Genentech Shares Rise on Rival’s Misfortune
Investors were betting Friday that sales of Genentech Inc.’s lung-cancer drug, Tarceva, would increase after rival AstraZeneca said a major clinical trial showed that its competing medication, Iressa, failed to help patients live longer.
Shares of South San Francisco-based Genentech climbed nearly 6%.
Last month, Genentech and its partner, Melville, N.Y.-based OSI Pharmaceuticals Inc., won U.S. approval to sell Tarceva after showing in a study that the drug helped prolong patient survival.”OSI and Genentech are going to own the market,” Sven Borho, a partner at Orbimed Advisors, which owns shares in both firms, told Bloomberg News. “Iressa is dead.”
Genentech shares rose $2.87 to $51.36 on the New York Stock Exchange. OSI soared $21.28, or 45%, to $68.38 on Nasdaq. Analysts said OSI’s stock got a bigger boost because the smaller company was more dependent on the success of Tarceva than was Genentech, the world’s second-largest biotechnology company.
AstraZeneca Chief Executive Tom McKillop said he did not know if Iressa would be pulled from the market. But he said his company would stop marketing the drug until the Food and Drug Administration made a decision. The medication accounted for $309 million of AstraZeneca’s $15.6 billion in sales in the first nine months of the year.
“We were expecting more from Iressa and thought it would be a close fight between Tarceva and Iressa,” said Eric Bernhardt of Clariden Bank in Zurich, which holds AstraZeneca shares. “It’s a big setback. It shows this product really has a problem.”
Genentech and OSI are charging wholesalers about $2,026 for a 30-day supply of Tarceva, a 25% premium over Iressa. Now, Genentech and OSI may raise the price, Orbimed Advisors’ Borho said.
“They are the only game in town,” Borho said.
Genentech was noncommittal, however.
“It would be premature to comment on a potential price increase,” Genentech spokeswoman Kristina Becker said Friday. “We’re just glad there’s an option out there for patients.”
Genentech, which doesn’t do consumer advertising, has begun advertising the drug to doctors, Becker said.
Tarceva and Iressa, both pills, belong to a new class of cancer medicines called epidermal growth factor receptor inhibitors. The drugs work by blocking a signal that tells cancer cells to grow.
The FDA cleared Tarceva for use in November. Genentech said the once-daily pill was approved as a second or third treatment for patients with advanced lung cancer.
Patients who received Tarceva had a median survival of 6.7 months, two months more than those in the placebo group, according to a study conducted by the National Cancer Institute of Canada. Researchers tested the medicine in 731 patients and presented the results at a medical meeting in June.
