GlaxoSmithKline (GSK) recently withdrew its EU marketing application for its cancer drug, Tyverb (Tykerb in the US, generic name: lapatinib). The application, seeking approval for the use of Tyverb in combination with paclitaxel for the treatment of patients with metastatic human epidermal growth factor receptor 2 (“HER2”) positive breast cancer, had been submitted to the European Medicines Agency (“EMA”) in April 2011.
The decision to withdraw the application was taken after the EMA’s Committee for Medicinal Products for Human Use (“CHMP”) indicated that it is difficult to analyze the risk-benefit properly due to the lack of a head-to-head comparison between Tyverb plus paclitaxel with Roche’s (RHHBY) Herceptin (trastuzumab) plus paclitaxel.
We remind investors that in September 2011, Glaxo had announced the termination of the study arm evaluating Tykerb in patients with HER2 positive early stage breast cancer. The study arm was halted after an independent data monitoring committee indicated that Tykerb was unlikely to demonstrate non-inferiority to Herceptin, with respect to disease-free survival.
Apart from the withdrawal of the marketing application, Glaxo announced the submission of two new regulatory applications in the US and EU for Tykerb/Tyverb. Applications were submitted for use of Tykerb/Tyverb in combination with Herceptin for the treatment of patients with HER2 positive metastatic breast cancer who have received prior Herceptin therapy.
Tykerb is currently approved in combination with Roche’s Xeloda (“capecitabine”) for treating patients suffering from advanced or metastatic HER2 positive breast cancer who have received prior therapy including an anthracycline, a taxane, and Herceptin. It is also approved in combination with letrozole for postmenopausal women with hormone receptor positive metastatic breast cancer that overexpresses the HER2 receptor.
Out Take
Breast cancer is one the most prevalent forms of cancer. According to the US National Cancer Institute’s Surveillance Epidemiology and End Results (SEER) database for 2008, approximately 2.6 million breast cancer cases in the US alone. HER2 positive breast cancer accounts for approximately 15% – 30% of total breast cancer cases.
Currently approved products specifically indicated for this type of cancer includes Herceptin and Tykerb. We note that Herceptin generated annual sales of approximately $4.6 billion (CHF 5,253 million) in 2011 while Tykerb generated sales of $231 million. We expect the expansion of the Tykerb label will help Glaxo penetrate further into this lucrative segment.
Glaxo in Neutral Lane
We currently have a Neutral recommendation on Glaxo. The stock carries a Zacks #3 Rank (Hold rating) in the short run.
While several products in the Pharmaceuticals segment are facing generic competition, the Consumer side of the business is performing well and should help drive top-line growth. Moreover, 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 increase earnings at a faster pace than revenues. Share buybacks should also drive bottom-line growth.
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