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Amgen Stock Tumbles After Trial For Cancer Drug Is Halted

CNBC.com
Friday, 23 Mar 2007 | 2:05 PM ET

Amgen's stock fell sharply after the company said it had discontinued a key clinical trial of its drug Vectibix in combination with other drugs as an initial treatment for colon cancer.

The report helped boost shares of drugmakers such as ImClone Systems, which makes a competing drug Erbitux.

Amgen, the world's largest biotechnology company, said an interim analysis of the trial found that patients treated only with chemotherapy and Avastin, a biologic cancer drug sold by Genentech , had a better chance of survival than patients who also received Vectibix.

'Increased Toxicity'

"Unfortunately, it appears that adding Vectibix to Avastin, when used in combination with oxaliplatin- or irinotecan-based chemotherapy, increased toxicity, without improving efficacy," Roger Perlmutter, executive vice president of research and development at Amgen, said.

Amgen said the decision to discontinue the trial was based on a preliminary review of data from a pre-planned interim analysis, which revealed a statistically significant difference in progression-free survival in favor of the control arm.

Genentech's president of product development, Dr. Susan Desmond-Hellmann, said in an interview with CNBC on Friday afternoon that combination use of Avastin as a first-line treatment of colon cancer is the "gold standard" and is proven to be safe and effective.

"The addition of a fourth drug seemed to add harm, according to what we know," Desmond-Hellman told CNBC. "I have not seen the study results but in multiple other trials, Avastin in combination with other agents, including Erbitux, has not shown surprising safety signals, so we await seeing the data."

Credit Suisse analyst Michael Aberman said the failed trial "raises questions about Vectibix's commercial opportunity" and ImClone's Erbitux now has "a tremendous marketing advantage."

"We believe that this trial was flawed from the outset and question management's responsibility for the same," said Aberman, who cut the price target on the stock to $54 from $58.

However, the analyst said the potential approval and subsequent launch of a promising drug made by Roche could cause Amgen shares to drop to the $40s.

Shares of ImClone jumped more than 12% on Friday as a number of other analysts projected higher Erbitux sales. ImClone markets the drug with Bristol-Myers Squibb.

Friedman Billings Ramsey analyst Jim Reddoch said in a research note that the trial failure "puts greater distance between Erbitux and Vectibix."

"We feel more confident in Erbitux's abilities to meet or beat sales expectations after last night's news," Reddoch said in a research note that maintained an "outperform" rating on ImClone stock.

Broader Implications

Merrill Lynch said that even though the negative result came within a context used with other therapies, the implications would be broader.

"We expect Bristol-Myers and ImClone to use this negative outcome to drive significant share for Erbitux in all segments of the market at the expense of Vectibix," analyst Eric Ende said in a research note.

Vectibix is viewed as a key medicine in Amgen's development pipeline, with some analysts predicting eventual sales of as much as $2 billion a year.

The drug was approved last year as a treatment for colon cancer patients whose tumors have spread despite chemotherapy, but future sales growth hinges on its use in patients with earlier-stage cancer.

An unplanned analysis of overall survival also demonstrated a statistically significant difference favoring the group of patients not treated with Vectibix, the company said. Amgen said it will present the full trial results at an upcoming scientific forum.

The company said it is continuing to explore Vectibix as a single biologic combined with chemotherapy in Phase 3 first- and second-line trials.

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