A company that rejects a buyout proposal with a 45% stock-price premium had better deliver on its case for being worth more than the offer.
AstraZeneca (NYSE:AZN) gets an early shot to prove its worth tomorrow when a Food and Drug Administration's advisory committee reviews its ovarian cancer drug olaparib. The British drugmaker cited the drug's potential as one reason why Pfizer's (NYSE:PFE) recent acquisition bids were too low.
Good data, but...
The olaparib data look good. Really good. The median progression-free survival for patients with tumors that have BRCA mutations was 11.2 months for those taking olaparib, compared to 4.1 months for the placebo arm. There's an 83% reduction in the risk of progression or death compared to placebo.
But as with most things is drug development, there's more than meets the eye.
The BRCA group was just a subset of the patients enrolled in the trial. The subgroup was pre-specified, so it's not like AstraZeneca data-mined to find it, but dividing the enrollment means the best data comes from just 96 patients. The FDA is worried that the small size might overemphasize the true magnitude of the effect, especially since the control arm fared worse than one might expect. There's also no statistically significant benefit to overall survival, which is obviously much more important than when the disease progresses, but the lack of statistical significance isn't too surprising given the small sample size.
The FDA is quite lenient when it comes to side effects for oncology drugs, considering that most people would rather live longer with these health impacts than die. Serious adverse events occurred in 18.4% of patients taking olaparib, compared to 10.2% of patients in the placebo group, which doesn't look too bad.
The one concern comes from three patients (2.2% of those taking olaparib) who appear to have gotten myelodysplastic syndrome or acute myeloid leukemia. If you combine all the trials to date, AstraZeneca said the rate of patients getting the blood cancers is just 0.8% of those taking olaparib, but the FDA is worried the incidence might be underreported if patients developed the secondary cancer after the study ended.
Good news tomorrow?
I think the advisory panel will recommend the FDA approve olaparib tomorrow. The data in the subgroup is so strong that the outside advisers won't be too worried about the side effects. And AstraZeneca is looking for an accelerated approval, so it'll be conditional on the drug passing on ongoing phase 3 trial anyway. The drug won't be on the market for too long before we figure out if there's an issue with the small sample size skewing the data.
The FDA may not see it that way. The agency, which has the final say, tends to be a little more conservative than its advisers. The flip side to "it won't be too long before we figure out if there's an issue" is "why not just wait for the phase 3 trial."
In the long run, an accelerated approval isn't that important for AstraZeneca sales. Either way, the phase 3 trial needs to be successful for the drug to reach and stay on the market; sales in the interim will be minimal compared to total sales over the life of the drug.
The biggest advantage to an accelerated approval is staying ahead of AbbVie (NYSE:ABBV), which has a drug, veliparib, in the same class. AbbVie posted promising phase 2 data in BRCA ovarian cancer patients with a progression-free survival of 8.1 months. While that doesn't look quite as good as olaparib, the veliparib trial did not feature a control group, so it's hard to compare the data. AbbVie appears to be going after breast cancer first, having started a phase 3 trial in breast cancer patients earlier this year, but it seems likely the two -- or perhaps AbbVie and Pfizer? -- will eventually compete for patients in ovarian and/or breast cancer, assuming both drugs are approved.
The first step is getting past the FDA advisory committee.