Yes, I saw. Essentially, positive results were obtained in a study of lung cancer patients treated with Avastin (which is already approved for colon cancer). This makes it highly likely that DNA will get fast-track FDA approval for use in lung cancer, and also makes it likely that other cancers will be benefitted as well. Obviously this markedly expands the possible market and revenues, so the market had to price this in rapidly, and... well, it did.
The trading was interesting. At 3pm DNA was trading at $44.10. Then a surge of volume pushed the stock rapidly up about 22% in the next 20 minutes to about $54....then trading was halted for about 30 minutes while the announcement was made. DNA opened again at about $54, then traded up another dollar or so during the final 15 minutes of trading.
139.142.147.22
Here's the news:
yahoo.reuters.com
Avastin cancer drug results lift US biotech market
Mon Mar 14, 2005 06:02 PM ET
By Deena Beasley
LOS ANGELES, March 14 (Reuters) - News that Genentech Inc.'s (DNA.N: Quote, Profile, Research) Avastin extends the lives of lung cancer patients helped brighten the recently lackluster market for biotechnology shares, analysts said on Monday.
Interim results from a pivotal-stage trial of Avastin, currently used to treat colon cancer, showed the drug, in combination with chemotherapy, extended the lives of patients with non-small cell lung cancer to a median of 12.5 months compared with 10.2 months for chemotherapy alone.
The news prompted a buying frenzy in Genentech shares, during which about $11.5 billion was added to the company's market value during the final hour of trading, and bled over into shares of Biogen Idec (BIIB.O: Quote, Profile, Research) and Imclone Systems (IMCL.O: Quote, Profile, Research) in late trading on Monday.
Genentech shares rose $10.92, or nearly 25 percent, to close at $55, a two-month high, its biggest one-day gain since May 2003, when it rose 45 percent after saying Avastin extended colon cancer patients' lives far longer than expected.
"This casts some sunshine on what has been an overcast market since Biogen Idec," said Jennifer Chao, an analyst at Deutsche Bank, referring to Biogen and partner Elan Corp.'s (ELN.I: Quote, Profile, Research) decision last month to suspend sales of multiple sclerosis drug Tysabri after a patient died from a rare infection of the central nervous system.
That news sent shares of Biogen, the fifth largest U.S. biotech company, down more than 43 percent in one day, while Ireland-based Elan's shares lost more than 70 percent.
With Avastin, "part of the reason for the strong reaction (on Monday) is that people weren't expecting the results until May," Chao said.
The gain sparked by the latest Avastin news also pushed Genentech, the world's second-largest biotech company, into positive territory for the year. Through Friday, the stock had been down 19 percent since Dec. 31, slumping sharply along with the broader biotech and pharmaceuticals group, which has been stung by a long string of bad news about problem products.
"What this does is raise the probability that Avastin will be approved for lung cancer," said Winton Gibbons, an analyst at William Blair & Co. It also raises the likelihood that an ongoing trial of Avastin in breast cancer patients will be a success, the analyst said.
By the end of Monday's rally, Genentech's stock was showing a gain of just over 1 percent for the year to date.
The rally also helped repair some of the damage done to other biotech shares. The American Stock Exchange biotech index rose 5 percent, nearly halving the sector's loss for the year. The index had been down 10.7 percent going into the day, and now stands off 6.2 percent for the year to date.
"This puts a glow on the sector," said Jason Kantor, an analyst at WR Hambrecht & Co.
On Monday, Biogen shares rose 3.6 percent to $39.41 while Imclone shares rose 3.6 to $41.32 on Nasdaq.
Shares of Protein Design Labs (PDLI.O: Quote, Profile, Research) , which earns royalties on sales of several antibody-based drugs, including Tysabri and Avastin, rose 14 percent to close at $16.41 on Nasdaq.
"Tysabri had some people thinking that the problems could expand to the rest of the market, but Avastin working in another cancer indication kind of removes some of that," Gibbons said. (Additional reporting by Ed Tobin in New York) |
