Don't Bet Against Avastin: Roche's $55,000 Cancer Drug Thrives on Bad News
Usually, when drugs fail in multiple tests, their sales decline. Not Roche (RHHBY)'s cancer treatment Avastin. Its sales go up. And they'll probably continue going up, despite negative headlines.
The drug generates $5.7 billion in annual revenues for Roche and accounts for 13 percent of the company's revenues. I suggested last year that Roche may have been hasty in acquiring Genentech to get Avastin, as it did so before the results of a test that showed it did not work very well on early-stage colon cancer. About half its revenues are generated from advanced colon cancer.
Since then, Avastin added another $900 million to sales, so clearly I was wrong to worry about what the drug actually works on.
Avastin also recently failed in tests on prostate cancer and gastric cancer (although it was successful in one for ovarian cancer).
This morning, investors were digesting a nuanced report from Sanford Bernstein's Tim Anderson on the drug's future. He said:
We have become negative on any sales growth in lung cancer. We are reflecting in our forecasts the recent failure of Avastin in gastric and prostate cancer. We continue to have very low expectations for Avastin in the adjuvant setting.There were opportunities for growth in breast and ovarian cancer, however he said. (The adjuvant setting is where the drug is used after surgery to remove a tumor, to prevent cancer from coming back.)
Add to that a lengthy piece in Forbes arguing that taking the drug is basically not worth it -- unless you regard two extra months of life with cancer at a cost of $55,000 as "worth it" -- and the lay reader might get the impression that Avastin is headed for some sort of cliff.
Not so. Anderson estimates that Avastin's sales will increase until they reach a staggering $8.4 billion in 2015. Nothing will stop this drug, it seems.
Kicker: It also cures chronic nosebleeds, apparently.
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