Senior Staff Writer

AstraZeneca plc had the distinct but risky opportunity of providing those watching biotechnology with the first glimpse of data from a Phase III trial of an endothelial growth factor receptor inhibitor in combination with other cancer treatments. That honor proffered unfavorable results that Monday helped drag down a sizable chunk of the sector's stocks.

OSI Pharmaceuticals Inc., marching forward with its small-molecule inhibitor, Tarceva, lost the most value, as its stock fell $18.74, or 57.2 percent. Abgenix Inc., developing ABX-EGF, watched its stock slide $1.50, or 16 percent, and Erbitux developer ImClone Systems Inc.'s stock dipped 98 cents, or 10.6 percent. AstraZeneca itself lost $6.02, or 16.3 percent. All stocks were heavily traded. Although OSI and Abgenix posted gains Tuesday, the Iressa news had the biotechnology companies distancing themselves from AstraZeneca's Iressa and the doubt its results cast over the class of drugs stemming from EFGR.

Preliminary analysis of the Iressa IMPACT 1 and IMPACT 2 trials showed that addition of the drug to standards of care (gemcitabine/cisplatin and paclitaxel/carboplatin) concurrently did not offer a survival advantage. AstraZeneca was forced to conclude that Iressa (and other similar drugs, it hinted) may be effective as monotherapy for non-small-cell lung cancer patients and perhaps could be effective with chemotherapy when given sequentially, but not concurrently.

What London-based AstraZeneca's announcement did was "increase the risk that an EGFR inhibitor may not be as effective as hoped in first-line therapy in lung cancer," said David Bouchey, an analyst and vice president, life sciences research, at C.E. Unterberg, Townbin, but he tempered that statement.

"It would be premature to assume that you have increased the risk that an EGFR inhibitor would be unsuccessful in other cancers," he said. "It's possible that the market was assigning increased risk in every EGFR indication. Perhaps that's an unfair assumption."

Although AstraZeneca said it thought the problems it experienced in the two Iressa IMPACT trials would, indeed, impact similar drugs, Jason Zhang, analyst with Stephens Inc., did not agree.

"AstraZeneca's statement was interesting - it believes the results are going to be a class event, meaning all EGFR inhibitors will encounter the same problem," he told BioWorld Today. "Most of those inhibitors work in the same way, but they do have differences when you look at pharmacokinetics. It could be that those differences could make a huge difference in the final outcome. I'm not convinced that all EGFR inhibitors will act the same way as Iressa."

Companies Respond To Dropping Stock Prices

As stock prices fell, the companies hit hardest - OSI and Abgenix - hit back, releasing statements on Monday and Tuesday, respectively, detailing how their drugs differ and why their confidence is unwavering.

"There was a perception created that the Iressa news has implications for other drugs in the class, but those types of assumptions cannot be made," Abgenix's director of corporate communications, Ami Knoefler, told BioWorld Today. "Expectations for our product should not be driven from Iressa and the small molecules."

Abgenix's ABX-EGF is in five ongoing cancer Phase II trials in both monotherapy and combination therapy studies, including non-small-cell lung, colorectal, kidney and prostate. The product is a humanized monoclonal antibody developed in a partnership with Amgen Inc., of Thousand Oaks, Calif. Like Iressa, it is designed to affect EGFR, but as an antibody, it is a larger molecule and affects the target differently.

"Small molecules [such as Iressa] bind to a different part of the receptor," Knoefler said. "Structurally, there is a difference [between Iressa and ABX-EGF]. ABX-EGF does not have the dose-limiting toxicity that has been seen in trials with Iressa and we have showed a very tight dose-response curve in our studies. Also, our clinical trials have shown 100 percent of patients achieving a skin rash, which is widely believed to suggest complete saturation of the receptor."

Knoefler said results for Abgenix's colorectal cancer monotherapy trial are expected to be available in the first quarter of next year; Phase II renal cancer results also are expected around that time. The company has not volunteered its timeline for Phase III development, and it will not do so until it has viewed the Phase II data.

"That decision has to be data driven," Knoefler said. "Our timeline will be agreed upon with Amgen. Our intent is to plan to make that decision by the second quarter [of 2003].

"We continue to have great confidence in EGFR as a target for drug development, based on significant evidence," she added. "We have great confidence in this molecule."

OSI, of Melville, N.Y., is developing Tarceva with Genentech Inc., of South San Francisco, and F. Hoffmann-La Roche Ltd., of Basel, Switzerland. Similar to Iressa, Tarceva is a small-molecule inhibitor of EGFR, and thus the market treated its stock the most harshly. However, the company said in a prepared statement there are "important differences between the agents and clinical programs, including structure, formulation, pharmacokinetics and Phase III design and dosing." Tarceva is in three Phase III studies for non-small-cell lung cancer and OSI said all three are "progressing as planned." Two studies are first-line combination trials and one is a single-agent refractory study. Company officials could not be reached for comment Tuesday.

"Despite [Monday's] events, we [continue] to believe that Tarceva and HER1/EGFR inhibitors in general represent a potentially important new class of agents for the treatment of human cancer," said Colin Goddard, chairman and CEO of OSI, in a prepared statement.

The more than 50 percent value OSI lost on the Iressa news shocked some industry watchers.

"I was surprised to see the magnitude of the negative reaction for OSI," Zhang said. "I truly believe this one is overdone."

ImClone, of New York, its stock already hammered in 2002 by the FDA refusal to accept its rolling biologics license application for Erbitux, a chimeric monoclonal antibody, and the ensuing SEC and congressional probes into the company's dealings, did not publicly address the Iressa news. (See BioWorld Today, Jan. 3, 2002; June 6, 2002; and June 21, 2002.)

Industry Stands Behind EGFR

Although the Iressa news causes some concern when regarding the use of EGFR as a combination treatment, Zhang believes combination therapy is still where EGFR is best applied.

"I think [the Iressa data] will push back the speed of how quickly [companies] get into combination trials, but combination will be the mainstay," he said. "I believe so, and most oncologists would agree."

Investors in the sector and the sector itself - at times uncomfortable bedfellows - are viewing the Iressa news differently. Investors have turned a skeptical eye to the EGFR target and, especially in today's volatile market, skepticism means selling off. Those at the bench are more stalwart, Zhang said.

"I don't think the industry interest will wain, but investors will have a different opinion," he said. "The industry will look at the long term. I just came back [from the First International Congress on Targeted Therapies] and the focus has not changed. People will learn from Iressa and may find a better way to sort this out."

Bouchey, who has a Ph.D. in cell biology and spent 16 years as a bench scientist, still feels the EGFR arena can be lucrative.

"Although we may know more now than before, there is a lot of clinical work that needs to be done to show what benefits these drugs will provide and in what patients. But I believe the market for EGFR will be a multibillion-dollar market."

OSI's stock (NASDAQ:OSIP) gained $1.93 Tuesday, or 13.7 percent, to close at $15.98. Abgenix's stock (NASDAQ:ABGX) rose 21 cents to end the day at $8.10. ImClone (NASDAQ:IMCL) lost 5 cents to close at $8.21. AstraZeneca (NYSE:AZN) fell $1.33 to close at $29.65.