Biotech stocks, not unexpectedly, were dragged down onWednesday by Centocor Inc.'s announcement that the FDAwon't approve its sepsis drug without more data. But the sectorcould have fared worse.
Aside from Centocor, Tocor II and Xoma Corp., only eightbiotech stocks lost $2 or more. The biggest losers were ChironCorp. (NASDAQ:CHIR), down $3.25 to $39.50; GensiaPharmaceuticals Inc. (NASDAQ:GNSA), off $3 to $36; andImmune Response Corp. (NASDAQ:IMNR), down $3 to $21.
The AMEX Biotechnology Index, which includes both Centocorand Xoma, fell 9 percent, or 14.76 points, to 148.28, its lowestnumber since its inception last October. The 177 biosciencestocks tracked by BioWorld were already down 14 percent inthe first quarter, and Wall Street had hoped that marketingapproval of Centoxin would breathe life into the group.
With that prospect gone, there is no blockbuster newsforeseeable for the rest of this year on the order of last year'sapproval of Amgen Inc.'s Leukine G-CSF.
"I am very concerned about the group," said Cowen & Co.analyst Joyce Lonergan. "There is room for positive milestonesfor the group, but the psychology is very negative."
The analyst consensus was that the sector was due for acorrection, but the stocks have also been buffeted by a string ofbad news. In addition to turning down Centoxin and informingXoma that E5 isn't approvable on data from its first clinicaltrial, an FDA advisory committee in February gave a thumbs-down to a non-biotech drug: U.S. Bioscience Inc.'s Ethyolchemoprotective. MGI Pharma Inc. halted trials of its non-biotech chemoprotective, MGI 136, a few days later. Inaddition, a rotation into cyclical stocks began in mid-January.By comparison, the Dow Jones industrials have gained 83 pointsin the past two days.
"We need a bunch of approvals," said Jay Silverman of NomuraResearch Institute. "The next blockbuster will be Antril fromSynergen. They will get good data by the middle of next year,and that study, when it is released, could spark a lot ofexcitement." However, the drug for sepsis and other indicationswon't be submitted to the FDA until 1993.
"Let me take the optimist view," said Hambrecht & Quist'sJacqueline Siegel. "Centoxin was the last of a wave ofblockbuster products, so we weren't expecting any regulatorynews for a while anyway. But in terms of the fundamentals ofcompanies developing products, the optimistic view says 'learnfrom these experiences.' Young companies are hiring competentclinical directors, and the FDA will expedite approval of life-saving drugs. On the negative side, nobody gets through theFDA the first time around without a major hiccup."
So what will prop up stocks this year? While none of theproducts likely to receive the FDA nod are in large markets,approvals on the horizon include Chiron's Proleukin IL-2 forrenal cell carcinoma, two recombinant Factor VIII hemophiliaproducts developed by Genentech Inc. and Genetics InstituteInc., and Xoma's CD5 Plus for graft-vs.-host disease.
Immune Response will present data this quarter on its AIDStherapeutic, and will start trials of its arthritis and multiplesclerosis vaccines before year-end, said Edward Kim, assistantto Robertson, Stephens analyst Mark Simon.
Lonergan expects to see clinical data from Genentech on DNaseto treat cystic fibrosis.
"There are a lot of products making important progress in theclinic," said Siegel. "For example, Scios Inc.'s ANP will enterPhase III trials for acute renal failure this year. At meetings inthe fall, we will likely get PIXY123 data from Immunex Corp.and data on Hirulog from Biogen Inc."
Still, the next couple of months will be slow going, she said, andthe issue in the next couple of years will be choosing individualcompanies in which to invest.
And investors will still put money into stocks on news, evenold news. Genelabs Technologies Inc. (NASDAQ:GNLB), forexample, on Wednesday gained $1.38 to $7.75 after announcinga patent issued on March 31 for genetically engineeredtrichosanthin, which the company has in Phase II trials to treatAIDS.
-- Karen Bernstein BioWorld Staff
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