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UPDATE 3-U.S. FDA panel backs Puma Biotech's breast cancer drug; stock soars

(Updates with stock reaction)

WASHINGTON, May 24 (Reuters) - Puma Biotechnology Inc's experimental breast cancer drug reduces the risk of the disease's recurrence and should be approved, a U.S. Food and Drug Administration advisory committee concluded on Wednesday, sending the stock up as much as 30 percent.

The panel voted 12-to-4 in favor of the drug, neratinib, saying its benefits outweighed the risks, though panelists noted that the magnitude of the benefit was modest. The FDA is not obliged to follow the recommendations of its advisory panels, but typically does so.

The difference in the rate of disease-free survival between patients taking neratinib and those taking a placebo after two years was 2.3 percent. Out of 100 women, cancer returned in 5.8 women in the neratinib group, compared with 8.1 in the placebo group.

"The benefit in absolute terms is relatively modest," said Dr. Grzegorz Nowakowski, associate professor of medicine and oncology at the Mayo Clinic in Rochester, Minnesota, adding: "toxicity appears to be manageable." He was on the advisory panel.

The most significant side effect was diarrhea, which affected 95 percent of patients. In 40 percent of cases, the diarrhea was severe. In total, 28 percent of patients discontinued neratinib due to a side effect.

The drug is designed to treat early-stage breast cancer in patients with the HER2 genetic mutation whose tumor has been surgically removed and who have been treated with Roche Holding AG's Herceptin. That drug itself reduces the risk of the disease returning.

Panelists who voted against approval were not convinced the drug would be effective in the overall population for which it would be approved. But some thought it could potentially be beneficial in a subset of patients.

"I felt that the indication as proposed did not suggest a benefit profile for the majority of patients," said Dr. Harold Burstein, a physician at Dana-Farber Cancer Institute and associate professor of medicine at Harvard Medical School. Burstein was also on the panel.

Breast cancer is the most frequently diagnosed cancer in women. HER2-positive breast cancer accounts for 20 percent to 25 percent of breast cancer cases. The current standard of care in patients with early breast cancer is chemotherapy and one year of Herceptin following surgery. About 20 percent of patients with HER2-positive early breast cancer will see their cancer recur within five years following standard treatment.

Puma shares jumped 22.3 percent to $70.75 in afternoon trading after rising as high as $75 earlier in the session. (Reporting by Toni Clarke in Washington; Editing by Andrea Ricci and Jeffrey Benkoe)