By Mary Welch
Trading in Genentech Inc. shares was halted temporarily Thursday as the South San Francisco-based company disclosed it was sending a "Dear Doctor" letter after the deaths of 15 women were linked to the breast cancer drug Herceptin. That news was offset somewhat by Genentech's signing of an exclusive licensing deal worth up to $40 million to use the maytansinoid Tumor-Activated Prodrug (TAP) technology of ImmunoGen Inc. with antibodies such as Herceptin.
The company's shares (NYSE:DNA) ended the day at $119, down $4.50.
Herceptin (trastuzumab) is a humanized anti-HER2 monoclonal antibody. Nearly one-third of all women with breast cancer have tumors that overexpress HER2, a growth factor receptor. Herceptin does not kill breast cancer cells. Instead, it neutralizes the activity of the receptors and slows tumor growth.
Genentech spokesman Neil Cohen said the company sent out the letter to doctors in order to heighten awareness that a small percentage of women with advanced cancer can have a reaction to the drug. About six out of every 10,000 women receiving the drug have died since Herceptin was approved in 1998, he said.
"It's not a major issue," said Joel Sendek, vice president and research analyst with Lazard Freres & Co., of New York. "You're talking about 15 women out of 25,000 patients. I don't believe that it will prevent women with late-stage breast cancer from wanting to take the drug."
Sendek added, "When you see the headlines - death and Genentech - it causes people to rush for the exit. But if you read it, it shouldn't cause the stock to have a 5 percent correction. We think it's created an opportunity to buy some shares on the company's weakness."
Soham Pandya, an analyst with Lehman Brothers in New York, agrees with Sendek's assessment. "You have to be serious when you are talking about deaths," he said. "But you must also realize that it's 15 women out of 25,000. It may cause some change in the labeling. Near-term it's not likely to have any significant revenue impact."
In pivotal trials, Genentech noted that Herceptin raised the incidence of cardiac dysfunction, characterized as heart failure, especially in patients treated with anthracycline and cyclophosphamide (AC). Anthracyclines are known to cause heart failure. However, only 7 percent of the patients receiving AC therapy experienced heart failure, compared to 28 percent of the patients receiving Herceptin plus anthracycline therapy. Eleven percent of the patients receiving Herceptin and paclitaxel experienced heart failure, compared to 1 percent receiving paclitaxel alone. The cardiac dysfunction was responsive to standard cardiac medicines. (See BioWorld Today, Sept. 2, 1998, p. 1.)
Genentech Taps Into ImmunoGen Platform
In addition, Genentech has received exclusive worldwide rights to commercialize anti-HER2 targeting products using ImmunoGen's maytansinoid TAP platform. Genentech will be responsible for manufacturing, product development and marketing of products resulting from the license. Cambridge, Mass.-based ImmunoGen will be reimbursed for any preclinical and clinical materials that it makes under the agreement. ImmunoGen will receive an upfront payment of $2 million. In addition to royalties on net sales, the terms of the agreement include milestone payments that could reach $40 million, if all benchmarks are met.
"This is an important deal for two reasons," said Mitchel Sayare, ImmunoGen's chairman and CEO. "First, the financial terms are very good for us. Second, this is the first in what will be a series of validations that will be coming out soon concerning our technology. Notice is now being given to the fact that our technology is an enabling platform that can be used to create effective or more effective products out of their antibodies. This is part of our strategy to get the technology out there."
ImmunoGen's product candidates are called TAPs and are based on a proprietary immunoconjugate technology platform. TAPs are intended to deliver potent chemotherapy specifically to a tumor.
"This deal points to Genentech's leadership position on antibodies," said Sendek. "They are in the forefront in developing therapeutic antibodies and will sign licensing deals for innovative ways to develop and deliver these antibodies. They want to have access to the best technology, and this is an example of that."
ImmunoGen's TAPs consist of drugs coupled to monoclonal antibodies, like Herceptin, for delivery to and destruction of cancer cells. The most advanced TAP, huC242 DM1/SB-408075 is designed to treat colorectal and pancreatic cancer. The recent launch of Phase I/II trials brought a $2.5 million milestone payment from partner SmithKline Beecham plc., of London. To date, ImmunoGen has received $9.5 million in milestone payments from the collaboration.