Luke Burgess here. I'm currently on a mini-vacation in beautiful sunny Myrtle Beach, the land of Harley Davidsons and Shag dancers.
Don't worry… the Lukester won't be dancing anytime soon. The only dancing I'm looking for are the ones you get in the VIP room.
The temperature is a pleasant 75 degrees, but it's humid.
Anyway, I just got off the phone with Brian Hicks. He told me that this was a monumental week… a historic week in the world of biotechnology. In fact, he's calling for another leg in the biotech boom to start right now.
He was telling me that an announcement this week by Genetech was the fulfillment of a prediction he made in 1998 in his old letter, The Cutting Edge.
And that was: Genetech was going to become the best biotech company in the world.
Why?
Because the company's flagship drug, Herceptin, was a breakthrough similar to penicillin.
Here's the skinny:
More than 220,000 women are diagnosed with breast cancer each year in the United States, the most common kind of cancer among women.
And because biotechnology has not caught up with this terrible illness, over 40,000 American women lose their life to breast cancer annually.
Finding a way to treat this awful disease, especially in its early stages, is crucial. Up to this point there was little doctors could do for breast cancer suffers
But now there is new hope.
New studies from the drug are clearing the clouds of despair and despondency showing a significant drop in the rate of cancer recurrence four years after treatment.
The drug administered to women with a common form of early breast cancer shows it can cut the chance of relapse in half.
Experts hail the drug's success vs. breast cancer using words like "revolutionary", "stunning", and "jaw-dropping" to describe results from three new studies, involving more than 3,000 women that were published by the New England Journal of Medicine.
In an accompanying editorial to the studies, Dr. Gabriel Hortobagyi of the University of Texas M.D. Anderson Cancer Center said, "The results are simply stunning,'' suggesting that Herceptin might turn out to be a cancer cure.
The studies found that Herceptin, when used with other chemotherapy after cancer surgery, cut the risk of a relapse in half for women with a common form of breast cancer linked to a growth factor called HER2. This type of breast cancer accounts for about 25% of cases in the United States.
After four years of study follow-up, 15% of women treated with Herceptin plus chemotherapy experienced disease recurrence, compared to 33% of women treated with chemotherapy alone.
In 1998 the FDA approved Herceptin for use women with advanced cases of HER2 breast cancer. But some doctors have started giving it to early cancer patients.
Although Genentech says it doesn't encourage doctors to use drugs for purposes not specifically approved by the FDA, doctors aren't barred from doing so.
Based on the recent tests, Genentech plans to seek FDA approval for the earlier use of Herceptin in the first quarter of 2006 for use in early-stage breast cancer, a far bigger group.
"In 1991, I didn't know that we would cure breast cancer, and in 2005, I'm convinced we have."
– Dr. Jo Anne Zujewski, head of breast cancer therapeutics at the government's National Cancer Institute.
It's no accident that Genentech is in the forefront in the race to treat cancer.
Unlike many of its competitors, the company has solely focused on the science of drug discovery rather than on marketing, acquisitions, or patent-extension battles.
Now there's a lesson here.
Genentech has spent the past 15 years coming up with novel drugs for unmet needs.
In developing cancer drugs, one of the hardest diseases to treat, the company designed its own clinical trials to test whether its drugs could extend life, an unequivocal proof of efficacy.
Most other drug companies merely try to prove that their drugs will shrink tumors.
Genentech's willingness to plod through the science has paid off with Herceptin, which targets a specific genetic flaw.
It would have failed clinical trials if it had been tested on all breast cancer sufferers. But Genentech developed a test for suffers of the HER2 form of breast cancer so it could try the drug only on those with a chance of responding.
Basically the Herceptin targets only diseased cells.
Thinking out of the box, being creative, going against the grain, call it what you will. Companies that conduct original and innovative research and development will be the ones who will flourish.
"The strength of the evidence is so overwhelming at this point that it would be almost impossible to withhold this drug from the appropriate group of patients. I can't imagine the FDA not approving this."
– Dr. Gabriel Hortobagyi a breast cancer specialist at the M.D. Anderson Cancer Center
Back in the 90s, when Genentech was a fraction of the size it is today, Brian Hicks was making the claim that the company was going to become the biggest biotech company in the world and that Herceptin was on path to becoming a blockbuster.
He was right. Since that time the company has grown to tie Amgen (NASDAQ:AMGN) for title as the world's biggest biotech company.
And if the company continues to be creative, which I think they will, they'll leave Amgen in the dust.
Now that the Herceptin studies have been published in the New England Journal of Medicine more doctors are likely to begin using it for early stages of the cancer.
The study results will likely boost Genentech's profits further.
"The results of these studies represent in quantitative terms the largest improvement in outcome for any group of women with breast cancer in 25 years."
– Edward H. Romond, M.D., Associate Professor of Medicine, Division of Hematology/Oncology at the University of Kentucky
In the most recent quarter ending in September, U.S. sales of Herceptin hit $215 million, an increase of about 71% from the third quarter of 2004.
Sequential quarter-over-quarter Herceptin sales increased 41 percent from second quarter 2005 U.S. sales of $152.4 million. 
The company said it now expects 2005 earnings, excluding items, to jump by 50% over 2004, topping its previous estimate of at least a 35% rise.
Archimedes' Lever seeks companies, like Genentech, that have the prudence and gumption to be creative.
These are the companies that will propel America into the next century.
– Luke Burgess
