Investors adored results from a Phase III trial of an experimental cancer drug, significantly driving up stock prices of two of the companies involved in its development.

Shares of OSI Pharmaceuticals Inc. more than doubled on Monday's news that Tarceva (erlotinib HCl) met its primary endpoint of improving overall survival in refractory non-small-cell lung cancer patients. The drug, which is being evaluated in other cancer settings as well, was shown to both extend life and provide symptomatic improvement, as those who received the investigational candidate lived longer than those on placebo.

Melville, N.Y.-based OSI's stock (NASDAQ:OSIP) surged 138.9 percent Monday to gain $52.96 before closing at $91.10. More than 59 million shares traded hands, about 58 million more than the stock's average daily volume. Partner Genentech Inc. also received a boost, as the South San Francisco-based company's shares (NYSE:DNA) climbed 11.7 percent, or $13.77, to close at $131.99. Basel, Switzerland-based F. Hoffmann-La Roche Ltd. also is involved in the drug's development.

"We are obviously very pleased with the market's reaction to our announcement that the trial has met its primary and secondary endpoints," Gabriel Leung, OSI's executive vice president and the president of its oncology business, told BioWorld Today. "It's our intent to unlock all the clinical utilities that Tarceva can offer to patients, and the survival benefit we have demonstrated in lung cancer hopefully can be replicated in other diseases, as well."

The 731-patient trial also met secondary endpoints, including improving time to symptomatic deterioration, progression-free survival and response rate.

But Jason Zhang, who covers OSI as a senior analyst at IRG Research in New York, cautioned against excessive investor enthusiasm.

"People are jumping all over it," he said. "I'm a little worried that we are entering a speculative stage, regardless of the fundamental reason to buy. It is a good drug, but is it going to wipe out Iressa [gefitinib, from AstraZeneca plc], is it going to take over chemotherapy, is it going to be used in [just] any cancer indication? No, it is far, far from that."

Investigators evaluated Tarceva at 150 mg/day in patients with Stage IIIB/IV recurrent non-small-cell lung cancer. Participants must have received at least one, but no more than two, prior chemotherapy regimens. Results showed no apparent increase in toxicities.

Leung said the drug's initial commercial potential would be centered on an indication supported by the study population.

"Our intent, at the beginning, is to make sure that as many patients who would benefit from top-line Tarceva would be able to access the product," he said. "Going forward, the initial indication will only be the beginning of the journey. We believe in the product's use not only in the refractory setting in lung cancer, but also in an earlier setting, including adjuvant use."

Detailed findings will be presented at the June meeting of the American Society of Clinical Oncology in New Orleans. OSI, which sponsored the study, will work with the FDA to complete Tarceva's new drug application this summer. The first sections of a rolling submission were filed three months ago, including preclinical data and manufacturing information. (See BioWorld Today, Jan. 22, 2004.)

"Now with this data, we will be finishing up the clinical section of the NDA and get that into the FDA as soon as possible," Leung said.

Genentech representatives said they are targeting the first quarter of next year to launch Tarceva, and Leung added that the companies would be prepared if the FDA approves the fast-track product in a more accelerated time frame.

But Zhang warned against over-optimism.

"I think people are reading too much into hearing that it extends survival in lung cancer patients," he said. "That's a very powerful statement, but the reality is that the drug was compared to best supportive care, which is not standard in the U.S. anymore. In the U.S., no physician will consider supportive care as the standard of care for second- and third-line lung cancer patients."

Zhang concluded that the data should be weighed against current standards, such as Iressa and taxotere, to determine Tarceva's impact against peers in its potential marketplace. He said Tarceva's developers can point to its safety profile but must show better survival data and other responses relative to Iressa's performance. However, those findings will remain under wraps until June.

An oral small molecule, Tarceva is designed to target the human epidermal growth factor receptor 1 (HER1) pathway. HER1, also known as EGFR, is a key component of the HER-signaling pathway, which plays a role in the formation and growth of numerous cancers.

Results of a Phase III trial of Tarceva in pancreatic cancer are expected in the second half of this year, and earlier-stage studies in other solid tumors such as ovarian, colorectal, head and neck, renal-cell carcinoma, glioma and gastrointestinal cancers are under way. The partners are investigating Tarceva's use as monotherapy and in combination with other agents, including the subject of another recent Genentech success story, Avastin. All three partners share development costs.

"It is important to continue to pursue other cancer types, because EGFR is an important growth receptor involved in many kinds of cancer," Leung said. "In the alliance, we have over 100 clinical studies in the works or planning, and we continue to uncover important new leads as to other tumor types where a product like Tarceva could ultimately demonstrate a benefit for patients as well."

Genentech and OSI would share profits equally if Tarceva is commercialized in the U.S., where Genentech will take a lead role in marketing the product and OSI will manufacture it. Roche controls foreign rights, while Genentech and OSI would receive royalties for sales outside the U.S. (See BioWorld Today, Jan. 9, 2001.)

Initially, OSI was developing Tarceva with Pfizer Inc., though the Federal Trade Commission forced the New York-based pharmaceutical company to drop the partnership in order to complete its acquisition of Warner-Lambert Co., of Morris Plains, N.J.

On its own, OSI markets Novantrone (mitoxantrone concentrate for injection) for oncology indications and Gelclair for the relief of pain associated with oral mucositis. In its pipeline, the company's other cancer candidates include gene-targeted therapies focused on signal transduction and apoptosis, as well as next-generation cytotoxic chemotherapy agents.