NEWS OF THE WEEK BUSINESS
BIOTECH RALLIES Clinical advances and drug approvals are helping to propel biotech stocks
T
HE PROMISE OF NEW CAN-
cer therapies coming out of last week's American Society of Clinical Oncology (ASCO) meeting in Chicago has helped restore vigor to the biopharma-
CLIMBING Biopharmaceutical stocks outpace broader market C&EN biopharmaceutical index8, weekly close (1992 = 100) 400 r~ 350 Bio index
S^J^s
300
V / NASDAQ"
250 Jan.
Feb.
March 2003
April
May June
a Based on average share prices for Amgen, Biogen, Celera Genomics, Cephalon, Chiron, Cytogen, Genentech, Genzyme, Gilead Sciences, Icos, Medlmmune, Millennium Pharmaceuticals, Protein Design Labs, Vertex Pharmaceuticals, and Xoma. b Reindexed.
ceutical industry. It has also gotten a boost from a spate of new product approvals and generally upbeat earnings reports this year. PHARMACEUTICAL
Genentech and Merck KGaA, the European partner of ImClone Systems, created some excitement at the ASCO meeting. Genentech reported on Phase I I I trials of Avastin, one of a new generation ofantiangiogenesis drugs. In combination with chemotherapy the monoclonal antibody improved survival rates for advanced colorectal cancer patients by 50%. Merck reported on seeing antitumor activity using ImClone's monoclonal antibody Erbitux against colorectal, head, and neck cancers. Merck says the results confirm the value of targeted therapies such as Erbitux, which inhibits cancer cell growth by blocking the epidermal growth factor receptor (EGFR). T h e company plans to apply for European approval this summer. Back in late 2001, FDA's refusal to review ImClone's Erbitux application initiated a chain of events—including a collapse of the company's stock and the res-
BUSINESS
Schering-Plough Awaits Indictment
S
chering-Plough says it expects that an ongoing government probe of its sales, marketing, and clinical trial practices will result in an indictment. Schering-Plough says it has received a letter from the U.S. Attorney's Office for the District of Massachusetts advising the company that its subsidiary, Schering Corp., is the target of a federal grand jury investigation. The company says it "understands that, based on Department of Justice guidelines, receipt of a 'target' letter indicates the government intends to pursue an indictment and believes it has substantial evidence to support that indictment." The probe, announced in November 2002,
centers on four areas: providing remuneration, such as drug samples, clinical trial grants, and other items or services, to managed health care organizations, physicians, and others to induce the purchase of Schering products for which payment was made through federal programs; sale of misbranded or unapproved drugs; submitting false pharmaceutical pricing information to the government; and document destruction and obstruction of justice relating to the government's investigation. Schering says it has implemented changes to its sales, marketing, and clinical trial practices and is continuing to review those practices to ensure compliance with relevant laws and regulations.-WILLIAM STORCK
ignation of its management— that weakened confidence in large collaborative deals. Now, ImClone and its U.S. partner Bristol-Myers Squibb want to discuss Merck's results with FDA. In general, signs fromFDAand its new commissioner are positive. The agency has approved several new drugs already this year, including two for cancer: Millennium Pharmaceuticals' \elcade and AstraZeneca's EGFR-inhibitor Iressa. FDAalso wants to improve the process for developing and evaluating cancer therapies (see page 18). Stock prices have been climbing in response to all the recent good news. Genentech's share price jumped 45%, to $54.85 per share, on May 19 when it released early Avastin results. Following its ASCO presentation, Genentech's shares rose again to trade above $73. And ImClone's stock bolted from around $20 to more than $38 per share last week. The entire biopharmaceutical sector has gained about 40% in market value since mid-April. 'We haven't seen this much positive movement since the genomics bubble in 2 0 0 0 , " says G. Steven Burrill, CEO of the merchant bank Burrill & Co. Early in that year, biotech company stocks briefly skyrocketed as a draft of the human genome was completed. However, there's a significant difference this time, Burrill notes. "This recovery is based on far more than hope and hype—it's based on real products, real revenue streams, and real market sustainability," he says. Biopharmaceutical firms are hoping this is true. With investor interest lagging since mid-2000, the industry has slipped into a period of consolidation and cost-cutting. But one apparent vote of confidence has already emerged; Schroder'Ventures life Sciences is out looking for investments after closing a new $400 million venture-capital fund onJune 4.—AN N THAYER
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C & E N / J U N E 9, 2003
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