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Amgen And Genentech: A Big Biotech Double Play

AMGEN
AMGEN

This is a big week for the world's top-two biotechnology companies and their investors. Amgen goes before an FDA Advisory Committee Thursday about the side effects of its bread-and-butter franchise Aranesp. Today or tomorrow the agency may post the briefing documents for the meeting online.

Analysts and investors use that information to try to figure out how the vote might go--and some trade on it, but FDA panel outcomes are very tricky calls. Then, on Friday Genentech holds an analyst meeting.

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Ahead of the Amgen event, on the front page of the "Marketplace" section of today's "Wall Street Journal" reporter Marilyn Chase does a q. and a. "Boss Talk" piece with CEO Kevin Sharer (subscription required).

The artwork is of a smirking Sharer sporting rolled-up shirtsleeves and a tie with a DNA-strand on it while holding onto a periscope. Most of the excerpted questions and answers are general in nature, but at least a couple of them I think are worth highlighting. Chase asked Sharer about rumors last year (rumors, I might add, persist today) that a big pharma might make a play for AMGN. Sharer insisted that the company has the wherewithal to stand alone but added, "If somebody (is) going to do something hostile, we can't control that." And then Chase asked him if there are any companies whose innovation Sharer admires and he replied, "I have a lot of admiration for Genentech."

Meantime, we're working on a scene-setter piece for the upcoming FDA panel meeting. We requested an on-camera interview with Amgen's head of research and development and were told, through a spokesperson, that he doesn't have the time. We have been offered a telephone "briefing" with a lower-level exec, but that really doesn't work for TV. It's fine for print, web and wire reporters, but in this medium our pen-and-pad is a camera.

Genentech is also grabbing headlines today, but not the type it likes. "The New York Times" is running an editorial titled, "The High Cost of a Cancer Drug" (registration required). It's referring to Genentech's Avastin, which the FDA recently awarded conditional approval for breast cancer. The Times calls Avastin "hugely expensive" and says the basis on which the agency okayed the drug for breast cancer was "modest". Tests showed Avastin delayed the time that the cancer progresses by about five-and-a-half months, but so far studies have not been able to show the drug actually extends life.

The paper points out that Genentech charges about $92,000 a year for Avastin in breast cancer, but that it caps the amount at 55-grand for people who make less than 100-grand. Nonetheless, The Times editorial says, "If this country hopes to get escalating health care costs under control, it will need a way to determine which treatments are worth paying for, and which are not." At previous analyst meetings and on conference calls, Genentech CEO Art Levinson has strongly defended drug pricing.

Finally, late last Friday Amgen and Johnson and Johnson , which sells the anemia drug Procrit, announced that the FDA has updated/revised the black-box or stiff safety warning for the products.The labels now say that the anemia drugs may shorten "overall survival" and shorten the amount of time that passes before tumors start growing again. Analysts today are out with research notes about the label change and speculating about what it means, if anything, for the outcome of the panel meeting on Thursday. In early trading, AMGN shares, which fell to a new low on Friday, are up a fraction.

Questions? Comments? Pharma@cnbc.com

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