UPDATE 2-Genentech's Rituxan not effective in type of MS

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SAN DIEGO, April 14 (Reuters) - A Phase II/III trial of Rituxan, marketed by Genentech Inc (DNA.N: Quote, Profile, Research, Stock Buzz) and Biogen Idec Inc (BIIB.O: Quote, Profile, Research, Stock Buzz), failed to show that the cancer drug is an effective treatment for primary-progressive multiple sclerosis, the companies said on Monday.

Genentech and Biogen Idec said they will continue to analyze the study results and will submit the data for presentation at an upcoming medical meeting.

Rituxan is approved for use as a treatment for non-Hodgkin's lymphoma and rheumatoid arthritis.

Mark Schoenebaum, an analyst at Bear Stearns, said the market potential for the MS indication "was relatively small," at around $250 million in U.S. sales.

"We believe most Street observers viewed this trial as very high risk -- thus, stock downside should be small," he said in a research note.

Shares of Genentech, which closed down $2.10 at $74.69 on the New York Stock Exchange, were trading at $74.02 after hours. Biogen, which closed 50 cents lower at $63.72 on Nasdaq, fell to $62.00 in after-hours trading.

Schoenebaum said the next data on Rituxan is expected within the next few weeks from a trial in lupus.

"We (and the Street) are more optimistic about this trial. However, we currently carry no lupus estimates. Were the trial to succeed, we peg the lupus market opportunity in the U.S. at around $800 million," he said.