Healthy Skepticism Library item: 7109

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Publication type: news

Ahead of the Bell: Genentech, Biogen: Analysts See Little Impact on Genentech and Biogen From Drug Related Death Disclosure
Yahoo Finance 2006 Dec 19
http://biz.yahoo.com/ap/061219/biogen_ahead_of_the_bell.html?.v=1

Abstract:

NEW YORK (AP) — Wall Street analysts are largely shrugging off a recent disclosure of deaths from unapproved use of a drug developed and marketed by Genentech Inc. and Biogen Idec Inc.
Late Monday, the Food and Drug Administration said it wants more information on the cancer treatment Rituxan after Genentech and Biogen said two people died while using the treatment for an off-label condition.

The patients were using Rituxan to treat Systemic Lupus Erythematosus, an autoimmune condition, and died from a viral disorder called progressive multifocal leuklencephalopathy, or PML, according to the companies. The drug is approved for treating non-Hodgkins lymphoma and other conditions.

Analysts noted that the drug’s association with PML is already listed on its label, and that PML could be caused by other conditions.

“In our view, there is little proof of cause-and-effect as a result of these two reported cases of PML,” wrote Rodman & Renshaw’s Michael G. King Jr. in a client note. He kept a “Market Outperform” rating and an $87 target price on shares of Genentech.

Credit Suisse’s Michael Aberman, meanwhile, said the news could cause delays in approvals for other uses of Rituxan. He kept a “Neutral” rating on Genentech and trimmed his target price to $84 from $85.

“While we do not think this announcement will have an impact on oncology sales, we believe it will change physician perception (whether deserved or not) on the safety of Rituxan in autoimmune disease,” wrote Aberman.

But May-Kin Ho of Goldman Sachs sees little impact on Genentech, and said doctors are comfortable with risks associated with the drug.

Baird Equity Research’s Christopher J. Raymond likewise said he does not expect the news to have much of an impact. He reiterated a “Neutral” rating and $55 target price on the stock.

Genentech fell 62 cents to $80.34 in premarket trading after closing at $80.96 Monday on the New York Stock Exchange.

Shares of Biogen dropped $2.53, or 5 percent, to $47.70 in early activity after closing at $50.23 Monday on the Nasdaq.