Novartis stock surged Monday after a panel found the company's treatment significantly reduced the risk of relapse in patients with early-stage breast cancer.
An independent panel of experts viewed the full results and said Novartis could stop the study. The combination of Novartis' Kisqali and endocrine therapy met the goal of the study after three years.
Evercore ISI analyst Umer Raffat says the study sets up an interesting battle between Novartis and Eli Lilly. Lilly makes a treatment for early-stage breast cancer called Verzenio. It uses the same mechanism as Kisqali. But Novartis is going after a wider population. The drugs also have different dosing schedules and there are trade-offs in side effects between the two.
"This will be an interesting interplay," Raffat said in a report to clients, noting Verzenio accounts for 20% of Lilly's earnings per share now. Verzenio is also Lilly's second-biggest growth driver, expected to add $1 billion in sales this year.
On today's stock market, Novartis stock jumped 8% and ended the regular session at 90.28. Further, Lilly shares dropped 0.5% to 334.60.
Novartis Stock Retakes 50-Day Line
Novartis said its Kisqali-containing combination met the study's goal: an improvement in invasive disease-free survival. This means the regimen led to an improvement in the number of women alive and free of any breast cancer at the end of the study. That pushed Novartis stock well above its 50-day moving average for the first time since late January, according to MarketSmith.com.
The results offer promise for patients with HR positive and HER2 negative breast cancer. Many receive only endocrine therapy and 30%-60% are at risk of relapse.
"While most patients are diagnosed and treated early with the aim to cure breast cancer, the risk of cancer returning, often as metastatic disease, peaks within three years after diagnosis, but never goes away completely," Dennis Slamon, lead investigator for Novartis' study, said in a written statement.
Patients need new options that don't disrupt their quality of life, he added.
Meanwhile, the news pushed Novartis stock closer to a buy point at 93.41 out of a flat base.
Competition Between Novartis, Lilly
Evercore's Raffat says Novartis is going after a broader group of early-stage breast cancer patients than Lilly — roughly two to three times the market Verzenio currently targets.
Safety will be key. In one of Lilly's studies, 84% of Verzenio recipients experienced diarrhea. Raffat believes Novartis' Kisqali may have resulted in a much lower rate of diarrhea.
But Kisqali likely leads to twice the rate of neutropenia as Lilly's Verzenio, he said. Neutropenia is a drop-off in specific white blood cells. Patients with neutropenia have an increased risk of developing an infection.
Raffat kept his in-line rating on Eli Lilly stock, but didn't list a rating for Novartis stock.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
