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Biotech / Medical : Biogen
BIIB 242.90-2.9%Nov 26 1:00 PM EST

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From: mopgcw3/8/2010 11:47:56 AM
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WSJ: Roche, Biogen Suffer Setback With Experimental Drug
By GORAN MIJUK

ZURICH--Roche Holding AG and Biogen Idec Inc. said Monday they suspended a rheumatoid arthritis program using drug candidate ocrelizumab because of safety concerns, further cutting the experimental drug's market potential.

The suspension was recommended by the independent Data and Safety Monitoring Board, or DSMB, which found risks outweighed potential benefits after cases of serious infections led to several deaths. It follows earlier program halts in the ocrelizumab treatment of lupus and rheumatoid arthritis, two autoimmune diseases.

"The decision to put the trial on hold doesn't come as a surprise as earlier programs have already been stopped," said Birgit Kulhoff, analyst at private bank Rahn & Bodmer, who has the stock on its recommendation list. "Given the U.S. Food and Drug Administration's intense focus on safety, the chance that the product won't make it to market is very high now," she said.

Shares of Roche, which have gained around 51% over the past twelve months, showed little reaction to the news as investors were expecting another trial setback for ocrelizumab. They were down 0.6% at 179 Swiss francs ($166) in late morning trading.

"Patient safety is of the utmost importance in all of our drug development programs," said Roche's Chief Medical Officer Hal Barron. "In light of the DSMB recommendations we have decided to suspend ocrelizumab treatment in the rheumatoid arthritis clinical development program."

Ocrelizumab was expected to reach peak sales of between $1 billion to $2 billion in the three indications rheumatoid arthritis, lupus and multiple sclerosis. If approved, the drug could have helped Roche to manage the life-cycle of its cancer drug Mabthera, which loses its patent protection over the next five years, according to analysts.

Roche said it will first analyze the program data in question before deciding on the future of the biological drug in the treatment of rheumatoid arthritis. Ocrelizumab will be further studied in the treatment of relapsing-remitting multiple sclerosis, which is currently in Phase II trials, Roche said.

Although Roche will continue with its MS trial, Helvea analyst Karl-Heinz Koch said that based on the latest safety data, "the chances of the drug to continue its clinical path in the relapsing-remitting multiple sclerosis is increasingly unlikely."

Mr. Koch, who rates the stock at buy, expected peak sales of around 800 million Swiss francs. However, due to the increased likelihood that these trials could be halted too, he has removed the sales estimates from his model, cutting the company's share-price target to 191 francs from 195 francs.
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