NEWS SNAP: Genmab Drops Lead Project; Stock Down 57%
Wednesday September 25, 6:37 am ET
By Myriam Noisette, Of DOW JONES NEWSWIRES
COPENHAGEN -(Dow Jones)- Danish biotechnology company Genmab A/DS lost more than half its market value Wednesday after it said it had stopped further testing of its lead treatment for rheumatoid arthritis.
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Genmab said results from Phase II studies for HuMax-CD4 on 155 patients showed the product wasn't effective in treating rheumatoid arthritis.
J.P. Morgan analyst Samir Devani said Wednesday's collapse in the share price is fair. "HuMax-CD4 was around 75% of the valuation of the pipeline." He added that the disappointing results of the phase II trials was a surprise, coming after encouraging results from earlier studies.
HuMax-CD4 attracted a lot of attention in February when the U.S. Federal Drug Administration gave it Fast Track status, which would have cut the review process to around six months from an average of about 19 months.
Analysts pinned high hopes on HuMax-CD4 because it was targeting rheumatoid arthritis differently from other drugs in the market. Some analysts even hailed it as a potential blockbuster, pushing the stock to year-to-date high of DKK203 on Feb. 26.
At 0935 GMT, Genmab's stock was down DKK52, or 57%, at DKK40.
HuMax-CD4 is part of a new group of products called biologic response modifiers which include Immunex Corp.'s rheumatoid arthritis drug (IMNX) Enbrel. Enbrel had sales of $762 million in 2001.
Genmab was developing HuMax-CD4 alone while looking for a partner to finish the project. The cash-rich company was in a strong position to find a good partner. "That's now out the window," said Devani.
Genmab's Chief Executive Officer Lisa Drakeman told Dow Jones Newswires the news was very disappointing but that it's business as usual for the company.
"We had a strategy to develop multiple products and that's still in place," she said.
Genmab also has another antibody, HuMax-IL15, in clinical trials for the skin disease psoriasis and for rheumatoid arthritis, though it tackles the diseases at different points than HuMax-CD4.
Clinical trials for two other compounds, one for inflammatory conditions and one for cancer, are expected to start in 2003.
Genmab will also be continuing its Phase II studies using HuMax-CD4 for the treatment of psoriasis.
However, this is small comfort, analysts say.
"It means a total revaluation of the company. Before the news, Genmab was an advanced biotech company in Phase II, now its an early biotech company in Phase I/II and with results only likely in 2004," said one Swedish analyst requesting anonymity.
The results from the rheumatoid arthritis trials also casts doubt on the use of HuMax-CD4 for psoriasis, added the analyst.
Company Web site genmab.com |
