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Renal Cell Cancer Indication Report

August 15, 2005

SUMMARY

Renal cell cancer (RCC) is the most common type of kidney cancer and accounts for 3% of all malignancies. RCC is considered curable when detected early, however, advanced metastatic kidney cancer has a very poor outlook. Metastatic RCC is currently treated with cytokine therapy which is only effective in a small percentage of patients and is associated with severe side effects. There is currently no standardized second-line therapy for metastatic RCC since the disease responds poorly to all currently available therapies.

Recent clinical developments have resulted in some very exciting drugs for this difficult-to-treat disease with two drugs, Sutent and Sorafenib, set for FDA approval in early 2006. We believe that Sutent and Sorafenib will dominate the second-line RCC market and we expect Sutent to be the market leader. We also believe that both Sutent and Sorafenib will be used off-label in the front-line setting once approved.

BACKGROUND

Cancer of the kidney is also called renal cancer. The most common type of kidney cancer accounting for more than 90% of all kidney cancers is renal cell cancer or renal cell carcinoma. The kidneys contain over a million filtering tubules called nephrons, which serve to filter blood, remove waste and make urine. Cancer in these tubules is called renal cell cancer.

Renal Cell Cancer (RCC) accounts for 3% of all malignancies with an estimated 35,000 patients diagnosed with the disease annually in the U.S. and an annual death rate of 12,000 patients. The risk of developing disease increases with age and the median onset of disease is 60 years. Accordingly, the incidence is on the rise due to the increasingly aging population. Men are twice as likely to develop the disease as women. While it is not known what causes RCC, several risk factors increase the likelihood of developing the disease including smoking, obesity, radiation exposure, and a genetic disorder called Von Hippel-Lindau disease.

Disease Classification
There are 5 main subtypes of RCC, categorized based on tumor morphology: clear cell, papillary, chromophobe, collecting duct, and “unclassified”.

Clear cell is the most common form of RCC, accounting for 70-80% of RCC. The cells found in this subtype are very pale, or clear, when viewed under the microscope. Clear cell is also the subtype that is considered to be the most sensitive to treatment.

Papillary is the second most common type, affecting 10-15% of RCC patients. The cells of this subtype form papillae, or finger-like projections, in some or most of the tumors.

Chromophobe RCC is the third most common type, found in 5% of cases. These cells are also pale like clear cell, but are much larger with other differentiating factors.

The fourth type, collecting duct RCC, is very rare and is characterized by the cancer cells forming irregular tubes. The fifth type, unclassified, accounts for the remainder of cases in which the cancer cells do not fit into any of the above categories.

Disease Staging
While the type of cancer is important, the stage of RCC is the most important prognostic indicator. The stage of disease also determines how the disease is treated.

Stage I – the cancer is only in the kidney and is less than 7cm in size;

Stage II – the cancer is still in the kidney but is greater than 7cm in size;

Stage III – the cancer has spread to the blood vessels surrounding the kidney (renal vein, inferior vena cava) or to the lymph nodes around the kidney;

Stage IV – the cancer has metastasized to other organs or tissue;

Recurrent – the cancer has come back after being successfully treated.

Historically, kidney cancer was often not diagnosed until later in stage but due to the recent extensive use of ultra sonography, there has been an increase in the “accidental” diagnosis of early disease. It is currently estimated that 70-80% of patients present with localized disease, of which approximately 50% will develop metastatic disease. Patients who are diagnosed while the tumor is still resectable (not metastatic disease) have a much better prognosis, with approximately half of these patients considered cured after the removal of the cancerous kidney (nephrectomy). However, in many cases, even after a full recovery following the nephrectomy, distant metastases can appear 5 to 10 years later. Patients with metastatic RCC have a very poor outlook with a 1-year survival rate of 26% and a 3 year survival rate of 4%.

Disease Treatment

The treatment of RCC remains primarily surgical in which a part or the whole kidney is removed. For patients with more advanced disease (Stage III), a radical nephrectomy may be performed in which the whole kidney as well as the renal vein, the adrenal gland and the lymph nodes are removed.

Metastatic RCC is currently incurable and is associated with a poor prognosis. The management of metastatic RCC (mRCC) remains a therapeutic challenge as it is highly resistant to mainstay cancer treatments. RCC responds poorly to radiation therapy and only a few chemotherapy agents have shown any effectiveness in RCC, though their efficacy is very limited (generally response rates of less than 10% are seen). RCC is associated with a multidrug resistance (MDR) phenotype which may help to explain why the disease does not respond to most chemotherapy agents.

The only effective therapy in metastatic RCC is cytokine therapy. There are two cytokines that are principally used in mRCC: interleukin 2 (IL-2) and interferon alpha (IFNa). Proleukin (IL-2; Chiron) is the only FDA approved therapy for mRCC in the U.S. while IFNa is approved in Europe and is being used off-label in the U.S. Both IL-2 and IFNa have been shown to shrink tumors by more than 50% in a small number of patients with response rates to either cytokine of 7 to 26% and complete response rates of 2 to 7%. Responses to IFNa are rarely durable while the small number of patients who have complete responses to IL-2 tend to maintain the response (complete remission). Interestingly, studies combining both cytokines have shown little benefit over either agent alone but with an increase toxicity profile. While both IFNa and IL-2 are associated with significant toxicity (such as neutropenia and neurotoxicity), IL-2 has more pronounced side effects that can also include capillary leak syndrome and cardiopulmonary toxicity. Due to these side effects, a lower dose of IL-2 is sometimes used.

There has been considerable debate as to which cytokine therapy is superior with several studies showing conflicting results. To answer this debate, the Cytokine Working Group recently published a randomized phase III study evaluating high dose IL-2, low dose IL-2 and IFNa. The study showed that high dose IL-2 is superior to low dose IL-2 or IFNa in terms of response rates, duration of response, and patient survival. Based on these results, along with high dose IL-2’s durable response in some patients, high dose IL-2 is the preferred treatment option for patients with mRCC in patients who can tolerate the drug. Importantly, patients who fail IL-2 therapy have a very poor outlook with a median survival of only 6 months. Given the low response rates to either cytokine coupled with their high toxicity, it is not common practice for patients who have failed on one cytokine to be given the other cytokine.

MAJOR DRUGS IN CLINICAL DEVELOPMENT

Given the lack of effective therapies for metastatic RCC, there remains a need for new, effective drug treatments. The increasing understanding of RCC biology and tumor biology in general, has led to exciting new drugs that target specific molecular pathways involved in tumor proliferation and survival. These pathways include the Epidermal Growth Factor (EGF), Platelet Derived Growth Factor (PDGF), and the Vascular Endothelial Growth Factor (VEGF) pathways. Of the drugs in development, two promising tyrosine kinase inhibitors, Sorafenib and Sutent, that inhibit these growth factor pathways are expected to revolutionize the treatment of metastatic RCC. While much attention has been focused on these two agents, there are numerous others in early and late clinical development that also appear to be promising. We have outlined some of the more interesting drugs below.

Sorafenib (BAY 43-9006; Onyx)

Sorafenib is an orally available broad spectrum tyrosine kinase inhibitor that targets VEGF (VEGFR-2 and VEGFR-3), PDGF (via the receptor PDGFR-beta), FLT-3, c-kit, and p38 among many kinases. In addition to these, Sorafenib also inhibits the RAS/RAF signaling pathway by inhibiting RAF. The RAF kinases are oncogenes that promote tumor growth and metastasis by promoting cell proliferation and migration. Thus, Sorafenib has the potential to not only inhibit the formation of new blood vessels via VEGF inhibition, but also curtail the uncontrolled growth of cancer cells, two processes critical for cancer development. While Sorafenib is being evaluated in numerous solid malignancies, it is furthest along clinically in RCC where the drug has received both orphan and fast track status. Onyx and Bayer filed an NDA for Sorafenib in second-line RCC in July 2005 and approval is expected in January 2006 based on a priority review.

In a phase II study evaluating whether Sorafenib can stabilize disease (defined as a response between 25% reduction and 25% growth), Sorafenib was shown to shrink tumors (objective response) in 40% of patients while stabilizing disease in 30% of patients. Given the 15% response rate typically seen with IL-2 and IFNa, the response rate seen in this study is rather impressive. After this initial 12 weeks, the trial continued for another 12 weeks in patients that responded to Sorafenib. In this second part of the trial, patients whose tumor shrunk in response to Sorafenib stayed on the drug while patient’s whose disease stabilized were randomized to receive active drug or placebo. Following this randomization, the investigators calculated that the time to disease progression for the treatment group (which included patients who were on placebo initially) to be 169 days (5.5 months) which compares well to the 60-90 days seen in historical controls for this patient population.

The positive results from the phase II study led to the initiation of a large special protocol assessment (SPA) phase III study that enrolled over 800 patients with advanced clear cell RCC who had failed cytokine therapy. The objective of this study was to evaluate the effects of Sorafenib on progression-free survival (PFS) and overall patient survival, more meaningful measures of clinical outcome than response rate.

Interim data from this phase III study was presented at the American Society of Clinical Oncology (ASCO) in May of this year which showed that Sorafenib doubled the PFS to the placebo control. The median PFS for the control group was 12 weeks (3 months) while Sorafenib extended the PFS to 24 weeks (6 months). In light of the fact that cytokine-refractory patients have a median survival of 6 months and that their disease is highly resistant to treatment, the 6 months PFS seen with Sorafenib is very impressive.

We expect overall survival data from this phase III study later this year or early 2006 however it must be cautioned that the overall survival data may not look as impressive due to the crossover of patients. In March earlier this year, the study’s independent data monitoring committee (DMC) recommended that the trial be halted due to meeting it’s primary endpoint of time to disease progression and that all patients in the placebo arm be allowed to crossover to receive Sorafenib. Thus, given that some placebo patients are now receiving Sorafenib, the overall survival data of the study may well be diluted between the original Sorafenib and placebo groups. However, given that the median PFS seen with Sorafenib is equivalent to expected survival of these patients, it can safely be assumed that Sorafenib does indeed prolong patient survival, although the magnitude of this effect may be impacted by the crossover design of the study. Based on the impressive PFS data and the favorable toxicity profile of Sorafenib, we expect the FDA to approve the drug by early next year.

Sutent (SU-11248; Pfizer)

The main competitor to Onyx’s Sorafenib is Sutent. Like Sorafenib, Sutent is an orally available broad spectrum tyrosine kinase inhibitor that also inhibits VEGF, PDGF, FLT-3, and c-kit. In contrast to Sorafenib, Sutent is not a potent inhibitor of the RAF kinases. On August 10, 2005, Pfizer announced that they have filed Sutent for FDA approval for the treatment of gastrointestinal stromal tumors (GIST) and RCC, both in the second line setting. While the filing for GIST was expected based on the positive data presented at ASCO earlier this year, the filing for RCC is suprising given that Sutent has only been evaluated in 2 small phase II studies for RCC.

Sutent is currently undergoing phase III studies in front-line RCC patients. Efficacy results thus far are only available from two sequentially conducted phase II studies, Trial 1 and 2, which are identical in design. The studies enrolled patients with metastatic RCC patients who have failed one prior cytokine therapy with Trial 1 comprising 63 patients while Trial 2 enrolled 106 patients. Results from the studies were presented at ASCO earlier this year, which demonstrated that Sutent is active in mRCC, with approximately a 40% response rate in each study and a disease stabilization rate of 28% and 23% in Trial 1 and 2, respectively.

The more meaningful outcome measure of progression-free survival and overall survival was only available for Trial 1 as the data has not yet matured in Trial 2. In Trial 1, median PFS was 8.7 months and median overall survival was 16.4 months. These results are very impressive given tthat the median survival for cytokine-refractory RCC patients is 6 months. The 16.4 months survival observed in Trial 1 is overwhelmingly positive. Moreover, the PFS of 8.7 months is the longest seen with any treatment evaluated for mRCC (outside of cytokines). Furthermore, 8 patients (12%) were still progression free 2 years after starting Sutent treatment, indicating that Sutent can produce a lasting complete remission. A durable response in mRCC has only been seen with IL-2 therapy thus far (in approximately 5% of patients). The durable response seen with Sutent treatment in this study (in IL-2 refractory patients) indicates that Sutent may also offer a long-lasting complete remission in a small number of patients.

While the number of patients in Trial 1 is very small, these results are so impressive that we feel Sutent has a very good chance of receiving FDA approval in February 2006. With the FDA becoming more risk adverse in recent times, they may want data from the ongoing phase III study before giving approval, however given the toxicity of IL-2 and the small percentage of patients for which it works, we believe that Sutent will be approved in February 2006 based on phase II results.

It will be interesting to see if these impressive results will be confirmed in the ongoing phase III study. While larger, randomized studies do not always verify results from the smaller phase II studies, we are fairly optimistic that phase III data will be positive for Sutent since this was the case with Sorafenib (bearing in mind that Sutent and Sorafenib are in the same class of drugs). Sorafenib produced a PFS of 5.5 months in a phase II study and 6 months in the pivotal phase III study.

The unexpected Sutent filing for RCC sets up an interesting battle between Sutent and Sorafenib. While it was previously assumed that Sorafenib will have definite first-to-market advantage, this is no longer the case with a Sutent approval expected a month later. While we believe that there is plenty of room in the market for both kinase inhibitors, we believe that Sutent has produced the most remarkable efficacy data to date for a non-cytokine treatment in RCC, and accordingly, will become the dominant player. Furthermore, Sutent is being evaluated in the front-line setting in the ongoing phase III study, suggesting that Sutent may eventually become a standard first line treatment for RCC. However, we believe that both Sutent and Sorafenib will be used off-label in the front-line setting once approved due to the severe toxicity of IL-2 therapy. This off-label use may become more pronounced if data from the Sutent phase III study is also overwhelmingly positive.

In summary, we believe Sutent will lead the second line RCC market, however, Sorafenib will not be far behind. We also believe that both Sutent and Sorafenib will dominate the second-line RCC market and we expect both drugs to eventually be approved for front-line RCC, while being used off-label in this setting until such approval.

OTHER COMPELLING DRUGS IN DEVELOPMENT

Avastin (Bevacizumab; Genentech)

Avastin is a monoclonal antibody that neutralizes all forms of VEGF. VEGF is critical for angiogenesis (the formation of new blood vessels) which is necessary for tumor growth and survival. The inhibition of VEGF may have a profound benefit in RCC since RCC is a highly vascularized tumor and VEGF is overexpressed in the majority of RCC tumors.

Avastin has already been approved for the treatment of metastatic colorectal cancer based on trial data demonstrating that it prolonged progression-free survival and overall survival. More recently, Avastin was shown to improve progression-free survival in metastatic breast cancer and non-small cell lung cancer (NSCLC) as well as extending overall survival in NSCLC. Based on its efficacy in these malignancies, and given the highly vascularized nature of RCC, Avastin is expected to be effective in RCC. Avastin is being evaluated as a monotherapy and in combination with other drug treatments for mRCC.

In a phase II study of monotherapy Avastin in patients with second-line metastatic RCC, Avastin was shown to improve progression-free survival. In this study, which enrolled 116 patients, patients were given placebo, low-dose Avastin (3mg/kg) or high-dose Avastin (10mg/kg) every 2 weeks. High-dose Avastin resulted in a partial response rate of 10% and a time to disease progression of 4.8 month versus 2.5 months for the placebo control. Avastin appeared to be well tolerated with no life-threatening toxicities or death attributable to Avastin.

Based on this promising data, two phase III studies are underway, evaluating Avastin in combination with IFNa in front-line RCC. The first study, CALGB 90206, will enroll 700 front-line mRCC patients to evaluate the combination of Avastin and IFN alpha2b (Intron A; Schering Plough). The second study is being carried out in Europe and is evaluating Avastin in combination with IFN alpha2a (Roferon A; Hoffmanm-La Roche). The primary objective of both studies is overall survival.

Avastin is also being evaluated in combination with the EGFR inhibitor, Tarceva (Erlotinib; OSI) in a small phase II study with 63 patients in the first and second line mRCC setting. Results from this study was presented at ASCO recently which showed that the combination of Avastin and Tarceva resulted in a median time to disease progression of 11.1 months (12.9 months for front-line and 8.9 months for second-line patients). Median overall survival was 22.8 months. While a larger study with a placebo arm is needed for a true assessment, these results show that the combination of Avastin and Tarceva appear to be active in metastatic RCC and is superior to single-agent Avastin in mRCC.

Along with Tarceva, Avastin is also being evaluated in a triple therapy combination of Avastin, Tarceva and Gleevec (Imatinib; Novartis), the tyrosine kinase inhibitor that targets the PDGF pathway. Results from this phase I/II study were also presented ASCO recently. While the results are still immature, this triple combination appears to be effective in mRCC with the median time to disease progression not yet reached at 9 months. While promising, the triple combination resulted in a much worse toxicity profile than with doublet Avastin/Tarceva and it is not yet evident whether the addition of Gleevec to the Avastin/Tarceva combination provides any extra benefit. Thus, we feel that this triplet combination will not be used in the clinic.

Pending positive data from the ongoing phase III studies of Avastin in combination with IFNa, we speculate that Avastin will be used in both the front-line and second-line setting in patients who are not at risk of bleeding (a common side effect of Avastin as seen in other indications). Unless Avastin can demonstrate clearly superior efficacy, we believe that it will not effectively compete with Sutent or Sorafenib in RCC due to its requirement for IV infusions (both Sutent and Sorafenib are pills). However, we expect Avastin to be used widely in patients who are refractory to Sutent or Sorafenib.

Temsirolimus (CCI-779; Wyeth)

Wyeth’s Temsirolimus is a second generation analog of Rapamune (Sirolimus; Wyeth). Like Rapamune, Temsirolimus inhibits the protein mTOR kinase, the downstream mediator of the PI3K/Akt pathway. This pathway is involved in cell cycle regulation and thus its inhibition leads to cell cycle arrest, preventing cell division and tumor growth. Temsirolimus is currently in phase III studies for front-line mRCC.

In a phase II study in patients with advanced renal cell cancer (RCC) who have failed IL-2 and/or IFN-alpha based therapies, Temsirolimus demonstrated encouraging efficacy. While the response rate was rather low, Temsirolimus treatment resulted in a time to progression of 5.8 months and overall survival of 15.0 months. While it is difficult to compare drug efficacy from separate studies, the PFS data seen in this phase II study appears similar to that seen with Sorafenib and survival data similar to that seen with Sutent in the phase II study. Interestingly, these results were in very advanced patients with over half of the patients in this study failing two or more previous therapies, thus making these results more compelling.

While the data has been encouraging for Temsirolimus, it faces a distinct disadvantage in the competition for the metastatic RCC market. It is expected to be approved a year after Sutent and Sorafenib thus losing the first-to-market advantage. More importantly, Temsirolimus must be infused over a 30 minute period and patients must be co-administered with other drugs to prevent hypersensitivity reactions during the infusion. Based on its mode of delivery and its suggested comparable efficacy to Sorafenib and Sutent, we feel that Temsirolimus is more likely to be used in patients who are unable to receive or who have failed the tyrosine kinase inhibitors or perhaps in patients with poor-prognosis. Thus, while Temsirolimus is being evaluated in the front-line setting, we see the drug more as a third line agent or second line agent in patients with a poor performance status.

DRUG IN EARLY DEVLOPMENT

Tarceva (Erlotinib; OSI)

As mentioned above, Tarceva is being evaluated in combination with Avastin for the treatment of first and second-line metastatic RCC. The results from the phase II study have been compelling and suggest an additive benefit when Tarceva is combined with Avastin over single-agent Avastin or Tarceva. However, at their conference call at the end of July 2005, OSI noted that due to the small market size, they do not intend to pursue further studies of Tarceva in RCC in the near future. This will delay Tarceva’s entry into RCC market, however we speculate that off-label use with Avastin may be likely once Avastin receives approval.

Thalomid (Thalidomide; Celgene)

Celgene has 2 drugs in clinical development for RCC: Thalomid and Revlimid. Thalomid has multiple mechanisms of action and it is thought that its anti-angiogenic properties may be of benefit in RCC. Thalomid is currently being investigated in combination with IFNa in phase II/III studies for front-line RCC. Results from this study were presented at the recent ASCO meeting which showed that the addition of Thalomid to IFNa did not improve PFS or overall survival while significantly increasing toxicity. Since PFS and overall survival is a more important clinical measure of disease outcome than response rate, and given the worsened quality of life scores, we feel that Thalomid is unlikely to be approved for RCC in the near future. Perhaps Thalomid in combination with IL-2 is more effective, however, a phase III trial with positive PFS and overall survival data are needed in order to convince us otherwise. Also, given the other drugs that will be available by the time Thalomid comes to market for RCC, Thalomid will have little room for growth should it get approved.

Revlimid (Lenalidomide; Celgene)

Celgene’s second generation Thalomid, Revlimid, has demonstrated significant benefits in hematological malignancies, particularly in myelodysplastic syndrome (MDS) and multiple myeloma (MM). However, it has yet to demonstrate efficacy in solid tumors. In fact, a phase III study in melanoma was suspended in early 2004 due to lack of efficacy. While it is too early to determine Revlimid’s efficacy in RCC, Thalomid’s lack of effectiveness in RCC suggests that Revlimid may also not be as efficacious in RCC as in hematological cancers. Unless Revlimid demonstrates positive data in survival, we believe that it will not be an important treatment option for RCC even if it does eventually gain FDA approval for this indication.

Iressa (Gefitinib; AstraZeneca)

Iressa is a tyrosine kinase inhibitor directed at the epidermal growth factor receptor (EGFR). EGFR activation leads to cell proliferation and promotion of cell invasion and metastasis. Thus, its inhibition yields much potential for the treatment of cancer. In 2003, Iressa became the first EGFR inhibitor to be approved by the FDA, gaining approval for the treatment of non-small cell lung cancer (NSCLC). This approval was surprising given Iressa’s limited efficacy in these patients. Iressa is currently in phase II studies in studies for RCC. Results from two small phase II studies demonstrated that Iressa provided some benefit in stabilizing disease. However, both studies did not show a benefit in PFS or overall survival. Thus, we believe that Iressa has a lower than average likelihood of approval for RCC.

Panitumumab (ABX-EGF; Abgenix)

Panitumumab also targets the EGF receptor, but unlike Iressa and Tarceva, it is a monoclonal antibody. Panitumumab is currently in phase II studies for RCC. Preliminary data from the phase II study were presented at ASCO in 2002 showing a modest benefit in IL-2 refractory RCC patients. Panitumumab was shown to provide disease stabilization in half of the patients. However, PFS data and survival data have not yet been available despite the time lag. Abgenix indicated that the phase II trial which was presented in 2002 is now continuing and more mature data from this study will be available by the end 2005. We are cautious of the Panitumumab’s potential in RCC due to problems encountered while running the trials.

Targretin (Bexarotene; Ligand)

Targretin is a synthethic retinoid that selectively activates Retinoid X Receptors (RXRs). RXRs are thought to play an important role in regulating cell differentiation and proliferation. Targretin has already received FDA approval for Cutaneous T cell lymphoma (CTCL), a type of non-hodgkin’s lymphoma, and is currently in phase II studies for RCC.

While results from an early phase II study suggest that Targretin in combination with IFNa may be efficacious in RCC, we are cautious of the drug’s efficacy. Targretin has yet to demonstrate a survival advantage in any clinical setting (even in CTCL) and in fact, its treatment resulted in a worse outcome in two large clinical trials in patients with NSCLC. Thus, we do not have a favorable view of this drug and we do not expect it to receive FDA approval in the near future.

Genasense (Oblimersen; Genta)

Genasense is an antisense oligonucleotide that inhibits the Bcl-2 mRNA, and thus inhibits the formation of Bcl-2 protein. Bcl-2 is an anti-apoptotic factor that protects cells from programmed cell death. Genesense was designed to enhance the effectiveness of cell-killing agents, such as chemotherapy. The addition of Genasense to these agents is thought to enhance the cell killing properties of these agents, and given the resistant nature of RCC tumors to chemotherapy Genasense may have an important role in RCC. However, the effectiveness of Genasense is questionable since it has yet to demonstrate a survival benefit in any cancer setting for which it has been tested, although it has been shown to enhance the response rate. Given Genasense’s track record, we feel that the drug is unlikely to demonstrate a survival benefit (either in progression free survival or overall survival) in the RCC setting and therefore, is unlikely to receive FDA approval.

Velcade (Bortezomib; Millenium)

Velcade is a proteasome inhibitor. Proteasomes are a class of proteins that are found in every cell which are involved in the destruction of unwanted proteins. These unwanted proteins may include those regulating cell growth and survival. Velcade has demonstrated efficacy in multiple myeloma for which it received FDA approval in 2003. Velcade is currently in early phase II studies for RCC and it is too early to determine how efficacious it is in this setting. However, in early 2004, Millenium announced that RCC is not a priority for Velcade and thus we feel the drug may be severely delayed, if not suspended, for this indication. Given the number of drugs set to be approved for RCC in the next few years, and Velcade’s well documented toxicity, we feel it unlikely that Velcade will be competitive in RCC even if it does eventually receive FDA approval.

REVENUE MODEL UPDATES

We have updated and added 13 revenue models within the renal cell cancer market. Proleukin (Aldesleukin; Chiron)
Proleukin (IL-2) is currently the only FDA approved treatment for RCC. Proleukin reached $129 million in sales in 2004 and $67 million in the first two quarters of 2005, of which approximately 60% of sales came from renal cell cancer. Due to the drug’s severe side effects and the likely approval of newer, efficacious and less toxic therapies, we expect Proleukin’s revenue to decline going forward. We project 5 and 10-year U.S. revenues of $19.5 million and $20.9 million, with 5 and 10-year worldwide revenues of $37.2 million and $39.3 million.

Sutent (SU-11248; Pfizer)
Based on phase II data, we expect Sutent to be the market leader for second-line RCC once approved in early 2006. We also predict that Sutent will be used off-label in the front-line setting, particularly in poor performance status patients who are unable to tolerate Proleukin. As such we project 5 and 10-year U.S. revenues of $144.5 million and $170.9 million, with 5 and 10-year worldwide revenues of $349.7 million and $407.3 million.

Sorafenib (BAY 43-9006; Onyx)
Like Sutent, Sorafenib is expected to be approved in early 2006. We expect Sorafenib to be widely used in the second-line setting once approved, but to be outdone by Sutent. Nonetheless, like Sutent, we expect a quick uptake of the drug in the second-line setting and some off-label use in the first-line setting in patients who are unable to tolerate Proleukin. We project 5 and 10-year U.S. revenues of $44.2 million and $52.4 million, with 5 and 10-year worldwide revenues of $107.3 million and $124.8 million.

Avastin (Bevacizumab; Genentech)
Avastin is a blockbuster drug that is expected to be widely disseminated in numerous oncology settings. However, in RCC, we expect a more limited uptake due to the drug’s I.V. infusion delivery and the potential for more severe side-effects (compared to Sutent and Sorafenib). We also predict Avastin will be used in combination with Tarceva starting in 2011, which will lead to greater usage of Avastin. Avastin's high price makes it the highest revenue generator in the RCC market. We project 5 and 10-year U.S. revenues of $63.7 million and $288.8 million, with 5 and 10-year worldwide revenues of $154.5 million and $688.0 million.

Temsirolimus (CCI-779; Wyeth)
Due to Temsirolimus’ mode of delivery and its toxicity profile, we expect the drug to face stiff competition from the tyrosine kinase inhibitors and Avastin. Out of these 4 drugs in late stage development, we expect Temsirolimus to be used the least, most likely in patients who have failed the tyrosine kinase inhibitors. We project 5 and 10-year U.S. revenues of $40.1 million and $47.4 million, with 5 and 10-year worldwide revenues of $97.2 million and $113.0 million.

Thalomid (Thalidomide; Celgene)
Thalomid has shown disappointing results in RCC and as such, we see little uptake of the drug. We project 5 and 10-year U.S. revenues of $4.2 million and $5.0 million, with 5 and 10-year worldwide revenues of $9.6 million and $12.0 million.

Revlimid (Lenalidomide; Celgene)
While Revlimid has demonstrated potent efficacy in blood cancers, it has yet to demonstrate much benefit in solid tumors. Similar to Thalomid, we expect limited use of Revlimid in RCC. We project 5 and 10-year U.S. revenues of $5.1 million and $6.0 million, with 5 and 10-year worldwide revenues of $5.1 million and $14.3 million.

Genasense (Oblimersen; Genta)
Given Genasense’s track record in other solid tumors, we expect the drug to have little efficacy in RCC and therefore little utility in this indication. We project 5 and 10-year U.S. revenues of $0.0 and $1.5 million, with 5 and 10-year worldwide revenues of $0.0 and $3.6 million.

Iressa (Gefitinib; AstraZeneca)
Iressa has yet to demonstrate a survival benefit in any cancer setting thus far. We do not expect the drug to make an impact in RCC. We project 5 and 10-year U.S. revenues of $0.0 and $0.9 million, with 5 and 10-year worldwide revenues of $0.0 and $2.2 million.

Panitumumab (ABX-EGF; Abgenix)
Panitumumab has only demonstrated a modest in RCC thus far and as such, we expect a limited uptake of the drug in this setting. We project 5 and 10-year U.S. revenues of $0.0 and $1.1 million, with 5 and 10-year worldwide revenues of $0.0 and $2.7 million.

Tarceva (Erlotinib; OSI)
Tarceva has only been studied in combination with Avastin in RCC. While the phase II study of this combination has shown promising results, OSI has indicated that RCC is not a priority for Tarceva at the present time. Therefore, we expect a significant delay of the drug to the RCC market, by which time, it may be too late for Tarceva to make an impact. We project 5 and 10-year U.S. revenues of $0.0 and $47.3 million, with 5 and 10-year worldwide revenues of $0.0 and $112.7 million.

Targretin (Bexarotene; Ligand)
While phase II results of Targretin in RCC have been encouraging, we are very discouraged by the drug’s efficacy in lung cancer. Furthermore, Targretin has yet to demonstrate a survival benefit in any cancer setting and as such, we expect little utility of the drug in RCC. We project 5 and 10-year U.S. revenues of $0.0 and $2.2 million, with 5 and 10-year worldwide revenues of $0.0 and $5.3 million.

Velcade (Bortezomib; Millenium)
Millenium recently announced that RCC is not a priority for Velcade, and similar to Tarceva, we expect that if Velcade does get approved for RCC, it may enter the market too late to compete effectively. We project 5 and 10-year U.S. revenues of $0.0 and $4.8 million, with 5 and 10-year worldwide revenues of $0.0 and $11.5 million.

EVALUATED COMPANY UPDATES

Onyx Pharmaceuticals (ONXX)
We value Onyx’s 5 and 10-year pipeline at $35.97/share and $20.03/share.

Genentech (DNA)
We value Genentech’s 5 and 10-year pipeline at $75.17/share and $39.47/share.

Celgene (CELG)
We value Celgene’s 5 and 10-year pipeline at $46.17/share and $34.86/share.

Abgenix (ABGX)
We value Abgenix’s 5 and 10-year pipeline at $8.09/share and $12.91/share.

OSI Pharmaceuticals (OSIP)
We value OSI’s 5 and 10-year pipeline at $57.71/share and $44.31/share.

Ligand Pharmaceuticals (LGNDE)
We value Ligand’s 5 and 10-year pipeline at $15.51/share and $14.21/share.

Millennium Pharmaceuticals (MLNM)
We value Millennium’s 5 and 10-year pipeline at $16.15/share and $12.01/share.