Genentech on a Roll

Somaiya's optimism is based on a National Cancer Institute study that shows patients taking Avastin plus two standard treatments for lung cancer had an improved overall survival rate -- or a reduced death rate -- compared with patients solely receiving chemotherapy.

The study says Avastin patients had a median survival rate of 12.5 months compared with 10.2 months for the chemotherapy-only patients. The difference is statistically significant. More details will be unveiled next month at a major cancer-research conference.

Analysts say they'll need more details on the tests involving Rituxan and rheumatoid arthritis before they're as gung-ho as they are about Avastin.

"Physicians are very excited about the prospects of Rituxan, but we believe there are just too many unanswered questions about Rituxan at this stage, which may take years to resolve," says Craig C. Parker, of Lehman Brothers, in an April 6 report to clients. He has an equal weight rating on Genentech. He doesn't own shares; his firm has had a noninvestment banking relationship with Genentech.

On April 6, Genentech and its Rituxan partner Biogen Idec (BIIB) said preliminary tests results showed patients taking Rituxan plus another drug, methotrexate, had statistically significant improvements vs. patients taking methotrexate plus a placebo after 24 weeks of treatment. Improvement was based on measurements of reduced swelling and tenderness in joints, plus other indicators.

Mark E. Augustine, of Credit Suisse First Boston, speculates that Genentech and Biogen Idec might unveil more Rituxan data at a medical conference in Vienna in June. He predicts the companies by year-end will file applications to regulators in the U.S. and abroad for Rituxan as a rheumatoid arthritis treatment. He has an outperform rating on Genentech. He doesn't own shares; his firm has had an investment banking relationship with Genentech.

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