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by Richard Daverman, PhD
Centient Biotech Investor



Biotech took a double hit today when both of its two biggest companies traded lower by more than 4%. Amgen (AMGN) was off on very disappointing news about a Vectibix drug trial, and Genentech (DNA), with one week left in the quarter, warned the investment community to expect flat revenues for its first quarter.

The rest of biotech seemed to be in moderately good shape. But the combined force of these two declines, given that they take place in the companies with the biggest market capitalizations in biotech (by far), pushed the Centient Biotech 200™ lower on a day when most other indexes are doing well. The CBT 200™ was down just over 1%.

The Amgen news came from a trial that was administering Vectibix as a first-line treatment to patients with colorectal cancer. Vectibix won FDA approval last September as a second-line treatment for colorectal cancer in patients with metastatic disease that expresses the epidermal growth factor receptor (EGFr). In this Phase IIIb trial, Vectibix was given as an adjunct to Avastin from Genentech, which is approved for first-line use, and chemotherapy.

In an interim analysis, conducted after 231 events (death or disease progression), the data committee discovered that the results were worse in the Vectibix arm than the comparison cohort, which received Avastin and chemotherapy by themselves. The control arm experienced a statistically significant better result in progression-free survival. Normally, a negative result shows that the drug provided no benefit, but these data showed the drug had an adverse effect.

Amgen will contact all physicians giving the drug to patients in this trial and ask them to discontinue use of Vectibix.

The announcement had a positive effect on ImClone (IMCL), whose Erbitux competes with Vectibix as a second-line treatment for colorectal cancer.

The goal of the Amgen trial was to give Vectibix a leg up as a first-line treatment for colorectal cancer. Amgen has Vectibix in a Phase III trial for first-line use, administered with chemotherapy, but without Avastin, a trial that is continuing. Amgen did say, however, that it will re-evaluate the data for the drug in all of its studies, given the negative results.

Genentech, meanwhile, told analysts that first-quarter US sales will be even with the numbers in the last quarter of 2006, or about $2.05 billion. During Q4, total sales for Genentech were $2.24 billion, and analysts expected total sales to rise to $2.76 billion in Q1 of 2007. So the new numbers represent a considerable shortfall over what analysts were expecting.

To sweeten the pie, Genentech also said it expects a higher number of products in its pipeline through 2010. Genentech now projects that it will have 30 molecules in development by 2010, a 50% increase over earlier estimates. Plus, the company reiterated its expectation that earnings per share would achieve a growth rate of 25%, compounded annually.

Amgen moved down $2.69 to $57.77, a loss of 4.4%, and Genentech was off by $3.55 at $81.73, a decline of 4.2%. ImClone, on the other hand, rose $3.82 to $37.69, an 11.3% jump.



Disclosure: Centient management holds a position in Gententech shares and does consulting work for Genentech.

Source: CentientInvestor.com



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