Agouron Stock Falls 22% as Firm Ends Pact With Roche
Shares of Agouron Pharmaceuticals Inc. fell 22% Tuesday after the La Jolla-based biotechnology company said it will end a collaboration with Swiss firm Roche Holding on a drug to treat certain types of cancer.
Agouron shares fell $8.50 to close at $31 on Nasdaq.
Agouron’s stock had risen 46% over the last year on favorable prospects for its new AIDS drug, Viracept. The cancer drug, Thymitaq, was its next candidate for approval and sale. It was being developed to treat cancer of the liver, head and neck.
“I’m not sure when we’re going to see the next driver for the stock after Viracept sales,” said Anthony Butler, an analyst with Lehman Bros.
Butler, who wouldn’t disclose his rating on Agouron, said the drop in the company’s stock could be an overreaction.
Viracept’s 1998 sales could exceed $350 million, while Thymitaq’s potential market for 2000 could have been about $25 million, said Jay Silverman, an analyst with BancAmerica Robertson Stephens.
“Thymitaq wasn’t the reason to hold this stock,” Silverman said. “Agouron has one of the most successful AIDS drugs in Viracept. That’s going to drive sales and earnings over the next several years.”
Agouron expects to start sales of Viracept in Europe in 1998, with Roche as a partner. The drug was developed in collaboration with Japan Tobacco Inc.’s pharmaceutical unit.
Viracept was the first product for 13-year-old Agouron. Working alone in the U.S., Agouron has been able to steal sales from much larger rivals such as Merck & Co., which makes a similar drug, Crixivan.
Agouron said it will focus on developing two other new cancer treatments. The company said it decided to stop work on Thymitaq, also known as nolatrexed dihydrochloride, after studies indicated it wasn’t superior to other treatments for liver, head and neck cancer.
Roche will make an undisclosed final payment to Agouron, and Agouron will regain all marketing rights to the cancer drug previously within the scope of the June 1996 collaboration agreement.
Agouron said it doesn’t foresee any significant impact on financial results as a result of ending the agreement with the Swiss drug maker.
The Basel, Switzerland-based conglomerate manufactures drugs and vitamins, as well as fragrances, diagnostic equipment and liquid crystals.
Roche’s American depositary receipts rose 25 cents to $90.75 in over-the-counter trading.
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Agouron Pharmaceuticals Inc.
The La Jolla biotech firm’s shares tumbled after it said it will end a collaboration with Roche Holding on a drug to treat cancer of the liver, neck and head. Agouron has a successful AIDS treatment drug, Viracept, on the market. The proposed cancer drug, Thymitaq, was to be Agouron’s next major drug. Its shares fell $8.50 to $31. Less than three months ago, shares traded as high as $56.50.
Tuesday close: $31.00
Source: Bloomberg News
