UPDATE 3-Genentech, Biogen say Rituxan fails in lupus study

(Adds analyst's comment, paragraphs 3, 6)

By Deena Beasley

LOS ANGELES, March 11 (Reuters) - Genentech Inc DNA.N and Biogen Idec Inc (BIIB.O) said on Wednesday that a pivotal trial failed to show that their cancer drug Rituxan is an effective treatment for lupus nephritis, a type of kidney disease.

The results mark the third failure for Rituxan in autoimmune disease after disappointing trial results last year in multiple sclerosis and systemic lupus erythematosus, commonly called lupus.

"We are disappointed in the missed upside opportunity, but maintain our Rituxan estimates and believe future growth in Rituxan could still come from increased use in rheumatoid arthritis," RBC Capital Markets analyst Jason Kantor said in a research note.

Lupus nephritis is an inflammation of the kidney and a complication of lupus, which is characterized by inflammation of the joints, skin, major organs and central nervous system as the immune system attacks healthy tissues and cells.

Shares of Biogen were down about 1 percent at $46.09 after hours, while shares of Genentech, for which majority owner Roche Holding AG (ROG.VX) has offered $93 a share in a hostile takeover bid, were unchanged at $92.17.

Kantor said the latest results would have no impact on the ongoing valuation discussions between Roche and Genentech because each would have assigned a very low probability of success for the trial.

Lupus tends to flare up and wane, making it difficult to assess the effectiveness of any treatment and it has been more than 30 years since a new therapy has been approved for the disease.

La Jolla Pharmaceutical Co (LJPC.O) last month said it would stop developing its lead drug candidate, an experimental treatment for lupus called Riquent, after an interim efficacy analysis showed negative results.

"We are disappointed that Rituxan did not show a significant benefit in patients with lupus nephritis, a complex and serious disease," Hal Barron, Genentech's chief medical officer said in a statement. "Using the insights from this study, we will continue to look for new approaches to the treatment of lupus."

The company said a preliminary analysis of safety data from the yearlong trial involving 144 patients did not reveal any new or unexpected safety signals for Rituxan.

The drug, which is Genentech's second-biggest seller with 2008 receipts of $2.59 billion, is approved to treat non-Hodgkin's lymphoma, as well as rheumatoid arthritis. (Reporting by Deena Beasley, editing by Leslie Gevirtz)