West Coast Editor

Genentech Inc.'s two-line press release earlier this week about a subpoena related to a federal investigation regarding its promotion of Rituxan disclosed only that the probe is "both civil and criminal in nature" and that the firm "plans to cooperate," leaving industry observers to guess the nature of the issue.

"The pervasive belief is that it's off-label use," said Winton Gibbons, analyst with William Blair & Co. in Chicago, but the questions might be focused on some other matter, such as Medicare pricing.

Specifically, Genentech said the U.S. Attorney's Office for the Eastern District of Pennsylvania has asked for documents related to the promotion of Rituxan (rituximab), approved in 1997 for relapsed or refractory, low-grade or follicular, CD20+, B-cell non-Hodgkin's lymphoma. The drug sold $1.5 billion last year.

Genentech's stock (NYSE:DNA) was unhurt by the subpoena news, closing the day it was made public at $53.99, up 83 cents. Shares closed Wednesday at $50.25, down 88 cents.

"My opinion, and I believe this is also the opinion of the regulators, is that Genentech is extreme - in the good sense" - regarding off-label promotion, Gibbons said. The company is not shy about discussing off-label use in quarterly conference calls, though, and "that could be one reason why they were picked on vs. somebody else," he said, adding that "commercial speech doesn't have the same protection as individual speech, but it is protected."

Genentech officials were due for their third-quarter earnings call after the market closed Wednesday.

"They may not comment [on the probe]," Gibbons said. "There's not a reason, per se, for Genentech to be more detailed at this point, because there's no guarantee - and there may not even be a probability - that if they give them the documentation there will even be a case. It's fact-gathering at this point, as far as we know."

Genentech has run into trouble with the FDA before. In the spring of 1999, the firm negotiated a $50 million settlement with the U.S. attorney for the Northern District of California to quell an investigation into Genentech's promotion of human growth hormone Protropin (somatrem) during the late 1980s and early 1990s. The fine resolved charges that the company urged buyers to use its human growth hormone from 1985 to 1994 for off-label indications. (See BioWorld Today, April 13, 1999.)

"That was before [Chairman and CEO Arthur Levinson] took over," Gibbons said. "I don't believe they've been cited by the FDA since the late 1990s. It's not like the FDA is out there after them."

The company sells Rituxan with partners Biogen Idec Inc., of Cambridge, Mass., and F. Hoffmann-La Roche Ltd., of Basel, Switzerland. The drug is being tested against other forms of lymphoma, as well as new indications. In June, the New England Journal of Medicine published results of a Phase IIa study showing that two doses of Rituxan (rituximab) administered two weeks apart improved symptoms in patients with moderate to severe rheumatoid arthritis for up to 48 weeks when combined with methotrexate vs. methotrexate alone.

"I would think the regulators in a case like this might even be willing to be friendly," possibly to the degree of filing an amicus brief if the matter goes to court, Gibbons told BioWorld Today. "Why would you want to seek to punish a company that has done things the proper way?"

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