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March
31st 2003 Since February, ImClone System’s (NASDAQ:
IMCL) share price has forged ahead based
on renewed interest in its cancer drug, Erbitux (a chimeric
anti-EGFr [epithelial growth factor receptor], antibody for
colorectal cancer. The sudden raise is due to ImClone's
European partner, Merck KgaA (Merck), which has been conducting
its own trials of Erbitux.
Meanwhile,
Abgenix’s/NASDAQ:
ABGX share price has benefited from the renewed interest in
ImClone. Abgenix is in collaboration with Amgen, in a 50/50 cost
and profit sharing agreement in developing ABX-EGF, a monoclonal
antibody EGF-receptor to treat cancers. The results of the Phase
II trial of ABX-EGF in colorectal cancer are expected at the
upcoming American Society of Clinical Oncology (ASCO) meeting,
which will start on May 31st in Chicago. Overall, five
trials of ABX-EGF in four indications are under way; colorectal
cancer, renal cell cancer, non-small cell lung cancer and prostate
cancer.
Potential
catalysts for Abgenix share price appreciation include
presentation of Phase II data for ABX-EGF in colorectal and renal
cancer at ASCO, and the initiation of a pivotal Phase III clinical
trial for ABX-EGF in mid-2003. The company also expects to file
one or two investigational new drugs each year. The key to
Abgenix’s profitability is the potential success of ABX-EGF.
ABX-EGF has two advantages over Erbitux. First, ABX-EGF is a fully
human monoclonal antibody, while Erbitux is a chimeric (contains
some mouse) humanized antibody. And second, ABX-EGF has a better
safety profile than Erbitux. These advantages could help ABX-EGF
even if Erbitux receives FDA approval first.
Risks
for Abgenix include unfavorable results from the Phase II clinical
trials for ABX-EGF, and to a certain extent, unfavorable results
from competitors’ anti-EGFr candidates in clinical trials, which
could be negative in terms of the perception of anti-EGFr therapy.
Some 14 anti-EGFr drugs are in development, including ImClone’s
Erbitux, AstraZeneca’s Iressa (the PDUFA date is May 5th),
and OSI Pharmaceuticals’s Tarceva, so competition abounds for
ABX-EGF.
Despite
reports of pulmonary toxicities and deaths associated with Iressa
in Japan, the FDA is likely to grant approval for Iressa in
relapsed/refractory non-small cell lung cancer. Such news would
validate the EGF receptor inhibitor class.
Nonetheless,
Abgenix’s ABX-EGF has the potential to become a
good drug. All ABX-EGF needs is convincing clinical data to
support it. We’ve been looking for evidence that the drug is on
course with its development, but it appears Wall Street is picking
up the scent. Judging by Abgenix’s trading volume, interest is
starting to rise. So, we’ll say the market must know something.
While
Abgenix’s share price has risen about 50% and ImClone’s 67%
over the past 2 months, Abgenix book value is about $7.00 compared
to ImClone that is basically nothing. Additionally, both Abgenix
and ImClone’s one year price target is $13. Abgenix, whose stock
is trading around $8, looks certainly like a better deal than
ImClone, which trades at around $16. Finally, Abgenix is involved
in more than 30 collaborations with Big Pharma, biotech and
genomics companies. Thus far, two of its collaborators, Pfizer and
Amgen, have advanced antibodies to the clinic. So, rather than add
more partnerships, Abgenix would like to expand existing
partnerships. It intends to bring targets forward at a slower
pace, clear out a preclinical backlog of candidates, and reduce
cash burn so that it has 3 years of cash on hand by the end of
2003. The company also plans to partner product candidates earlier
in the process, mostly at the preclinical stage. Abgenix is
building a future.
Contact:
Contact: Nadine
Wong
Company:
BioTech Stock Report
Voice:
503-649-1355
Fax:
503-649-4490
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