GlaxoSmithKline and Personalized Medicine Take Another Leap Forward

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Earlier this month, the FDA granted an accelerated approval to GlaxoSmithKline (NYSE: GSK  )  for Mekinist and Tafinlar as an oral combination therapy for treatment of patients with inoperable melanoma. Merck  (NYSE: MRK  ) has a promising new compound that may give it some competition going forward. For now, this relatively straight-forward label expansion holds important lessons for pharmaceutical companies, and investors.

The FDA had already approved Mekinist for patients with BRAF V600E or V600K mutations, and Tafinlar for patients with BRAF V600E only. Although the National Cancer Institute estimates over 920,000 Americans are living with melanoma, this is the first approved combination therapy.

Vertically integrated
Glaxo's recently approved combination therapy requires a positive result from BioMérieux's THxID BRAF Kit. As the number of new medicines with required companion diagnostics continues rising, few companies are better positioned to take advantage of this trend than Roche  (NASDAQOTH: RHHBY  ) . The Swiss giant is the world leader in in vitro diagnostics, and has its eye on personalized medicine. Early last year it won approval for Kadcyla, a late stage breast cancer therapy it developed in partnership with Immunogen(NASDAQ: IMGN  ) . Roche's subsidiary, Ventana, will be providing the companion diagnostic for Kadcyla.

Competition from Merck
Glaxo's melanoma combo-therapy is likely to face competition in the future from Merck's PD-1 immunotherapy lambrolizumab (MK-3475). In November 2013, the company released compelling data. At one year, the overall survival rate was 81%. With numbers like this, it's likely that this therapy will hit the market, and it may hit sooner rather than later. Merck has initiated a rolling submission for lambrolizumab's biologics license application. This means the FDA is reviewing data as it becomes available in an attempt to speed this promising therapy into physician's hands.

Why specific is good
Melanoma is one of the most commonly diagnosed cancers, and about half of all melanoma patients harbor a BRAF mutation. Glaxo's combo therapy was approved fairly quickly based on results from a 162 patient, open-label trial with an objective response endpoint, not years of overall survival data. The drug's genetic specificity played a role in this relatively speedy approval.

As an investor, the advantages of an accelerated review are that...

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