Biotech Shares Fall on Drug News

Shares of EntreMed Inc., OSI Pharmaceuticals Inc. and ImmunoGen Inc. tumbled Monday after the biotechnology companies presented research showing smaller benefits than investors hoped to see from their experimental cancer drugs.

The companies provided the results over the weekend at the American Society of Clinical Oncology, the most closely watched cancer research meeting of the year.

EntreMed (ticker symbol: ENMD) fell $3.95, or 21%, to $15.30 on Monday. OSI fell (OSIP) $3.33, or 7.7%, to $40.22 and ImmunoGen (IMGN) slid $1.07, or 6%, to $16.67.

Research on EntreMed’s Endostatin showed the drug slowed the growth of tumors, but the impact appeared temporary.

“Investors always had this hope and promise that these drugs would have a powerful efficacy based on strong preclinical results,” said Alan Auerbach, an analyst with Wells Fargo Van Kasper. “Now you’re starting to see the gap between perception and reality.”

A study of OSI Pharmaceuticals’ drug for treating patients with head-and-neck cancer showed the treatment was less effective than suggested by preliminary data published last month.

Researchers found tumors shrank by at least half in only about 6% of 124 patients with head and neck cancer who took the drug.

“Six percent is nothing. I doubt they will go forward with head and neck,” said Mathew Blackman, an analyst with Northern Trust, which owns shares in OSI.

Meanwhile, research from early human tests on ImmunoGen’s huC242-DM1-408075 for the treatment of colorectal, pancreatic and some non-small-cell lung cancers showed the treatment was safe.

But the study was not intended to show whether the drug is effective, and some investors have grown impatient for this data as ImmunoGen faces competition from companies developing similar treatments, said Lance Willsey, who runs a biotechnology fund for DCF Capital.

“Their clinical lead time is diminishing over time because other things are coming on their heels,” Willsey said.