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Is Personalized Medicine a Good Pill for Pharma Firms?

Health-care analysts Damien Conover and Karen Andersen review takeaways from the American Society of Clinical Oncology's annual meeting, including the impact of personalized medicine.

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Damien Conover: Thanks for joining us. My name is Damien Conover. I'm the pharmaceutical analyst here at Morningstar, and I'm joined by biotechnology analyst, Karen Andersen. Karen just returned from the American Society of Clinical Oncology's annual meeting. Now, this is one of the most important medical meetings of the whole year, and it really revolves around cancer treatments. Karen, thanks for joining us.

Karen Andersen: Good to be here.

Conover: Now, one of the things, I think, was a primary focal point at the conference was personalized medicine. Now, why was that?

Andersen: Well, personalized medicine, this has been around for a while--treatments like Herceptin in breast cancer. But it's just really become a lot more common in recent years to see studies involving personalized medicine, as researchers find gene mutations that are responsible for different types of cancer. And it helps explain why, say, one lung cancer patient may respond to a drug like Tarceva and one may not.

Conover: So that's interesting. So it might be better, I guess, from trying to find which patients will respond. From an investing standpoint, I think investors are sometimes concerned that that may limit the drug's potential because it's only going to treat a subset of the patient population. What do you think of that?<TRANSCRIPT>

Andersen: That's true. I mean, it could take away a portion of the patients that are treated. On the other hand, you could look at it as the companies, the patients that they're treating will respond better, will stay on therapy longer, and it also makes the therapy more cost-effective in that sense. So I think it does help make the drug companies a little more immune to any kind of price controls or any kind of health-care reform you might see in the future.

Conover: OK. No, that's interesting. Are there any particular companies that you might want to highlight as far as data that was presented in the personalized medicine category this year?

Andersen: Yeah. One that really stood out to me was Roche, with PLX4032. It's just in early-stage testing right now, but it actually targets a BRAF mutation, which 60 percent of patients with melanoma have this mutation. The results were very impressive, and Roche plans to move on to a final study later this year.

Conover: Now, one other data point that I think a lot of investors were interested in was Roche's data on Avastin. And the data was negative. So, is this the end of Avastin, or are we still going to think there's growth potential left for one of Roche's most important drugs?

Andersen: I think there's still plenty of growth potential left for Avastin. First of all, the data was in early-stage colon cancer, and there was a trend towards an improvement in overall survival; it just wasn't statistically significant. So it's possible the company could redesign some trials and have a better shot at getting approval in this extended indication. Plus, they're looking at Avastin in breast and lung cancer, in sort of similar, early-stage treatments, which are completely different types of cancers. So the drug could still work in those indications, even if it doesn't work in colon cancer.

Conover: That's interesting. So the pullback that we saw in Roche's stock price, partly attributable to that negative Avastin data, would you think that is a good buying opportunity for investors?

Andersen: I think it's a great time to get into the stock. Yeah, definitely.

Conover: All right. Well, great, Karen. Thanks for being here, and it was great to hear your thoughts. And thank you for joining us.

Damien Conover does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.