Peter
A FDA decision on Raptiva is expected sometimes during Q4. I don't think anything is yet known about any advisory committee meeting, but I cannot see FDA taking a decision without one. Most of the new biologics coming on stream in this area do represent new treatment methods and FDA should be happy to have someone covering their back and flanks.
As for the market potential it's difficult to impossible to have an opinion. In a recent Genentech piece, SG Cowen foresaw the following Raptiva revenue:
Year 2004 2005 2006 2007
Sales mUSD 125 250 385 510
Perhaps on the positive side. There will be competition. Not only from Enbrel, as you pointed out, but also from J&J's Remicade, which agent actually is the one with the most impressive clearance figures so far.
If one assumes that there will be an 80 % gross profit margin and S,G&A costs of 20 %, XOMA's 25 % profit cut should generate incomes of 19, 37, 58 and 77 mUSD over these four years.
And who knows what the situation will look like after that. Raptiva is a humanized mAb with all the potential problems they bring with themselves. There should be threats from fully human mAbs like J&J's third generation mAb CTO 1275. Icos and Biogen will during the summer be presenting the first phase II results from IC747, a small-molecule drug with the same target as Raptiva. These are just two examples I have come across. There should be more.
Will the expected income from Raptiva be enough to turn XOMA's figures green? Their 2002 results indicated an expense level (S,G&A plus R&D) of around 60 mUSD. So, it will take some time for them to become profitable even if Cowen's figure turns out to be correct. And it will take even more time for the cash to flow in the right direction.
I bought some Genentech to get some semblance of stability in my biotech portfolio. I felt that as the share price historically is low and with some upcoming defining events the upside should be better than the downside. I am not so sure any more.
The four important events I saw for Genentech's 2003 were approvals for Xolair and Raptiva. In addition we should learn more about the late-stage cancer drugs Avastin (anti-VEGF) and Tarceva (small molecule EGF manipulator).
But once the stock found its way into the portfolio, things start to look somewhat more shady. (That is often the case with me).
Xolair - I have no idea really. We will see in May. But if approved, it seems to be a very expensive treatment with a demanding method for administration. It's not for everyone.
Raptiva - I believe the drug will be approved, but I am doubtful if the level of income will be meaningful for a company of DNA's size. And being humanized only, the agent has its weak spots, until proven otherwise.
Tarceva - We have seen the problems AZN are facing with Iressa. Is there really any reason to believe that Tarceva will do much better? Both Iressa and Tarceva may very well be approved, but at present they seem destined to serve rather marginal "markets" (where the results very well may be very good). But based on Iressa's results, they don't seem to be destined to become major cancer drugs.
Finally Avastin - I have my doubts about this drug too. The agent is supposed to work through anti-angiogenesis - a concept that still has to be proven in the clinic (as far as I know).
All in all - there are a lot of question-marks that are hanging over Genentech late-stage portfolio of drug candidates at the moment. But question-marks are still better than no marks at all. I don't think they have another Rituxan-like success hidden away in their current crop of late-stage products.
Opinions on Genentech are more than welcome.
Erik |
