Shares of Antigenics Inc, the tiny New York-based biotechnology company which has been developing the vaccine for 11 years, rose as much as 58 percent on the news.
It is the first time the Russian government has approved a drug that was not first cleared in its country of origin, according to Antigenics, and clears the way for the company to start generating revenue from Oncophage later this year.
The company plans to file for approval of the vaccine in Europe by the end of the year, based on a relatively new set of guidelines in that jurisdiction.
Regulators in Russia approved Oncophage based on a subset of data from a late-stage clinical trial that in 2006 failed to show the vaccine delayed the recurrence of kidney cancer.
In the subset of patients -- those whose cancer was least likely to recur following surgery -- Oncophage lengthened the period before which the disease recurred by 45 percent, or an average of 1.8 years, versus those in the control group.
The U.S. Food and Drug Administration does not consider subset analysis a valid measure of success or failure since all manner of sub-populations can be carved out retrospectively. Therefore the vaccine stands little chance of approval in the United States.
"What this company needs to do now is a trial based on their findings with the good prognosis patients," said Dr. Otis Brawley, Chief Medical Officer at the American Cancer Society. "If they have a positive finding at that point then I'm going to be excited, and then I believe it would go before the FDA very quickly."
Conducting such trials, however, could take up to 10 years and vast sums of money, and would take the product's development cycle to 20 years.
"No one in their right mind would authorize that," said Garo Armen, the company's chief executive, in an interview. "Even if we had the money it wouldn't be practical."
SEEKING BROAD APPROVAL
Unlike their U.S. counterparts, Russian regulators have accepted the validity of the subset -- in part because roughly a third of the 604 patients enrolled in the late-stage trial were tested in Russia, and about 70 percent of those fell into the subset of patients whose prognosis following surgery was better than that of the total population.
Antigenics thinks it will be able to win approval elsewhere in the world too.
European regulators can now approve drugs on a conditional basis, meaning companies can market their products while simultaneously conducting additional follow-up of patients or further clinical studies.
If at the end of the trial period the regulatory agency were not satisfied, it could pull the drug from the market.
"Filing in Europe won't be a slam dunk, and will probably be more difficult than in Russia," said Armen, who added that the European review process would likely take 12 to 18 months.
The Russian approval caps years of dogged determination to bring the vaccine to the market despite multiple setbacks and investor skepticism of cancer vaccines in general.
Oncophage is designed to reprogram a patient's immune system to target cancer cells from a specific tumor.
The company takes tissue from a tumor following surgery, extracts proteins it says activate the immune system and then injects the enriched proteins back into the body through the skin.
Unlike a vaccine such as Merck & Co's Gardasil, which is designed to ward off a virus that is believed to cause some 70 percent of cervical cancer cases, Oncophage is designed to target the cancer directly and delay or prevent it from spreading once it has developed.
There are about 16,000 new cases of kidney cancer a year in Russia, according to Armen, of which about a quarter fit the profile of patients most likely to benefit from Oncophage -- a market theoretically worth about $200 million to Antigenics.
The Russian pharmaceuticals market is one of the fastest growing in the world. It will grow by nearly 60 percent to $19.4 billion in 2009 from about $12.3 billion in 2006, the research group DSM estimates.
Armen said he expects the initial sales growth for Oncophage to be "modest."
"We would have to price this probably at the low- to mid-range of other new-generation cancer drugs," Armen said.
Such drugs can cost as much as $60,000 per patient per year, he said.
"How much of that market we achieve depends on how well we iron out reimbursement issues and how effectively we can reach every single patient," Armen said.
Shares of Antigenics were up 62 cents or 25 percent to $3.09 in late afternoon trading on Nasdaq after touching $3.90 earlier in the day, an increase of about 58 percent.