Analyst says Regeneron oversold on drug failure

A Lehman Brothers analyst said Regeneron Pharmaceuticals Inc.'s cancer drug aflibercept compares more favorably with Genentech Inc.'s Avastin than investors realize.

Late Wednesday, the company reported disappointing data from a late-stage trial of aflibercept in ovarian cancer. Its shares dropped 19.6 percent in Thursday trading. Analyst Jim Birchenough said investors are comparing that trial data to those for Avastin, but the patients in the latest round of testing had more advanced disease, which affects the results and makes the comparison flawed.

Overall, trials of aflibercept against glioblastoma (brain tumors), ovarian cancer and colorectal cancer have shown the drug is about as effective against tumors as Avastin, he said.

Both drugs are designed to block a protein called vascular endothelial growth factor-A, which helps tumors grow new blood vessels and feed themselves.

Avastin has been approved to treat cancers of the colon, lung and breast, and is in clinical testing to treat numerous other cancers. Aflibercept is being tested as a treatment for ovarian cancer, lung cancer, colorectal cancer and pancreatic cancer. Regeneron is developing the drug with Sanofi-Aventis SA of France.

Birchenough kept an "Overweight" rating on Regeneron. He said other trials show that at the same dose levels, aflibercept and Avastin have similar patient dropout rates and similar side effects.

Regeneron shares slid 53 cents, or 3.4 percent, to $14.82. Stocks sank Friday after the Labor Department reported an unexpectedly large increase in unemployment rates in May.