Sector Wrap: Celgene, Genentech in ASCO spotlight

Abstracts of clinical data to be presented at the meeting were released late Thursday. ASCO is considered one of the most important medical conferences of the year for the biotech industry, as the sector derives much of its revenue and profit from selling cancer treatments.

Jefferies analyst Eun K. Yang expects ASCO to be neutral for most stocks in the sector, but thinks Celgene's new Revlimid midstage data for relapsed non-Hodgkin's lymphoma could garner the company early approval. Celgene continues to plan for Phase III trials.

Friedman, Billings Ramsey analyst Jim Reddoch also said Celgene would be the stock he is "overweighting" going into the conference. He said the combination treatment of Revlimid/Velcade looks impressive as a first-line treatment for myeloma with 65 percent of patients showing a very good partial response or better, and maintenance data also was solid.

Lazard Capital Markets analyst Joel Sendek said Celgenes Revlimid/Velcade combination in front-line myeloma appears "marginally more effective" than each drug alone, but said acute myeloid leukemia data was uninspiring, and debate over Revlimid's ability to successfully harvest stem cells continues.

Celgene shares rose $1.80, or 3 percent, to close at $61.09.

Genentech said it now expects final safety and effectiveness data from a trial of its cancer drug Avastin in colon cancer patients to be ready by 2009, a full year earlier than previously forecast. It also said it will present encouraging results from a midstage study of Avastin in glioblastoma multiforme (GBM), an aggressive type of brain cancer.

UBS analyst Maged Shenouda doesn't read anything into the early completion of the trial, but said that if adding Avastin to treatment in colon cancer delivers a significant disease-free survival benefit, it would mean upside to his Avastin estimates.

Shenouda currently forecasts 2008 Avastin sales of $2.9 billion growing to $4 billion in 2011. He rates Genentech a "Buy" with a $92 price target.

Rodman & Renshaw's Michael King is relieved Avastin appears to be safe in the colorectal cancer setting, and was pleased that the combination of Avastin and Erbitux in GBM produced impressive response rates in patients who had received chemotherapy. He backed a "Market Outperform" rating and $90 price target on the stock, saying Genentech is ready to show renewed earnings growth in the coming years.