GlaxoSmithKline’s (GSK) efforts to get its prostate cancer drug, Avodart, approved for an additional indication faced a stumbling block recently with an advisory panel of the US Food and Drug Administration (FDA) voting against the label expansion.

The FDA’s Oncologic Drugs Advisory Committee (ODAC) voted 14-2 against the label expansion. There were 2 abstentions in the voting process. The panel expressed concerns about the occurrence of more aggressive tumors in patients taking Avodart compared to patients on placebo (29 versus 19).

Glaxo is looking to get Avodart approved for the reduction of the risk of prostate cancer in men at risk for the disease. Avodart is currently approved for the treatment of benign prostatic hyperplasia. The product posted sales of $827 million in 2009 and approval for the additional indication would help boost sales significantly.

Currently, there are no treatments approved for the reduction of the risk of prostate cancer. According to the American Cancer Society, prostate cancer is the most common non-cutaneous cancer and the second leading cause of cancer death in men. The National Cancer Institute estimates that about 217,730 new cases of prostate cancer will be detected in 2010. With an ageing population and increasing life expectancy, the prevalence of prostate cancer is expected to increase steadily.

Glaxo intends to work with the FDA to get the indication approved. Although the FDA is not required to follow the advice of its advisory panels, it usually does so.

Neutral on Glaxo

We currently have a Neutral recommendation on Glaxo, which is supported by a Zacks #3 Rank (short-term “Hold” rating). Glaxo’s diversified base and presence in different geographical areas should help support revenue growth. Meanwhile, Glaxo’s restructuring initiative should help offset the impact of increasing generic competition in the next few years and help earnings grow faster than revenues.

While we remain concerned about growth with several products scheduled to go off patent in the next few years, we are pleased with Glaxo’s progress with its late-stage pipeline. We expect Glaxo to drive growth through acquisitions and further partnering arrangements. The company’s HIV partnership with Pfizer (PFE) and the Steifel acquisition are the beginning of a trend which we expect to continue going forward.

 
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