Genentech, Doctors Now See "Eye To Eye" On Avastin
Genentech today has essentially backed down from a proposed crackdown on doctors' use of the cancer drug Avastin instead of the way more expensive Lucentis. The drugs are used to treat age-related macular degeneration (AMD, for short), which is the leading cause of blindness in adults.
Because the Avastin molecule is similar to the one used to make Lucentis, eye specialists have been substituting little, broken down doses of Avastin for Lucentis in order to save money. That's good for patients and insurers, but bad for Genentech and its investors.
A couple of months ago Genentech said it would take steps to stop the practice at the end of November, then it pushed back the date it would take effect to New Year's Day and then today it backpedaled and said, "Never mind." You can read the company's press release here.
Genentech cautions that Avastin has not been clinically proven safe and effective for AMD and that handling it could potentially cause harmful contamination. The federal government is paying for an Avastin vs. Lucentis study.
Simultaneously, the American Academy of Opthalmology and the American Society of Retina Specialists put out a press release calling the compromise solution "a significant step forward." You'd think that this news would have been met with disappointment on Wall Street because it means Genentech will not be selling as much Lucentis as a premium. But on an "up" market day, DNA shares finished nearly one percent higher.
But the stock may have also gotten a boost from Roche, which owns a majority stake in DNA, winning European approval of Avastin for kidney cancer and investors expressing optimism that Genentech will eventually be able to do the same in the U.S.
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