Genentech, Amgen And The Fight Against Breast Cancer


Although the stock movement this morning is not reflecting it, the latest developments in Amgen and Genentech's efforts to come up with new treatments for breast cancer are emblematic of the opposite direction these California-based biotech behemoths and rivals are headed.

After the closing bell Friday Amgen announced that its drug Aranesp appears to have caused more deaths and tumors to grow in a subset of breast cancer patients versus those who did not get the drug. Aranesp is the anemia treatment that is already under tremendous pressure over safety and insurance reimbursement issues and has caused AMGN shares to fall about $25 this year. In early trading this morning, the stock is down once again although it has already trimmed its loss.

But Genentech shares are down even more right now as investors appear to be nervous about the tone of the Food and Drug Administration documents posted this morning on the agency's web site regarding DNA's Avastin for breast cancer. The company goes before an FDA Advisory Committee on Wednesday seeking a recommendation for approval of the colon and lung cancer drug for breast cancer as well.

The FDA typically puts briefing papers for its outside panel meetings on its web site two days ahead of the event. You can find them here. Look under the "Oncologic Drugs Advisory Committee". They're usually very thick, heavy and dense, but analysts and investors use the information to try to hedge which way the panel might vote. So, DNA shares are lower based on the agency reiterating a concern that Avastin was not shown to extend lives in breast cancer patients, only to delay the time that it takes for the disease to progress. Keep in mind, though, that advisory committee behavior is extremely unpredictable.

Ahead of the meeting analysts are putting out a bunch of research notes to clients. There's a huge debate on the Street over whether Genentech's data are robust enough to get a favorable recommendation and win FDA approval of Avastin for breast cancer by the end of next February.

The disagreement is over whether the FDA will demand evidence the drug extends lives or if a delay in tumor progression is sufficient. It's such a hot topic that Deutsche Bank biotech analyst Jenn Chao is hosting a conference call for clients this afternoon to talk about it.

If Genentech is successful, Bernstein biotech analyst Geoffrey Porges thinks Avastin revenue for breast cancer could quadruple by 2012. (Many doctors are already using the drug "off label." In other words, treating breast cancer patients with Avastin based on test results even though the FDA hasn't approved it for that use.)

A part of Bernstein owns at least one percent of DNA. Porges thinks the FDA says, "Yes". But Wachovia's George Farmer says, "…chances are high…that the (Advisory) Committee may recommend against Avastin approval…" Wachovia wants to bank Genentech.

The meeting starts Wednesday morning. Look for a panel vote in the late afternoon probably after the closing bell.

Questions? Comments?