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Drug Test Could Hurt Genentech

A study would compare a cheaper treatment against the firm's costly eye medicine Lucentis.

October 03, 2006|From Bloomberg News

Two Genentech Inc. drugs may be tested against the same disease in a federal government study, jeopardizing almost $1 billion in estimated annual sales for the biotechnology company.

The National Eye Institute has approved the trial in principle, subject to resolving how to pay for it, Frederick Ferris, the institute's clinical director, said Monday.

Genentech's eye treatment Lucentis would be compared with its cancer drug Avastin for treating age-related macular degeneration, the leading cause of blindness in the elderly. Lucentis, a new drug developed to treat the condition, costs $1,950 a dose, 100 times more than Avastin, a treatment for colon and other forms of cancer.

"There are obviously public health reasons for such a study, and the National Eye Institute in conjunction with others is looking into how and whether we can do that," Ferris said. "But there remains some major issues regarding funding because this is a very expensive study."

Shares of South San Francisco-based Genentech rose $1.02 on Monday to $83.72.

The drugs are related compounds that block blood-vessel growth. In people with age-related macular degeneration, Lucentis destroys the excess vessels that can lead to blindness. In cancer patients, Avastin is used to cut off the blood supply that feeds tumor growth.

Before Lucentis won U.S. regulatory approval in June, some doctors started successfully using Avastin because it was available and worked in a similar manner.

The price difference prompted calls for studies comparing the two treatments.

The Centers for Medicare and Medicaid Services, known as CMS, covers most costs for treating age-related macular degeneration under the Medicare health program for the elderly and disabled.

"We are working with the study investigators and CMS and others to see if we can find a way so we can afford to do the study," Ferris said. "The study has been approved in principle" and hasn't been started because of the cost issue.

A direct comparison of Lucentis and Avastin would be interesting, although it wouldn't have an immediate effect on sales of the newer drug, said Christopher Raymond, an analyst at Robert W. Baird & Co. in Chicago. It is unclear how Medicare or other insurers could steer doctors to Avastin, if it proved effective for age-related macular degeneration, Raymond said, adding that doctors would run the risk of liability because of the way that Avastin would have to be administered.

Separately, Biogen Idec Inc. and Genentech have received approval to widen marketing of their cancer medicine Rituxan to include patients newly diagnosed with a slow-growing form of non-Hodgkin's lymphoma.

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