Outlook Is Pared for Genentech Eye Drug

Ophthalmologists are using Genentech Inc.’s cancer drug Avastin to treat a major cause of blindness, making the outlook for the company’s experimental eye drug Lucentis less rosy, an analyst said Monday.

Genentech, however, said the cancer drug was not designed to be injected into the eye and there were significant risks attached to using it that way.

The company’s shares fell 3.8%, or $3.28, to $82.55.

“Positive clinical experience with Avastin and its low cost ($40 to $75 per injection) should enable the drug to rapidly capture and maintain significant share” in the market to treat the “wet” form of age-related macular degeneration, SG Cowen analyst Eric Schmidt said in a report.

Genentech said this month that it planned to file in December for U.S. approval of Lucentis as a treatment for the ailment, which is a leading cause of blindness for people over the age of 60.

Both Lucentis and Avastin are antibodies designed to block the formation of blood vessels, but Avastin’s use by ophthalmologists at this stage is mainly an indication of the desperate need by patients for new treatment options, Genentech said.

“I think Genentech will figure out a way to manage the issue before the launch of Lucentis,” said Mike King, an analyst with Rodman & Renshaw.

Avastin, which is approved as an intravenous treatment for colon cancer, has been shown to fight lung and breast cancer and is being tested against a range of other solid tumors.

“Lucentis is a smaller-sized fragment of an antibody that has been modified to increase penetration into the retina,” Genentech spokeswoman Dawn Kalmar said.

SG Cowen reduced its estimate for peak Lucentis sales to $600 million from $1.1 billion and trimmed its long-term earnings estimates for Genentech.