UPDATE 3-Cancer drug Erbitux seen limited threat to Avastin
(Adds ImClone, Genentech, Bristol-Myers shares; more reaction from analysts and doctor)
LONDON, June 2 (Reuters) - Roche Holding AG (ROG.VX) and Genentech Inc DNA.N shares jumped on Monday as investors decided new clinical data meant rival drug Erbitux posed no immediate threat to their cancer blockbuster Avastin.
The weekend news from the world's top cancer meeting, suggesting earlier fears were overdone, hit the stocks of Erbitux developer ImClone Systems Inc IMCL.O and its partners Merck KGaA (MRCG.DE) and Bristol-Myers Squibb Co (BMY.N).
Although Erbitux showed some encouraging results, presentations at the American Society of Clinical Oncology (ASCO) annual meeting in Chicago did not amount to a knockout blow for the rival treatment, industry analysts said.
Andrew Baum and Steven Harr of Morgan Stanley wrote in a note that Avastin had emerged "a relative winner".
Deutsche Bank said the perception of Avastin's competitive profile had been strengthened by the ASCO updates and the brokerage reiterated its forecast that Avastin sales would reach 10.2 billion Swiss francs ($9.8 billion) by 2012.
Roche participation certificates, its most widely traded form of equity, gained 4.7 percent to 188.10 Swiss francs by 1515 GMT, as Merck slid 3.3 percent to 87.39 euros.
In New York trading, Genentech added 3.2 percent to $73.13, as ImClone fell 5.9 percent to $41 and Bristol-Myers lost 3 percent to $22.11.
New findings that colon cancer patients with a certain genetic mutation were unlikely to benefit from Erbitux added to concerns about its commercial prospects.
Both UBS and Goldman Sachs said Erbitux had not produced clinical data to threaten Avastin's outlook, while JP Morgan -- initiating Roche coverage with an "overweight" rating -- said the risk to Avastin from Erbitux in the key areas of colorectal and lung cancer was limited.
LUNG CANCER
Avastin is approved for treating colorectal, lung and breast cancer, while Erbitux is currently approved for colorectal and head and neck cancer.
Most attention at ASCO was focused on a new study of Erbitux in lung cancer, which found patients taking it with chemotherapy lived about five weeks longer than patients treated with chemotherapy alone [ID:nN31394375].
Credit Suisse described this 1.2-month survival increase as "unremarkable", while analysts at Equinet said they had been hoping for a benefit of more than two months.
Dr. Thomas Lynch at Massachusetts General Hospital Cancer Center called the Erbitux trial results "clinically meaningful", but said the drug should only used only in patients who were not eligible for Avastin.
At the same time, new data for Avastin in breast cancer indicated that a higher dose of the drug may be more beneficial for patients -- a finding that may boost Avastin sales in this setting [ID:nN31441734].
Worries about competition from Erbitux have overshadowed Roche's stock price this year, reflecting the importance of the medicine to the company's future growth.
Total Avastin sales hit 4.1 billion Swiss francs ($3.9 billion) last year -- three times Erbitux's $1.3 billion -- and are expected to increase rapidly in the coming years, given the medicine's potential in a range of tumour types.
UBS said it expected Roche stock to recover in the run-up to first-half results on July 24.
Exane BNP Paribas, meanwhile, downgraded Merck to "neutral" from "outperform", arguing its product newsflow will now ease.
Avastin is an antibody that works by cutting off blood supply to tumours, while Erbitux is an antibody designed to block a protein called epidermal growth factor, which is believed to play a role in cancer cell growth. (Additional reporting by Deena Beasley in Chicago; editing by Jason Neely and Sue Thomas)
