Biotech Stocks Review: Seattle Genetics Sells Cancer Drug To Genentech

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Includes: ALKS, AZN, CEPH, DVAX, MYGN, NBIX, RHHBY, SGEN, VXGN, WYE
by: Centient Biotech Investor

Seattle Genetics (NASDAQ:SGEN) will partner with Genentech (Private:DNA) to complete development of its multiple myeloma drug. SGN-40 is a monoclonal antibody in Phase I and II trials for chronic lymphocytic leukemia and non-Hodgkin’s lymphoma, in addition to multiple myeloma. Genentech paid $60 million upfront for the program, and the big biotech will make up to $800 million in milestone payments, plus an escalating double-digit royalty on the compound. Genentech will also fund research and the clinical trials already underway. Seattle Genetics will have an option to co-promote the drug in the US. SGN-40 targets the CD40 antigen, which is highly expressed on most B lineage hematologic malignancies and is also found on many types of solid tumors. In Phase I tests, the compound was well-tolerated and produced antitumor activity in non-Hodgkin’s lymphoma patients. Seattle Genetics moved up 24% on the news, climbing $1.27 to $6.56.

Dynavax (NASDAQ:DVAX) disappointed investors with news that a trial of ragweed allergy drug Tolamba did not encounter any significant ragweed disease. Neither the placebo arm nor the active drug cohort showed any increase in their total nasal symptom scores (TNSS). The results came from one-year interim data in the two-year trial, which continues. The upshot is that, thus far, the effectiveness of Tolamba remains unproved, even though Dynavax has spent the money to conduct the trial. Dynavax watched 30% of its value disappear today. It fell $2.58 to $5.96.

Cephalon (NASDAQ:CEPH) announced that Fentora, a fentanyl buccal tablet, was effective in opioid tolerant patients with neuropathic pain. The data came from a Phase III trial. Because of its buccal delivery, the onset of pain relief was a short 10 minutes. Fentora is already approved for breakthrough cancer pain. Cephalon gained $1.41 to end at $71.16.

Alkermes (NASDAQ:ALKS) will supply AIR inhaled insulin to Lilly (NYSE:LLY) under a new manufacturing agreement. The two companies are developing the drug jointly. Lilly will pay for Alkermes to expand its manufacturing facility so that it can meet post-launch demand. AIR is currently in Phase III trials for type 1 and type 2 diabetes. Alkermes was 22 cents higher at $13.80.

Catalyst Biosciences signed a deal with Wyeth (WYE) that could be worth up to $100 million plus royalties. Catalyst will use its Alterase therapeutics platform, which consists of engineered human proteases, to develop drugs for two targets, one for metabolic disease and the other in oncology. Wyeth will be responsible for development and commercialization. Catalyst has gotten to this point on just $40 million in venture capital. Wyeth inched up 3 cents to $51.38.

Neurocrine Biosciences (NASDAQ:NBIX) reported positive Phase II results from its endometriosis drug. NBI-56418 is a nonpeptide Gonadotropin-Releasing Hormone (GnRH) receptor antagonist that gave evidence of both safety and efficacy in this second Phase II test, showing proof of concept. Using the Composite Pelvic Sign and Symptoms Score (CPSSS) as the primary endpoint, the compound reduced scores by approximately 50% after 12 weeks. Despite the good news, Neurocrine fell 33 cents to $10.33.

MedImmune (MEDI) received FDA approval for a refrigerated version of its inhaled FluMist vaccine. Previously, FluMist had to be frozen. MedImmune will begin marketing the new drug in the 2007-8 flu season later this year. MedImmune slipped 7 cents lower to $34.25.

In a Phase II trial, a prostate cancer drug from Myriad Genetics (NASDAQ:MYGN) failed to produce a benefit that was a statistically significant improvement over the placebo. Myriad will abandon any further development of the drug, known as MPC-7869 (R-flurbiprofen). Myriad took the news well, dropping just 14 cents to $31.42.

VaxGen (OTC:VXGN) reduced its employee roster by half and also slashed its expenditures by 50% to $3 million per month. The company has retained Lazard Freres to find a buyer. The cutbacks follow its loss last month of an $877 million contract to supply the US government stockpile with anthrax vaccine. The company’s long-time CEO and President, Lance K. Gordon, also left his post, though he remains an advisor to the company.

Biotech began the new week with a small loss. The Centient Biotech 200™ slipped 3 points lower to 3986, a drop of .07%. The broad market moved up modestly, with the S&P 500 higher by .22% while Nasdaq gained .16%.

Disclosure: Centient management holds a position in Genentech shares and does consulting work for Genentech.