Biotechnology company OSI Pharmaceuticals gained an instant fillip in the share market Friday following the success of the drug Tarceva, its joint venture with Genentech Inc., in arresting the spread of lung cancer.
Shares of the New York-based company from Melville shot up $5.03, or 14.1 percent, to settle at $40.39 in afternoon trading. The stock had been recording between $32.10 and $53.71 over the last 52 weeks.
The trial, which involved 889 patients, was conducted by Roche Holding of Switzerland. The volunteers were given at least four cycles of chemotherapy and were then subjected to either a daily dose of Tarceva or a placebo, if the disease did not show any progress during chemotherapy.
Doctors found Tarceva stopped the spread of advanced non-small cell lung cancer, following the treatment with chemotherapy, the companies said. However, full results are awaited at a future medical conference.
Tarceva is presently an approved prescription drug given as a secondary treatment for patients who do not respond to chemotherapy. The present effort of the companies is to gain approval for the drug as a component of a first line of treatment.
Friday’s results have created a flutter in the market. BMO Capital Markets analyst Jason Zhang reaffirmed the "Outperform" rating on OSI. Zhang remarked that the drug could rake in $1 billion in sales globally for the companies.
"We expected this trial to be positive given its unique design and many supporting evidences," Zhang said in a note to investors. Referring to its oral administration and mild side effects, Zhang mentioned that Tarceva can prove to be a unique possible choice for lung cancer patients.
However, not everyone sounded so optimistic. Goldman Sachs analyst May-Kin Ho, for one, took a more cautious stand on the stock with a "Neutral" rating. More detailed data is awaited, she mentioned.
May-Kin Ho also noted that the recent study results will probably be compared with study data from the presently approved lung cancer drug Alimta, manufactured by Eli Lilly & Co., before allowing for a final stance on Tarceva’s market value.
In a note to investors, May-Kin Ho categorically stated that ‘without detailed data on SATURN (Tarceva study), it is difficult to assess the benefit of Tarceva versus Alimta.’
Meanwhile, shares of Genentech too recorded an upswing. The California based South San Francisco company charted a $1.27 rise to $83.07.
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