AstraZeneca PLC (AZN 0.83%) is locked in a heated battle with Tesaro (NASDAQ: TSRO) and Clovis Oncology (CLVS). The three companies market competing cancer drugs that target poly (ADP-ribose) polymerase (PARP), an enzyme that can repair damaged cancer cells. The market potential for PARP drugs could be in the billions of dollars annually, so a lot is at stake. Is one of these companies in the lead?

First-mover advantage

In 2014, AstraZeneca's PARP inhibitor, Lynparza, became the first PARP drug to secure FDA approval when it was cleared for use in ovarian cancer patients with mutations to their BRCA gene who've received at least three prior chemotherapies.

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Since then, successful trials have resulted in the FDA approving Lynparza's use as a maintenance therapy in ovarian cancer patients who have a complete or partial response to chemotherapy, regardless of their BRCA status, and in BRCA-positive, metastatic breast cancer.

Those approvals are significant because they eliminate key advantages that Tesaro's Zejula and Clovis Oncology's Rubraca were relying on to grow their sales.

When Tesaro's Zejula won FDA approval in March 2017, it was the only PARP drug cleared for use as an ovarian cancer maintenance therapy, regardless of BRCA status. Similarly, when Clovis Oncology received FDA approval of Rubraca in late 2016, it became the first PARP treatment that could be used after patients failed on two prior chemotherapies.

Now, Lynparza and Zejula can be used as second-line ovarian cancer treatments, while Rubraca's limited to the third-line setting in BRCA-positive patients -- a much smaller addressable patient population.

By the numbers

The March 2017 approval of Tesaro's Zejula caused a short-term headwind for Lynparza, but following its label expansion to include maintenance use last August, Lynparza's sales have reaccelerated.

In Q4, Lynparza revenue grew 58% year over year to $100 million, bringing full-year sales to $297 million, up 35% from one year ago. U.S. sales jumped 74% year over year in the fourth quarter because of the maintenance therapy approval and tailwinds associated with Merck & Co. agreeing to co-market the drug last summer.

Lynparza's label now allows its use in the same patient population as Tesaro's Zejula, but Zejula still has one advantage that's allowing it to compete: once-daily dosing versus Lynparza's twice daily dosing. Zejula's added convenience helped it notch $43 million in sales in Q4, and $109 million in full-year sales over the course of Zejula's first nine months on the market.

Despite Lynparza and Zejula's use earlier in treating ovarian cancer, Clovis Oncology's Rubraca managed to generate meaningful sales in 2017, too. Rubraca revenue was $17 million in Q4, and that brought its full-year sales to $55 million. That's not bad for its first year on the market, especially given the stiff competition.

How the battle's shaping up from here

Lynparza's revenue could head even higher this year following its recent breast cancer approval in January. AstraZeneca also plans to file for Lynparza's approval as a first-line ovarian cancer treatment later this year, assuming a positive outcome from its phase 3 trial, which should wrap up soon. Furthermore, data is expected later this year from a trial evaluating Lynparza in pancreatic cancer, and if that trial's a success, AstraZeneca plans to file for approval in that indication in 2019.

Tesaro isn't resting on its laurels, either. The company's guiding for 2018 Zejula revenue of between $255 million and $275 million, and its got several label expansion trials underway that could drive sales growth. For instance, it's evaluating Zejula in first-line ovarian cancer patients and it submitted an abstract to be presented at the influential American Society of Clinical Oncology (ASCO) meeting in June for Zejula's use alongside PD-1 inhibitors in triple negative breast cancer, a tough-to-treat form of the disease. Phase 2 trials evaluating Zejula and PD-1 inhibitors in lung cancer is expected later this year, as well. 

Over at Clovis Oncology, researchers are knee-deep in projects that could expand Rubraca's use, too. Clovis spent $142.5 million on research and development last year, and a lot of that money was spent in support of efforts to close the gap between Rubraca, Lynparza, and Zejula. For example, the FDA accepted for review an application that would expand Rubraca's use to include the maintenance setting in December. A decision from the regulator is expected on April 6. If approved, then all three of the drugs could be used as second-line maintenance therapies. Clovis Oncology's also teamed up with Bristol-Myers Squibb to evaluate Rubraca's use alongside Opdivo, Bristol-Myers' $5-billion-per-year PD-1 drug. The two companies plan to kick off phase 3 trials in triple negative breast cancer and advanced ovarian cancer soon, and a phase 2 trial's already enrolling metastatic castrate-resistant prostate cancer patients.

Clearly, these companies aren't giving up and I don't blame them. The ovarian cancer drug market alone is valued at $4 billion per year and only $1.4 billion of that is the maintenance market. That means that there's still a lot of money up for grabs in the first-line setting. Additionally, the potential for PARP inhibitors to act as backbone therapies in combination with PD-1s and other cancer drugs could be worth billions more. This battle isn't anywhere near over.