AstraZeneca cancer drug 'faces hurdles'

Iressa, Astrazeneca's controversial cancer drug, which was approved for use in the US on Monday, faces tough competitive and medical hurdles if it is to become a significant contributor to the drug company's profits, analysts warned yesterday.

The market gave a cool response to news of the approval and some investors clearly took the opportunity to take profits on AstraZeneca shares. The stock rallied more than 5 per cent in early trading, but fell back to close just 52p higher at 2,560p.

The drug, which has been linked to 246 deaths in Japan since its launch there last summer, will be used only by US patients whose lung cancer has not responded to any other therapy.

Analysts' scepticism is founded on the fact that AstraZeneca has not yet proved Iressa prolongs the life of terminal cancer patients, only that it significantly reduces the size of tumours in 10 per cent of cases. It will now have to show improved survival rates in new trials.

There are also doubts over whether it will be possible to extend the use of the drug to earlier stages of lung cancer, which would make it a much bigger seller. Iressa has failed to show any significant benefit in one 1,000-patient trial of its use in combination with chemotherapy.

Rivals are developing similar products for launch in the next 18 months and the competition will be fierce to show whose drugs are most effective. Roche's Tarceva in particular has showed positive trial data.

Forecasts of peak sales for Iressa were barely changed after Monday's limited approval by the US Food & Drug Administration, with Lehman Brothers calculating Iressa will sell $350m a year – far from the $1bn that would classify it as a blockbuster drug.

The FDA ruled that Iressa must warn of the dangers of side-effects, which include a form of pneumonia that has killed 246 Iressa users in Japan. It was approved for use in Australia last week.