Amgen (NASDAQ:AMGN) and ImClone have already lost patients because of recent findings that their colon-cancer drugs don't work as well in patients who have mutated copies of the K-ras gene. Now they're hoping the FDA doesn't add insult to injury by making the companies add further proof through additional clinical trials.
Genentech (NYSE:DNA), seller of Herceptin for breast cancer, knew that the Her2 gene was an important factor in the efficacy of its drug. It even partnered with DAKO to develop a test for the expression of Her2 during clinical trials. However, the discovery that the patient's type of K-ras gene affects his or her response to Amgen's Vectibix and Bristol-Myers Squibb's (NYSE:BMY) and ImClone's -- now Eli Lilly's (NYSE:LLY) -- Erbitux is relatively new. An FDA panel meets tomorrow to help decide whether the current data is good enough to change the label of the drugs, or whether the drugs need additional clinical trials to prove that they work better in patients with "normal" K-ras genes.
Changing the drugs' labels won't be a too damaging to the companies in the long run. They've probably already lost many patients, because doctors already know the initial results and have begun testing patients. With the label change, the companies will be able to tout the data from the normal K-ras patients, for whom the results suggest that the drugs work better than chemotherapy. While they will likely lose some colon-cancer patients, they should also pick up even more normal K-ras patients who might have used other drugs -- or so ImClone believes.
Actually, the big beneficiary of a label change will be the companies that test for mutations in K-ras: Bio-Reference Laboratories (NASDAQ:BRLI), Genzyme (NASDAQ:GENZ), Exact Sciences and LabCorp (NYSE:LH). They're already getting some business from early adopting doctors, but a label change will convince most doctors that testing is needed for all patients.
As society tries to lower the cost of health care, it may increasingly begin to eliminate the use of drugs in patients who won't benefit. Personalized medicine is still in its infancy, but it's an emerging industry that should be huge in the long run.
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Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. Eli Lilly is an Income Investor recommendation. LabCorp is a Stock Advisor selection. The Fool has a one-size-fits-all disclosure policy.