Shortly before the closing bell trading in shares of Genentech was halted for news pending. Then, right after the bell the company issued this press releaseannouncing the Food and Drug Administration has granted "accelerated approval" to Genentech's Avastin for use on breast cancer.
The announcement says the FDA will review the results of two more clinical trials before it might grant full approval of the drug and that Genentech will turn in the findings of three other studies.
So, what in the heck is accelerated approval? Here's an explanation from the FDA's web site.I think the most significant part is the last line:
"If the confirmatory trial shows that the drug actually provides a clinical benefit, then the FDA grants traditional approval for the drug. If the confirmatory trial does not show that the drug provides clinical benefit for patients, FDA has regulatory procedures in place that could lead to removing the drug from the market."
Again, based on what's in the Genentech press release it sounds like the FDA will look at two confirmatory trials.
The stock resumed trading after hours and spiked about nine percent. Mark Schoenebaum at Bear Stearns has already sent out a blitz email to clients saying, "We include only very modest growth for Avastin breast cancer sales in our models. We expect the stock to open up $4+ on Monday. Back to you (the firm's clients) after we speak with the company."
We'll be speaking on Monday with the company in a First On CNBC interview with Dr. Susan Desmond-Hellmann, Genentech's President of Product Development and a former practicing oncologist who specialized in breast cancer. That's Monday at 8:30 am ET on "Squawk Box".
Schoenebaum or someone in his household owns DNA shares. As a reminder, he was on CNBC more than a week ago saying there was about a 55 perecent chance, in his opinion, of DNA winning. That was higher than most analysts placing odds. I guess it was a good call.