The way to make money in biotech is to find companies going after unmet needs. The bar is lower for an approval and sales are easier without any competition.
The corollary, then, is that the way to not make money is to invest in crowded markets. But that's only partially true.
Get 'em coming and going
The kidney cancer market is becoming increasingly crowded. Pfizer
Sutent is used first and has been tromping Bayer and Onyx Pharmaceuticals'
Further downstream in the cascade that triggers growth of a tumor is a protein called mTOR. Both Novartis'
Inlyta works more like Sutent, Nexavar, Avastin and Votrient on the VEGF pathway, but it appears to work even after patients fail one of those treatments. So it'll compete with Afinitor as a second-line treatment, even though it works through a different mechanism.
Good, better, best
While these drugs can prolong survival, technically there's still an unmet need in kidney cancer since none of them is actually a cure for the disease. A drug that can beat Sutent could be an instant blockbuster.
Even a drug that works kind of well, but has a low side-effect profile and therefore could be combined with other already-approved drugs, could get on the market and capture sales quickly.
Unfortunately, AVEO Pharmaceuticals
Tivozanib beat Nexavar handily, even with Nexavar working better than expected, but it's nearly impossible to compare the data from that trial to data from Sutent's trial. Since the two drug trials used different standards, it's impossible to know if they even enrolled approximately similar patients.
The trial will be enough to get tivozanib on the market -- it beat an approved drug, after all -- but whether it'll be enough to take sales from Sutent remains to be seen. Going up against an established drug without head-to-head data will be difficult, although AVEO does have the backing of partner Astellas Pharma, which has plenty of experience in the oncology field.
"Crowded" is a relative term
The kidney cancer is certainly crowded, but it's a better choice for an investment than something like psychiatric drugs where patients are helped fairly well by existing players. Developing a depression drug that works better than anything on the market still wouldn't result in very high sales, because there are a ton of generic drugs that work well enough to convince doctors to try them first. Only patients that fail the other drugs would be candidates for the new medication.
For kidney cancer, drugs can go after the top spot and be rewarded since increased life expectancy is a pretty strong motivator for taking a drug. And as a backup plan, the drug can join the rank and file, being used as a second-line treatment.
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