Analysts Upbeat on Drug Outlook
Genentech Inc. shares inched up slightly Tuesday as investors who drove the stock up 45% a day earlier remained convinced that the company’s experimental biotech drug Avastin would become a major cancer treatment.
A dozen analysts stampeded to upgrade their “buy” recommendations for Genentech after it announced Monday that Avastin extended the lives of colon cancer patients in a large clinical trial.
The Food and Drug Administration is expected to approve the drug within a year, analysts said.
The injectable drug could cost $15,000 to $20,000 a year per patient. It would be hugely profitable and a key driver of Genentech’s growth, analysts said, because the company has kept all rights to the medication.
The Medical Technology Stock Letter in Berkeley estimated that Avastin’s annual sales could reach $2 billion for colon cancer alone.
Just two cancer drugs have surpassed the $1-billion-a-year sales mark: the breast cancer treatment Taxol by Bristol Myers-Squibb Co. and Rituxan for non-Hodgkin’s lymphoma, a medication marketed by Genentech and Idec Pharmaceuticals Corp. of San Diego.
Avastin belongs to a class of drugs known as angiogenesis inhibitors, which starve tumors by cutting off their blood flow. Avastin works by neutralizing vascular endothelial growth factor, or VEGF, a protein switch that spurs blood vessel growth.
Genentech said that 400 colon cancer patients who received a combination of Avastin and chemotherapy drugs in the clinical trial lived longer than expected and that the company planned to seek FDA approval to sell the medication.
Patient advocacy groups said they hoped the FDA would give swift approval of the drug for treating colon cancer, a disease that strikes 147,500 American each year.
Kevin Lewis, chairman of the Colon Cancer Alliance in New York, said patients have been calling to find out when they can get the drug.
One concern on the part of some patients is whether Avastin will be effective for those who already have undergone chemotherapy. In the Genentech trial, patients had no prior treatments before receiving the experimental drug.
“There are a lot of questions, and so far we don’t have the answers,” Lewis said.
The early euphoria over Avastin is due in part to indications that the drug appears to have relatively mild side effects compared with chemotherapy, which leaves many patients feeling sicker. Genentech said the only clear side effect in the colon cancer study was hypertension, which can be managed easily with pills.
However, in other human tests, Avastin has caused bleeding in patients with lung cancer. George W. Sledge, a researcher at the Indiana University School of Medicine, said that when a large tumor dies, it can leave a hole that results in bleeding in the affected organ. “That isn’t good when it happens in the lung,” he said.
Genentech shares hit a 52-week high Tuesday of $55.51 before closing at $54.99, up 14 cents, on the New York Stock Exchange.
Because of the sharp run-up, analysts Alexander Hittle and Craig West of A.G. Edwards & Sons Inc. downgraded Genentech on Tuesday to “hold” from “buy.” In a research note, they cautioned against investing in Genentech, calling Monday’s price jump “excessive in the extreme.”
Genentech did not disclose much data on Avastin but said it would present more information June 1 at the annual meeting of the American Society of Clinical Oncology. Nonetheless, analysts believe that the results are strong enough to ensure rapid FDA approval of Avastin, perhaps by the end of this year.
Though Avastin stands to become the first anti-angiogenesis drug, other similar cancer treatments are being tested.
Several drugs are progressing through late-stage human tests in a field that has been riddled with failure. Close behind Avastin is Neovastat, a kidney cancer drug from Aeterna Laboratories Inc. of Quebec City, Canada. The company’s drug trial is nearing completion, and it expects to issue results by the end of this year.
In addition, Swiss drug maker Novartis has just started the final round of human tests for an angiogenesis inhibitor called PTK787 in colon cancer patients.
And further behind are some five dozen other anti-angiogenesis drugs.
“A fleet of drugs are in human testing, and if Avastin is approved, it will be the flagship,” said William Li, president of the Angiogenesis Foundation.
