The hotly contested market for breakthroughs in cancer vaccines saw a landmark event this week. Micro-cap biotech company Antigenics (Nasdaq:AGEN) grabbed bragging rights with the world's first therapeutic cancer vaccine to gain regulatory approval to bring to market. However, Oncophage, a treatment for kidney cancer and metastatic melanoma, won't be available anytime soon in the U.S. - it was Russia that gave its approval this past Tuesday.

This gives the New York-based company with 2007 revenues of $5.6 million a foothold in a very high-visibility sector of the global drug industry. Hot on the heels of the news from Russia, Antigenics announced an intended $21 million private placement of 7 million shares at $3.00 per share to help fund both the Oncophage launch in Russia and efforts to secure near-term regulatory approval in Western Europe and Canada. (To read more about this volatile sector, see The Ups And Downs Of Biotechnology and Using DCF In Biotech Valuation.)

The FDA Three-Step
Every country has its own peculiarities when it comes to testing and approving new drugs. The Russian approval of Oncophage was unusual in that it marked the first time the Russian authorities have blessed a new, unproven drug that has not been approved for use in its home market. Antigenics had conducted a Phase 3 (late-stage) trial of the drug in the U.S. with the target objective being to demonstrate improved recurrence-free survival (RFS) rates in patients suffering from kidney cancer.

The FDA trial failed to demonstrate a meaningful delay or prevention of recurrence among the total testing population, but noted that a subset of patients with better-than-average prognostics appeared to respond well to the vaccine with an improvement in recurrence-free survival of about 45%.

That wasn't enough to get a favorable ruling from the FDA, but it was good enough for Russia. Kidney cancer is a prominent health concern in Russia. Interestingly, about one-third of the patients participating in the Oncophage Phase 3 trial were tested in Russia, with a majority of those demonstrating improvement following use of the vaccine.

Whether it will be good enough for markets in Western Europe and Canada remains to be seen, but Antigenics intends to apply proceeds from its rights offering to augment its potential revenue base from these countries while at the same time continuing the U.S. FDA process, where Oncophage retains its orphan drug and fast track status for kidney cancer and metastatic melanoma.

Meanwhile, Back in the U.S.
The prize for first approved cancer vaccine in the U.S. remains up for grabs. Last year big pharma giant Sanofi-Aventis (NYSE:SNY) acquired the rights for TroVax, a multi-variety cancer vaccine developed by UK firm Oxford BioMedica and could wind up shelling out 518 million euros ($813 million) to fund the Phase 3 trial and associated regulatory milestones. Rival GlaxoSmithKline (NYSE:GSK) is working on a vaccine targeting lung cancer through its licensing of a portfolio of tumor-specific antigens from the Ludwig Institute for Cancer Research. And Dendreon (Nasdaq:DNDN), a tiny biotech outfit with 2007 revenue of $743,000, expects final results from its Phase 3 trial of Provenge, a cellular immunotherapy for the treatment of advanced prostate cancer, to be available in 2009 rather than 2010 as earlier estimated.

The green light for marketing Oncophage in Russia gives Antigenics a foot in the door of the emerging cancer therapeutic vaccine market and a possible launch pad for repeat successes in Europe and Canada while maneuvering through the FDA bureaucracy in the U.S. With a growing number of cancer vaccines moving toward the end of the approval pipeline, there may be sunny days ahead for the early entrants to this market.

To learn how to find a healthy pharmaceutical investment, read Measuring The Medicine Makers.

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Tickers in this Article: AGEN, SNY, GSK, DNDN

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