By Randall Osborne

West Coast Editor

Shares of Genentech Inc. and partner Tanox Inc. dipped only slightly Thursday on word that the biologics license application for Xolair will not be reviewed in April at a meeting of the FDA's Pulmonary-Allergy Drugs Advisory Committee (PADAC).

Analysts said the news was no surprise. Some Xolair (omalizumab) safety data were not going to end up in the hands of the FDA until March, and the agency "just didn't have time to review it all," said Gordon Cohen, associate analyst with Banc of America Securities in New York, which stood by its "buy" rating for South San Francisco-based Genentech.

"It was a pretty widely held view that they wouldn't be able to make this," Cohen told BioWorld Today, and Thursday's disclosure does not change analysts' expectations that Xolair will be approved and will be launched during the fourth quarter of this year.

Genentech's stock (NYSE:DNA) closed at $47.50, down $3.25, or 6.4 percent. Houston-based Tanox's shares (NASDAQ:TNOX) dropped even less, finishing at $26.937, down $1.50, or 5.27 percent, on a down day for the entire sector.

Michael Kelly, chief financial officer of Tanox, said Genentech, which is "shepherding Xolair through the FDA," said in December that additional platelet monitoring data for the BLA wouldn't be submitted until late March, prompting skepticism that the panel could consider the application by April.

"We began to see downward pressure on the stock, based on the assumption the approval would be pushed out into the second half of 2001," Kelly told BioWorld Today. "We don't view this as a cancelled meeting," he added. "It was never scheduled. Fundamentally, there's nothing different."

Tanox and Genentech ended a fight over the drug in 1996 by joining forces. Genentech, with partner Novartis Pharmaceutical Corp., of Hanover, N.J., submitted the BLA for Xolair last June. The drug works by binding to immunoglobulin E, which is the antibody that triggers release of inflammatory mediators causing allergy symptoms. (See BioWorld Today, June 6, 2000, and July 10, 1996.)

The next scheduled PADAC meeting is Sept. 6. Although the panel could convene between April and that date, there's no precedent for it, Cohen and analyst Eric Ende said in a research note issued early Thursday, which predicted peak Xolair sales of $400 million by 2006.

The note, revised later in the day, lowered the projected sales for Xolair in 2001 from $20 million to $15 million, and in 2002 from $150 million to $80 million.

"We just don't think it's going to penetrate [the market] enough" to reach those sales figures, Cohen said. But better-than-expected sales of Rituxan (rituximab) - Genentech's drug for relapsed or refractory low-grade or follicular, CD20-positive, B-cell, non-Hodgkin's lymphoma - led Banc of America to hike earnings-per-share forecasts to 76 cents from 73 cents in 2001, to 93 cents from 92 cents in 2002, and to $1.19 from $1.17 in 2003, with a price target of $73.

As for Tanox, which went public last spring, Kelly said: "We're not going to hype the company. We're going to be steady and focused." n