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With AstraZeneca plc's failure of Iressa in non-small-cell lung cancer, the winners were Genentech Inc. and partner OSI Pharmaceuticals Inc. and their drug Tarceva - also an epidermal growth factor inhibitor - which was approved for the indication last month.

OSI's stock (NASDAQ:OSIP) roared to a Friday close of $68.38, up $21.28, or 45.2 percent. Genentech's shares (NASDAQ:DNA) ended the day at $51.36, up $2.87.

Winton Gibbons, analyst with William Blair & Co. in Chicago, expressed the surprise of many observers at Iressa's fizzle.

"Everybody thought [Iressa and Tarceva] were essentially the same drug and we'd see a survival benefit" with AstraZeneca's compound, he said.

Iressa (gefitinib) was approved in the spring of 2003 on the basis of tumor response rate, with AstraZeneca required to show clinical benefit in a subsequent trial. Tarceva (erlotinib) gained FDA clearance last month on the basis of a 42.5 percent survival advantage over placebo.

"A couple of years ago, Genentech was taking a highbrow, gold-standard approach of doing a Phase III survival trial," Gibbons said. "In that kind of boxing match, is it going to be the sneaky guy who shows up with Phase II data under fast-track status with surrogate endpoints, or is the person going to win who takes the high road?"

Popular opinion was pretty clear.

"The previous thinking was that Iressa was going to end up being the winner," he said. "Iressa's been out there for a year longer, so people were saying Genentech made a mistake by being buttoned up."

Popular opinion was wrong.

"What happened today is that Genentech won the current biggest battle," Gibbons told BioWorld Today, noting that Tarceva's 25 percent price premium over Iressa seems even more justified now.

AstraZeneca's failure with Iressa follows a rejection last month by the FDA of the pharmaceutical firm's blood-clotting drug Exanta (ximelagatran).

In the trial that enrolled 1,692 subjects, Iressa as monotherapy failed to show a survival benefit vs. placebo in the overall NSCLC patient population or in those with adenocarcinoma (a tumor that originates in glandular tissue).

AstraZeneca hardly needed more bad news, having also run into trouble with its cholesterol-lowering drug Crestor (rosuvastatin), which the activist group Public Citizen has asked to be taken off the market because of safety concerns. Even an FDA medical reviewer has said the compound needs more study.

The small-molecule Tarceva (erlotinib) gained a U.S. regulatory nod in November for patients with locally advanced or metastatic NSCLC after failure of at least one chemotherapy regimen. Tarceva targets HER1 (also known as EGFR), a key component of the HER-signaling pathway, which plays a role in the formation and growth of various cancers. Specifically, the drug blocks the tyrosine kinase activity of HER1 inside the cell. (See BioWorld Today, Nov. 22, 2004.)

Jennifer Chao, an analyst with New York-based Deutsche Bank Securities Inc., posted a "buy" rating for Genentech, reiterating her projections of Tarceva revenues: $260 million in 2005 and $400 million in 2006.

Other EGFR therapies include Erbitux (cetuximab), from New York-based ImClone Systems Inc., and ABX-EGF (panitumumab) from Abgenix Inc., of Fremont, Calif., and Thousand Oaks, Calif.-based Amgen Inc.

Erbitux is approved for colorectal cancer, and an NSCLC Phase III program is under way. Also in Phase III is ABX-EGF, the fully human monoclonal antibody for refractory colorectal cancer.

"It's hard to compare an antibody to a small molecule because the mechanisms are different," Gibbons said, making his firm "more bearish" on those compounds than on the likes of South San Francisco-based Genentech Inc.'s Tarceva.

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