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Biotech Stock Mailbag: Immunomedics

BOSTON ( TheStreet) -- The Biotech Stock Mailbag went AWOL last week. My apologies. I'm back and kicking off this week's Mailbag with an email from EK Watt on Immunomedics (IMMU - Get Report) and its experimental lupus drug.

EK asks, "Can Immunomedics be the competitive killer in lupus to Human Genome Sciences' (HGSI) Benlysta?"

Human Genome's Benlysta has about a three-year head start on Immunomedics' epratuzumab (e-mab, for short), so EK's question is difficult to answer. Data from a phase II study of e-mab in lupus patients will be presented at a European rheumatology conference on June 19. The Belgian drug firm UCB is running the e-mab lupus program under a license from Immunomedics.

The research abstract for the e-mab phase II lupus study was made available online Wednesday night. Lupus patients treated with 2,400 mg of e-mab reported a 43% response rate compared with a 21% response rate for patients treated with placebo. Response was measured after 12 weeks of treatment. E-mab doses of 200 mg, 800 mg and 3,600 mg also were studied.

Here are two views of the data contained in the abstract, first from a health care fund manager who is long Immunomedics. (His firm's compliance rules bar him from speaking publicly.)

"The data look pretty good and interesting with three caveats -- the highest dose was dead negative, did nothing, not even a trend. Also, the statistics are post-hoc (UCB never had a statistical analysis plan since this study was dose-ranging). The original press release [issued in August 2009] had no p values and Immunomedics was criticized for this, so they did some albeit post-hoc. Finally, these results are driven by small numbers of patients.

The study is a very simple design -- get standard of care and then either e-mab or not. The drug appears to work more quickly than Benlysta -- 13 weeks and well-tolerated. The highest dose, though, is a head scratcher... I think the data are overall positive and I think the data are real -- but very little comfort when predicting the phase III data since such small numbers."

Avik Roy, health care analyst with Monness Crespi Hardt, presents the bear story on Immunomedics and the e-mab lupus data. Roy has a selling rating on Immunomedics and he lowered his price target to $1.50 after the e-mab lupus research abstract was posted Wednesday night.

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