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The problem may not be with the drug. Sutent clearly works for some cancers; it's approved to treat two different cancers, and Pfizer has shown that it's effective against a third.
The reason Pfizer has had to discontinue two Sutent clinical trials in the last three months is because the company gambled and tried to show that Sutent could beat current breast cancer drugs.
Sutent failed to best Roche's Xeloda in April, and yesterday the company said it was stopping a second trial. The trial in question failed to show that Sutent worked better than Roche's Avastin when they were combined with the active ingredient in Bristol-Myers Squibb's (NYSE: BMY ) Taxol. While the gamble didn't pay off, at least Pfizer was smart to build a potential stopping point into the trial so it didn't have to pay for the completed trial before it got the bad news.
What's Pfizer's backup plan? If you can't beat 'em, join 'em. Sutent is still being tested against breast cancer in two clinical trials. In one, it's combining Sutent with sanofi-aventis' (NYSE: SNY ) Taxotere, and the other combines it with Roche's Xeloda.
Combining drugs in order to show an effect isn't a bad idea -- yesterday, Merck (NYSE: MRK ) and AstraZeneca (NYSE: AZN ) said they plan to test their cancer drugs in combination -- but Pfizer may not be able to grab ahold of too much of the breast cancer market if it can't prove that it's any better than the current treatments like Avastin. The trial failures are a big loss for Pfizer, but breast cancer is a big market, so even the chance at a small slice of the market should keep Pfizer's investors hopeful.
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