Rituxan Data a Balm for Biogen Idec Pain
By Robert Steyer
TheStreet.com Staff Reporter
4/6/2005 11:34 AM EDT

Shares of Genentech (DNA:NYSE) and Biogen Idec (BIIB:Nasdaq) rose Wednesday after the companies said their cancer drug Rituxan met goals in a late-stage clinical trial for treating rheumatoid arthritis.

The preliminary test results issued Wednesday at 1:30 a.m. EDT continued Genentech's recent winning streak of good research news and provided a welcome respite from the stream of bad news for Biogen Idec, ever since the company and its partner Elan (ELN:NYSE) pulled their multiple sclerosis drug Tysabri from the market on Feb. 28.

Given the uncertainty over Tysabri, analysts who follow Biogen Idec had said the Rituxan test was the next key event in the Cambridge, Mass.-based company's recovery effort. Rituxan is approved for treating non-Hodgkin's lymphoma, a cancer of the lymph system, which helps protect the body against disease and infection.

Shares of Biogen Idec rose 72 cents, or 2.1%, to $35.49 in early trading Wednesday. Shares of Genentech added 49 cents, or 0.9%, to $57.64.

"These results continue to support the potential of Rituxan as a new therapeutic option for rheumatoid arthritis," said Dr. Burt Adelman, executive vice president for development at Biogen Idec. "We look forward to sharing the data in our discussions with the FDA."

The companies offered no timetable for submitting an application to the Food and Drug Administration. "Further analyses of the data are ongoing and will be submitted for presentation at an upcoming medical meeting." They didn't provide details.

Genentech's comments were a bit more cautious. "These are the first phase III Rituxan data to demonstrate clinical improvement in this difficult-to-treat rheumatoid arthritis patient population," said Dr. Hal Barron, Genentech's senior vice president of development and chief medical officer. "While we are encouraged that the preliminary safety results are similar to previous studies, we recognize the importance of monitoring long-term safety in rheumatoid arthritis patients treated with Rituxan."

Phase III clinical trials represent the last stage of testing before companies submit drug applications to health care regulators. Rituxan was approved by the FDA in November 1997.

Genentech and Biogen Idec market the drug in the U.S. Genentech's majority owner, the Swiss drug company Roche, markets the drug under the brand name MabThera in the rest of the world except Japan.

"While we view these early data as provocative, longer-term data with a fuller efficacy [and] safety/tolerability are required" for assessing Rituxan's potential as a treatment for rheumatoid arthritis, says Jennifer Chao, of Deutsche Bank, in a Wednesday research note.

Chao says Rituxan has "an established safety track record" as a cancer treatment. As she awaits future test results, Chao views Rituxan for rheumatoid arthritis as an "upside to our financial projections." Still, she is keeping a hold rating on Genentech and a sell rating on Biogen Idec. (She doesn't own shares of either company; her firm has a non-investment banking relationship with Genentech, and it is a market maker in Biogen Idec's stock.)

The rheumatoid arthritis test results compared patients taking Rituxan plus methotrexate, a cancer drug that is also used in treating rheumatoid arthritis, with patients taking methotrexate plus a placebo. All patients also received corticosteroids.

Among the 520 patients tested at medical centers in the U.S., Canada and Europe, Rituxan patients achieved statistically significant improvement in symptoms vs. the placebo group after 24 weeks of treatment. Improvement was based on measurements of reduced swelling and tenderness in joints plus other indicators.

Patients enrolled in these clinical trials were those who had first responded inadequately to one or more previous treatments of rheumatoid arthritis drugs known as anti-TNF drugs. These medications include Remicade from Johnson & Johnson (JNJ:NYSE), Humira from Abbott (ABT:NYSE) and Enbrel from Amgen (AMGN:Nasdaq) and Wyeth (WYE:NYSE). The latest test results represent "a significant development for Rituxan for the rheumatoid arthritis market," says Sagient Research Systems, a San Diego firm that tracks biotech companies and their research efforts.

The anti-TNF drugs "have dominated the rheumatoid arthritis market since their introduction, due to their efficacy," the firm says. "However, there is still a significant proportion of rheumatoid arthritis patients who either cannot tolerate or do not respond to anti-TNF antibodies. Thus, Rituxan demonstrating efficacy in this ... population is a significant boost to the drug."

Rheumatoid arthritis is an autoimmune disease that causes inflammation of joints and deterioration of cartilage, bones and tendons. In addition to rheumatoid arthritis, the companies are testing Rituxan as a treatment for other autoimmune diseases such as lupus and multiple sclerosis.