West Coast Editor
ImClone Systems Inc. stands to get a $250 million milestone payment from partner Bristol-Myers Squibb Co., thanks to the FDA’s approval of the colorectal cancer drug Erbitux for the added indication of head and neck cancer.
One analyst projected the monoclonal antibody would reap about $73 million in sales this year in the new indication.
"In my mind, the new Erbitux indication doesn’t really change anything about ImClone’s position as a takeover target," said Kate Winkler, senior director of health care and life sciences for Global Crown Capital LLC.
New York-based ImClone said in January that it was exploring options.
"I’m not sure the revenue stream from Erbitux will be sufficient to warrant a takeover of ImClone as a whole, at the current valuation, unless other assets offer synergies with the business of a prospective acquirer," she told BioWorld Today.
BMS, for its part, has no plans to bid for ImClone, whose stock (NASDAQ:IMCL) closed Thursday at $37.42, down $1.58.
Specifically, the monoclonal antibody Erbitux (cetuximab), which inhibits epidermal growth factor, was cleared by the FDA for treatment of locally or regionally advanced squamous cell carcinoma of the head and neck, and as a single agent in recurrent or metastatic disease where platinum-based chemotherapy has failed.
Erbitux first was approved by the FDA for use with irinotecan for patients with EGFR-expressing metastatic colorectal cancer who are refractory to irinotecan therapy by itself, and as a single agent for the treatment of EGFR-expressing metastatic colorectal cancer in patients who are intolerant to irinotecan. Sales in the fourth quarter of last year reached $121 million, beating by $6 million Wall Street’s estimate.
The coming year promises data from trials exploring the drug in other cancer types, including lung and pancreatic, as well as other colorectal cancer settings. Meanwhile, analyst James Reddoch, with Arlington, Va.-based Friedman, Billings, Ramsey & Co., wrote in a January research note that the takeover chance is good.
"If Amgen paid $2 billion for Abgenix, then [ImClone] could be bought for $4 billion, considering that the company has good economics on a cancer drug that has sales of $600 million and growing, has $300 million in antibody manufacturing facilities, four cancer antibodies in Phase I and II, and about $150 million in net cash," wrote Reddoch, whose rating for ImClone is "outperform."
At the end of last year, Thousand Oaks, Calif.-based Amgen Inc. disclosed a plan to acquire Abgenix Inc., of Fremont, Calif., for $22.50 a share, or about $2.2 billion in cash, which is how Amgen got the colorectal cancer drug panitumumab. (See BioWorld Today, Dec. 15, 2005.)
Reddoch’s firm noted in a report Thursday that off-label use of Erbitux against head and neck cancer has been "modest thus far," and predicted about $73 million in sales for that indication this year, now that the FDA has approved the indication, although panitumumab looms as a player in first-line colorectal cancer.
Winkler said the drug "should compete in head-and-neck against Erbitux, as much as it will compete for colorectal, even without explicit labeling." Amgen’s stock took a hit in January, when the company decided - probably for competitive reasons, especially with a sale possibly in the works - not to release data that were expected by Wall Street.
There’s also Avastin (bevacizumab), though that picture became clouded somewhat last month, when Genentech Inc. reported that it stopped a trial with the compound because of a slightly higher death rate not related to patients’ colon cancers. That Phase III study by Genentech’s partner, Basel, Switzerland-based F. Hoffmann-La Roche Ltd., was designed to evaluate whether adding the drug (which is cleared for metastatic colorectal cancer in the first-line setting when combined with 5-FU-based chemotherapy) to chemo as an adjuvant following surgery can reduce the chance of recurrence in patients with Stage II and III disease. (See BioWorld Today, Feb. 14, 2006.)
As one potential ImClone buyer, Reddoch names none other than Genentech, which he said might want to pair its Avastin with Erbitux, while adding manufacturing capacity. He expects data in the second half of this year that could put Erbitux "on a par" with Avastin.
Also rumbling around as a possible ImClone suitor is Johnson & Johnson, of New Brunswick, N.J., which recently backed away from its takeover of Indianapolis-based device maker Guidant Corp., and might be looking for an oncology drug to market with its Doxil (doxorubicin).
As for panitumumab, Reddoch pointed out that the compound will not enter a registration trial for first-line colorectal cancer until the third quarter of this year - and by then, Erbitux will be reporting data from its first-line registration trial. Small studies already have shown Erbitux compares favorably to the Amgen drug, he said.
In its Erbitux deal with New York-based BMS, worth up to $900 million in up-front and milestone payments, ImClone got $200 million in the fall of 2001, $140 million the following spring, $60 million a year later and $250 million in March 2004, according to SEC paperwork.
Down the line, Genentech’s Tarceva (erlotinib), which sold $274.9 million last year, could also compete in colorectal cancer. Tarceva gained approval in November 2004 to treat patients with locally advanced or metastatic non-small-cell lung cancer who have failed at least one prior chemotherapy. In November 2005, Genentech and partner, Melville, N.Y.-based OSI Pharmaceuticals Inc., won approval for Tarceva in a second indication: advanced pancreatic cancer in treatment-naive patients in combination with gemcitabine. (See BioWorld Today, Nov. 4, 2005.)