Johnson & Johnson’s (NYSE:JNJ) blockbuster potential oncology drug Zytiga has secured U.S. FDA approval for expanded use in metastatic castration-resistant prostate cancer (mCCRPC) patients (no longer responsive to reduction of androgen/testosterone by chemical or surgical means), who have not yet been treated with chemotherapy but have failed hormone treatment. And to add to the good news is positive opinion from the European Medicines Agency’s (EMA) committee for similar indication. 
Currently, the drug is approved for patients diagnosed with both hormone treatment and chemotherapy. This lends support to our expectation of exponential growth in sales of Zytiga in the near future even as Xtandi, considered the closest rival of Zytiga, received FDA approval about three months ahead of schedule and shown a little survival advantage over Zytiga.  Below we discuss the prospects of Zytiga in detail.
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Zytiga is mainly used to treat prostate cancer, one of the most prevalent cancers in men, with around 250,000 Americans alone being diagnosed with this cancer each year.  While there are many treatment therapies available, most of them are injectables. Before the early approval of Xtandi, Zytiga had the advantage of being the only oral pill. But, the fact that Zytiga had only been approved for use for patients who didn’t respond to prior chemotherapy and hormone treatment meant limited eligible patients and consequently revenues. But, the recent FDA approval opens a bigger market as the drug can now be prescribed to more patients, bringing in additional revenue.
In addition, the EMA committee’s positive opinion also raises the chances of approval in Europe even as EMA is not bound to accept the recommendations of the advisory panel. Further, the FDA approval could guide other countries to take similar action as the drug had shown strong results in increasing survival rates in metastatic prostate cancer patients. The median overall survival of 35.3 months in patients on Zytiga was significantly higher when compared with 30.1 months in patients with placebo.  Riding these expected approvals, we do see a $1.5 billion sales potential for Zytiga. The drug clocked $200 million in sales in 2011, whereas sales zoomed to $700 million in the first nine months of 2012.
There is one rider to our expectations, that is Xtandi. But, we don’t see Xtandi to make a major dent in Zytiga’s potential sales. While in studies Xtandi showed a survival advantage (extending patients’ lives over a control group) of 5 months compared with JNJ’s 4.6 months or nearly 10 days, the difference is not statistically significant.  Further, Zytiga still has the cost advantage over its rival. While Zytiga currently costs about $5,500 per month, Xtandi is priced at $7,450 for a month’s dose. Notes:
- U.S. FDA Approves Expanded ZYTIGA® Indication For Treatment Of Metastatic Castration-Resistant Prostate Cancer, JNJ New Release, Dec 10 2012 [↩]
- New Drug For Prostate Cancer Gets F.D.A. Nod, NYtimes, Aug 31 2012 [↩] [↩]
- Prostrate Cancer, cancer.org [↩]
- UPDATE: FDA Approves J&J’s Zytiga for Hard-to-Treat Prostate Cancer, Nasdaq, Dec 10 2012 [↩]
- J&J’s Zytiga gets early challenge from Medivation’s new pill, FiercePharma, Sep 4, 2012 [↩]