FDA’s approval of the hedgehog inhibitor Erivedge (vismodegib) for patients with advanced basal cell cancer is the first for the drug classand a transformational event for Lexington, Mass., biotech Curis Inc.

The approval, which came more than a month before its priority review PDUFA date, was announced Jan. 30 by Curis and Genentech Inc., a member of the Roche Group, which is developing and commercializing vismodegib, discovered by Genentech in 2003 using Curis’ technology, under a collaboration with Curis.

Curis receives a $10 million milestone with the approval, as well as mid-to-high single-digit royalties based on net sales, CEO Dan Passeri said in an interview. “This is really transforming for our business model, a substantial de-risking of the business in that it addresses capital access risk quite substantively,” Passeri said. “It creates a much more stable company.”

Erivedge will be available within one to two weeks through specialty pharmacies at a wholesale cost of $7,500 for a month’s supply, Genentech said. The estimated cost for a course of treatment based on the pivotal trial is estimated at $75,000, with the expectation that real world usage will vary. Roche has submitted a marketing application for the indication in Europe.

Erivedge, a 150 mg capsule taken orally once daily, is indicated for treatment of adults with metastatic basal cell carcinoma or with locally advanced basal cell carcinoma that has recurred following surgery or who are not candidates for surgery or radiation. The approval comes with a “black box” warning and a MedGuide to inform both male and female patients of the risk for embryo-fetal death or severe birth defects from Erivedge.

Hedgehog signaling is important in embryonic growth and development but becomes less active in adults. Certain cancers, including BCC, however, co-opt the pathway in adulthood to benefit their survival and growth, hence the danger to a developing fetus when inhibiting the hedgehog pathway to treat the cancer.

The approval is based on a single, multi-center Phase II trial in 96 patients with locally advanced or metastatic BCC in which 30% of patients with metastatic disease experienced a partial response and 43% with locally advanced disease experienced a complete or partial response Also see "Curis/Genentech Report Positive Phase II Results For Vismodegib" - Pink Sheet, 20 June, 2011..

The Prospect Of Significant Growth Potential

The approval offers treatment for patients who have not had therapeutic options, Passeri said. “We think this label has the prospect of significant growth potential.”

According to Curis and Genentech, around two million new cases of BCC are reported annually, 90% of which are caused by a mutation of both copies of a certain allele due to UV exposure. Even if only 0.5% of those patients fit the indication, the market is 10,000 patients, reasoned Passeri.

Another 5,000 or so BCC patients in the U.S are victims of a genetic predisposition in which they are born with one allele already mutated, making them more vulnerable to basal cell tumors. This particularly aggressive form of the cancer, called basal cell nevus syndrome or Gorlin-Gotz syndrome, can cause hundreds of tumors over a lifetime. Genentech noted these patients also would be eligible for treatment.

Genentech is also evaluating Erivedge in patients with operable BCC, in a trial that began enrolling in October 2010. In that setting, said Passeri, Erivedge might offer an alternative to disfiguring surgery – on the nose, for example. The drug could also be used in that case to shrink the tumor until it can be removed.

Still, it remains to be seen whether Roche will be able to convince regulators that the second indication, for operable BCC, is practicable. The question is whether there is a need for medical therapy in that setting.

In a same-day “quick take” note to investors, Cowan & Company analyst Simos Simeonidis stressed that convincing regulators “would definitely not be an easy task, especially given dermatologists’ ability to charge for a potentially curative minor procedure.” However, if Roche is successful, “even a fraction of a percent penetration” in that market could be commercially significant, he observed.

For the current approval, using conservative assumptions, Simeonidis projected revenues of $44 million, $103 million, $165 million and $212 million in the U.S. for 2012-2015, with total U.S./EU sales of $401 million in 2015 and peak 2012 sales of $533 million, resulting in royalties to Curis of $32 million and $43 million, respectively.

Hedgehog Pathway Still A Challenge

Despite the Erivedge approval, questions remain about targeting the hedgehog pathway in other cancers; Erivedge has failed against colorectal and ovarian cancer Also see "Genentech/Curis Hedgehog Inhibitor Gets Unclear Results In Ovarian Cancer Maintenance Study" - Pink Sheet, 9 August, 2010.. “We’re still optimistic a signal will emerge,” offering Genentech an opportunity to follow it and “make sense out of under what context you could use vismodegib to block the signal in a certain tumor type under certain circumstances,” Passeri said.

Other companies have been dealt similar hedgehog disappointments. Most recently, on Jan. 27, Infinity Pharmaceuticals Inc., in Cambridge, Mass., announced it was halting a Phase II trial of its candidate saridegib (IPI-926) in newly diagnosed metastatic pancreatic cancer for futility. Like Genentech, Infinity will continue to study its candidate in other cancers, with trials ongoing in myelofibrosis and chondrosarcoma.

And hope springs eternal. At the American Society of Hematology meeting in December, Pfizer introduced an early-stage hedgehog inhibitor that it said has shown “surprising activity” in a typical first-in-patient Phase I trial against hematologic malignancies Also see "Pfizer Touts Bosutinib Advantages, Debuts Hedgehog Inhibitor At ASH" - Pink Sheet, 1 December, 2011..

Curis Pipeline has More In Store

The vismodegib approval will give Curis a springboard to move ahead with the rest of its pipeline.

Curis has an unpartnered multi-target compound, CUCD-101, in Phase Ib that targets HDAC, EGFR and HER2, as well as CUDC-907, which targets PI3K and HDAC, for which Curis expects to file an IND in the first half of the year.

CUDC-101 produced “promising efficacy,” with responses seen in all five tumors tested, said Simeonidis. “We believe this is a molecule worth keeping an eye on, given its ability to inhibit multiple targets with a single molecule, which has the potential to address the resistance that eventually develops with most targeted therapies.”

Curis also has DEBIO 0932, an Hsp90 inhibitor licensed to Swiss biotech Debiopharm International SA, which expects to present Phase I data on the molecule at a medical conference sometime in 2012.

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