A Tale of 2 DNA Drugs

While Genentech's (NYSE: DNA) lead drug, Avastin, has produced a string of successes this year, its No. 2 compound, Rituxan, remains trouble-plagued. Yesterday, Genentech and partner Biogen Idec (Nasdaq: BIIB) announced that Rituxan had failed clinical trial tests as a treatment for systemic lupus erythematosus, an organ-damaging inflammatory disease.

The failed late-stage lupus study would have opened the door for a possible label expansion and sales growth for Rituxan, which is already approved for use in a wide variety of disorders from non-Hodgkin lymphoma to rheumatoid arthritis. Earlier this month, Rituxan also failed in a late-stage study for primary-progressive multiple sclerosis, an extremely difficult disease to treat.

Getting positive Rituxan study results for either of those conditions would have been a bonanza for Genentech and Biogen. There are precious few treatment options for either disease, though not for drugmakers' lack of trying. Pharmaceutical companies such as La Jolla (Nasdaq: LJPC) and Aspreva (Nasdaq: ASPV), to name just two, simply haven't had much success in producing robust study results in treating lupus, or getting potential treatments past regulatory agencies.

Genentech and Biogen aren't done testing Rituxan against lupus, though. They also have a phase 3 study in lupus nephritis under way, and it's not unusual for drugs treating such tricky conditions to produce mixed clinical trial results from one subtype to the next. Genentech expects results from this second study in the first quarter of 2009.

Rituxan is currently Genentech's top drug by sales (barely), bringing in almost $2.3 billion in sales last year. But since Genentech has to share the spoils of Rituxan with partner Biogen, cancer treatment Avastin is actually the company's most important compound. In the first quarter, Genentech's sales of Rituxan and Avastin both rose 13% year over year, to approximately $600 million each. But while Rituxan has faltered in the clinic, Avastin has flourished, receiving accelerated approval from the FDA as a treatment for breast cancer. Let's hope some of its good fortune can rub off on Rituxan.