Xofigo: A cancer drug with promise in the billions

Project name: radium-223 chloride
Disease: Prostate cancer
Peak sales estimate: $1.5 billion
Approved: May 15
Companies: Bayer and Algeta

The Scoop:
Ages-old drugmaker Bayer is not afraid to try something new, and with the company doubling down on oncology over the past few years, the pinpoint prostate cancer drug Xofigo is both a marker of its success and a sign of things to come.

The drug is designed to treat castration-resistant prostate cancer and uses exquisitely targeted alpha radiation to kill tumor cells that have penetrated the bone. In a pivotal study ended early thanks to a stellar performance, the radium-223 chloride compound boosted overall survival by 44%, extending patients' lives by a median of 14 months compared to 11.2 months on placebo. Xofigo can target tumors down to a few millionths of a meter, allowing it to spare healthy tissues and improving its safety profile compared to standard radiation therapies.

The drug's approval came more than three months ahead of schedule thanks to the FDA's priority review program, and the agency heralded Xofigo's precise targeting and risk-benefit profile. The drug could make a huge difference for late-stage prostate cancer patients with few other options, the FDA said, and analysts figure Xofigo's annual sales could peak at around $1.5 billion.

Bayer acquired the drug through an $800 million deal with Norway's Algeta in 2009, and the German pharma magnate is now hitching its oncology hopes to its partner's platform technology, paying $2.9 billion to buy out Algeta last month. The deal gives Bayer full control of Xofigo and its blockbuster potential and includes a promising pipeline of similarly targeted therapies.

First up, Algeta is developing thorium-227, technology that would allow it to link alpha radiation particles like Xofigo to monoclonal antibodies, promising to further improve targeting for future cancer treatments. Meanwhile, Bayer is spending big to study Xofigo in combination with other prostate cancer drugs, including Johnson & Johnson's ($JNJ) fast-growing pill Zytiga, looking to further expand the market for its banner injection.

Not everyone is so bullish about Xofigo's prospects, however, as the drug will face competition from the above-mentioned Zytiga, Medivation ($MDVN) and Astellas' Xtandi, and the wounded-but-still-kicking Provenge from Dendreon ($DNDN).

But Bayer's embrace of Algeta's cutting-edge approach to oncology is a sign that the old pharma isn't married to tradition, and, with ex-partner Onyx Pharmaceuticals taking a roughly $10.4 billion deal to join Amgen ($AMGN), Bayer's timing couldn't be better. After promising to hone his company's oncology focus, Bayer CEO Marijn Dekkers has come through with a blockbuster approval and a multibillion-dollar deal. Now we'll see whether Bayer's combination of bright minds and deep pockets can get it into the rare cancer company of Roche ($RHHBY), Novartis ($NVS) and Amgen. -- Damian Garde (email | Twitter)

For more:
FDA OKs pinpoint prostate cancer radiation drug Xofigo from Bayer, Algeta
Bayer bags Algeta's cancer drug portfolio for $2.9B
Bayer's $2.4B bid to buy Algeta fits neatly with cancer drug strategy

Xofigo: A cancer drug with promise in the billions

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