Cancer is a word that no one wants to hear. It's a scary word. A worrisome word. But with the healthcare industry developing new treatment options, more and more forms of cancer are becoming manageable, and even significantly reversible. 

In this video segment, The Motley Fool's Kristine Harjes and Todd Campbell discuss a cancer mutation that occurs in certain lung cancer patients that had rendered existing treatments useless, and how a newly approved drug from AstraZeneca (NYSE:AZN) is coming to the rescue, making it one of their top 3 drug approvals of 2015.

A full transcript follows the video.


This podcast was recorded on Dec. 2, 2015.

Kristine Harjes: Moving on, so our second drug that we wanted to talk about was just approved in mid-November, Nov. 13. This is an AstraZeneca drug called Tagrisso.

Todd Campbell: Tagrisso is an interesting and potentially very important drug because it does something, or it addresses something, that hasn't been adequately addressed before. And that's a specific mutation that occurs in certain lung cancer patients that basically makes it so that current medicines that are available for them to use, no longer work.

So what specifically we're talking about is, we're talking about lung cancer patients that have, that are EGFR positive. EGFR basically is involved in cell replication and survival. So by inhibiting EGFR, existing medications have done a pretty good job in slowing the pace of disease progression. However when that drug -- those drugs no longer work anymore, the prognosis gets much worse for patients, and there are far fewer treatment options. And overwhelmingly, the reason behind that disease progression is because of another mutation that ends up developing that becomes resistant to them. And that mutation is the T790m.

Harjes: Exactly, yeah. And as you mentioned, the problem really is that patients will progress. I mean, this drug is a tyrosine kinase inhibitor -- so I'll just call it a TKI drug  -- and this is a pretty relatively common kind of drug. But the problem, again, is this resistance.

So basically, what we're seeing with Tagrisso is that it's targeting the exact mutation that is responsible for most cases of resistance. And in trials, it shrank tumors in more than half of patients who had progressed on after other treatment with other of these TKIs. Median response lasted over a year -- that's pretty durable, and you can tell that the FDA was also impressed. They approved the drug three months earlier than expected.

One of the things that I really kind of struggled with in researching this was figuring out just how many patients this could possibly affect. And when you start to dig into the numbers, I just think it's, it makes it really clear just how difficult it is to put a specific number on a patient population pool -- which makes you want to take peak sales estimates with a grain of salt. But let's take a look at this for a quick minute. So bear with me here.

So, the American Cancer Society estimates that about 221,000 new patients will be diagnosed with lung cancer in the coming year. Eighty-five percent of those are non-small-cell lung cancer. EGFR rates vary from country to country, but in the U.S. at least, it's estimated to be around 10%. So multiply again by 10%. Of those patients, a majority progress. Again, hard to pin down an exact number on that. But even if we just call it, say 60%. So we multiply it by 0.6, and apparently the T790 mutation, the one that Tagrisso targets, is found in two-thirds of these patients. So multiply that all together and you get like somewhere around 7,500 or so patients in the U.S. every year.

Now any one of those numbers could be off by a little bit and throw the whole calculation off. And so I am by no means stating the 7,500 definitively. But that's the thing, is nobody has a definitive number out there. So I mean, it's all you can do to try to dig in and extract one. But in the end, it's pretty darn hard. And that's why you do see peak sales estimates all over the place. The one that I'm going to stick with is Astra's, which is $3 billion in annual sales.

Campbell: Yeah. I think that investors, like you said, you need to take these things with a grain of salt. Studies have been done on peak sales estimates that show that the vast majority of those estimates are way off. So I think you kind of have to do your own diligence. Just recognize that OK, could this be an important drug? Doesn't it address a patient population that needs it? Is it priced at a point where people will be able to use it and pay for it? And when it comes to those kind of categories, I look at this drug, I say, yeah, this could be a significant player. This could be a blockbuster drug because the 5-year survival rate is, sadly, for one patient still around 20%.

So there's a massive unmet need for new therapies that can attack and heal this disease. And even if we adjust your numbers by a little bit on either side, you're still talking about thousands of patients. So I think it's an important drug, it seems to work very well, it could become standard of care, and if it does, then I think you're talking about a $1 billion-plus run rate.