Inclusion Criteria:

• Subjects must have histologically or cytologically confirmed adenocarcinoma of the breast with locally recurrent or metastatic disease. Locally recurrent disease must not be amenable to resection with curative intent.
• HER2-positive by FISH, CISH, or IHC 3+
• ECOG performance status 0 or 1
• Left ventricular ejection fraction greater than or equal to institutional lower limit of normal
• Adequate laboratory studies (hematological, chemistries and urinalysis)
• Life expectancy greater than or equal to 3 months
• Cohort A only:
• Subjects must be either trastuzumab naïve or have had prior trastuzumab in the adjuvant setting only
• Subjects must not have had a clinically significant drop in cardiac function during a prior exposure to trastuzumab
• Subjects must have had no prior lapatinib therapy
• At least 3 weeks from enrollment since prior chemotherapeutic agents, including taxanes, in the neoadjuvant or adjuvant setting
• At least 3 months from enrollment since prior trastuzumab in the neoadjuvant or adjuvant setting
• Cohort B only:
• Subjects must have failed (due to disease progression or toxicity) trastuzumab in the first-line metastatic setting. Trastuzumab must be discontinued for at least 3 weeks prior to enrollment
• Subjects must have received prior chemotherapy as adjuvant therapy or for metastatic disease
• Prior chemotherapy treatment must be discontinued for at least 3 weeks prior to enrollment
• Subjects must have had no prior capecitabine
• Subjects must have had no prior lapatinib

Exclusion Criteria:

• Inflammatory breast cancer
• Current or prior history of central nervous system metastasis
• Clinically significant cardiovascular disease
• Concurrent or prior (within 1 week before enrollment) anticoagulation therapy, excluding aspirin and anti-platelet agents. The concurrent use of low molecular weight heparin or low dose warfarin (ie, less than or equal to 1 mg daily) for prophylaxis against thrombosis is acceptable while on study
• Subjects with a history of prior malignancy, except:
• Malignancy treated with curative intent and with no known active disease present for greater than or equal to 3 years before enrollment and felt to be at low risk for recurrence by treating physician
• Adequately treated non-melanomatous skin cancer or lentigo maligna without evidence of disease
• Adequately treated cervical carcinoma in situ without evidence of disease
• Subjects with interstitial pulmonary disease
• For Cohort B only:
• Current or prior history of long QT syndrome
• Baseline ECG report of QTc interval of > 480 milliseconds
• Severe chronic liver disease (Child Pugh C)