Roche and Curis
And the market yawned.
Curis ended down 8% for the day and Roche's over-the-counter ADR fell a little as well. It's hard to say exactly why, but here's my theory: Roche is a big company, so one drug isn't going to contribute all that much. Curis gets a $10 million milestone for the approval – whoopty-doo -- and a royalty on the sales of Erivedge. Considering shares are up more than 60% since the data was announced, a lot of the royalty was already baked in.
Every other cancer-drug company should be smiling
Well, OK, not every company. Erivedge works through a novel mechanism of action by targeting a protein called "hedgehog." Other companies, including Pfizer
One future competitor the hedgehog hunters might not have to worry about is Infinity Pharmaceuticals
Less is more (and faster too)
For oncology companies that have nothing to do with hedgehog or basal-cell cancer, the approval is nothing but good news. Erivedge was given an accelerated approval based on a phase 2 trial from just 96 patients. Given the lack of treatment options for basal cell carcinoma, there was no placebo control and the doctors and patients knew they were getting the drug.
There was a fairly robust response, but single-arm phase 2 trials aren't exactly the most convincing way to prove that the drug works. That the FDA is willing to accept it is good news for other drugmakers trying to go the same route for unmet needs. Onyx Pharmaceuticals' multiple myeloma treatment carfilzomib for instance.
And it's not like the FDA hemmed and hawed about whether to approve Erivedge. The PDUFA date for the decision wasn't until March 8. Let's hope the FDA continues to work at the quick pace.
Erivedge will run $7,500 per month, which, assuming 10 months of treatment, would put the cost of treatment at about $75,000. While that's certainly high, it's cheaper than some other cancer treatments. Bristol-Myers' Yervoy costs $120,000 and Dendreon's
I'm a little surprised that the price isn't higher. It's not like every skin cancer can be treated by Erivedge. Most will just be cut off, leaving only the most advanced cases to be treated. It seems there should be some premium pricing like orphan drugs have.
On the other hand, keeping prices in check might be the best thing in the long run. The health-reform law was a direct response to the high cost of the health-care system. While the law doesn't put caps on prices, it's pretty clear that there will be pushback from consumers over prices eventually.
Back to Curis
With a market cap of $380 million, Curis isn't outrageously expensive and it's a little less pricey after yesterday's drop. Whether it can go up from here depends mainly on whether Erivedge can be expanded to treat patients with the less-severe form of the disease, where an operation to cut off the tumor is still an option.
Fool contributor Brian Orelli holds no position in any company mentioned. Click here to see his holdings and a short bio. The Motley Fool owns shares of Dendreon. Motley Fool newsletter services have recommended buying shares of Novartis and Pfizer. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.