Shares in US biotechnology giant Genentech, which is majority-owned by Swiss drug major Roche, stumbled for the second day in a row after SG Cowen analyst Eric Schmidt said that ophthalmologists are using the firm’s cancer drug Avastin (bevacizumab) ‘off-label’ to treat age-related macular degeneration, thereby hampering the outlook for the group’s eye drug candidate Lucentis (ranibizumab).
As a result, Mr Schmidt has cut his sales estimates for Lucentis as well as his earnings forecasts for the company, leading to a 3.8% drop in Genentech’s share price to $82.55 on September 26. On Friday September 23, the stock slipped just under 2% on news that enrollment in a Phase II trial of Avastin in ovarian cancer trial was halted on a higher-than-expected rate of gastrointestinal perforations [[26/09/05c]].
Avastin, which targets vascular endothelial growth factor and is therefore similar to Lucentis in its mode of action, has been classed by some industry observers as a “pipeline in a product,” due to its potential for a wide range of indications. It is currently approved as an intravenous treatment for colon cancer, but has shown strong promise for the treatment of lung and breast cancer as well as a range of other solid tumors.
However, an increasing number of eye doctors seem to be prescribing the drug as an AMD therapy, although it is not approved for this condition. Furthermore, according to Genentech, significant risks are associated with injecting Avastin into the eye, as it is not designed for this purpose.
But according to Mr Schmidt, "Positive clinical experience with Avastin and its low cost ($40 to $75 per injection) should enable the drug to rapidly capture and maintain significant share in the wet AMD market."
Encouraging one-year trial results presented earlier this year [[25/05/05a]], substantially boosted Lucentis’ reputation, leading it to being considered as the main threat to Pfizer’s AMD drug Macugen (pegaptanib), even though it is unlikely to hit the market before 2007. In light of Avastin’s unapproved use for this condition, however, Mr Schmidt has lowered his sales forecasts for Lucentis to: $200 million from $280 million for 2007; $475 million from $625 million for 2008; $600 million from $835 million for 2009; and $625 million from $1.1 billion for 2010. Consequently, respective earnings per share have been reduced to: $2.25 from $2.30; $2.70 from $2.80; $3.30 from $3.40; and $3.75 from $3.95.