase 3 trials, the median progression-free survival for patients on Tafinlar was 5.1 months versus 2.7 months when treated with legacy treatment dacarbazine. In those treated with Mekinst, progression-free survival was 4.8 months versus 1.5 months for those on chemotherapy.

Not to be left out, Celgene (NASDAQ: CELG  ) is studying its Abraxane as a melanoma cancer treatment.  Abraxane offers Celgene multiple opportunities for sales, which I discussed more here. The drug recently gained approval in pancreatic cancer and was approved as a treatment for non-small-cell lung cancer last fall. In preliminary phase 3 data presented last November at the Society of Melanoma Research meeting, progression-free survival on Abraxane was 4.8 months versus 2.5 months for patients on dacarabzine. The trial's final data is expected to come out this year in Q4.

Plans to face-off against competitors and expand Yervoy
Bristol is also working on combination therapies to boost survival more for melanoma patients. It stopped a trial combining Yervoy with Roche's Zelboraf due to liver toxicity. But, its trial combining Yervoy with a white blood cell boosting drug from Sanofi (NYSE: SNY  ) is showing positive signs. Sanofi's drug, Leukine (GM-CSF), is currently used to support immune systems following chemotherapy in acute myelogenous leukemia or following bone marrow transplant. Two-thirds of patients on that combo therapy are alive after one year, compared to roughly half on Yervoy alone.

Bristol is also moving its own PD-1 immunotherapy program through clinic to offset risk from Merck. Bristol's PD-1 program, currently in phase 1, showed a 53% response rate in patients treated with its nivolumab. Those results are similiar to Merck's and suggest a potential foot race to market.

Bristol also thinks Yervoy may have a role in treating other cancer, too. In recently released data, the drug failed to achieve its overall survival endpoint in prostate cancer, but did show positive results for progression-free survival. Yervoy was especially effective in less advanced cases of prostate cancer, particularly in cases where the disease hadn't spread to the liver or lungs. As a result, Bristol thinks Yervoy can eventually carve out market share in that indication. An additional phase 3 test is expected to produce data in those earlier stage patients in 2015. 

The final Foolish take
Bristol also has trials under way testing Yervoy in stomach, lung, and ovarian cancer. Results of a phase 2 study treating squamous non-small-cell lung cancer should come early next year. It's combining Yervoy with nivolumab in renal cell cancer and non-small-cell lung cancer in phase 1, which should provide data for presentation at ASCO next year. The company also reported in the Q&A section of its second-quarter earnings conference call that it's considering additional trials in head and neck and colon cancer, too. As a result, some industry watchers estimate that Yervoy may end up with peak sales of more than $2 billion by 2018. Bristol will need to see ongoing success in trials to firm up its long term position in melanoma. But with an expanding opportunity in Yervoy beyond that indication, it seems like Yervoy has a good shot of seeing sales continue to climb.

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Editor's note: A previous version of this article incorrectly stated Zelboraf’s price and the length of its recommended course of treatment. The Fool regrets the error.


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