Biotech bulls were out in full force at this year's
American Society of Hematology
meeting, touting bright prospects for drugs from
The much-heralded blood-diseases meeting featured few surprises, since much of the clinical trial data had come out earlier in abstract form. But the meeting gave sell-side analysts a chance to talk about their favorite stocks and assess whether doctors are going to prescribe the new drugs. With biotech stocks their usual volatile selves, insight into what's working and what isn't could certainly help investors.
Among the curious analysts was Rob Toth. The
analyst says Genentech and
Rituxan took center stage, with reams of data showing it improved patient survival in treating non-Hodgkin's lymphoma in combination with chemotherapy.
"This is the first regime that has been shown to improve chemotherapy in a decade," says Toth, who rates Genentech a strong buy and whose firm does no banking for it. "The question on everyone's mind is how quickly the adoption rate will be when figuring in the numbers."
Both stocks jumped more than 8% Tuesday as tech stocks rallied sharply following signs the Fed may soon begin cutting interest rates.
The annual meeting, which attracts thousands of blood disease specialists each year and is a major biotech forum, also featured presentations from doctors using Celgene's thalidomide derivative Thalomid as a first-line therapy for treating multiple myeloma, a blood cancer.
Oncologists are already using the controversial drug "off label" for treating the disease, although it is approved only for a relatively small market of complications from leprosy. The company plans to use some of the data to gain approval to sell the drug as a cancer treatment next year.
The studies "should drive the use of Thalomid in early stage multiple myeloma patients," says
US Bancorp Piper Jaffray
analyst Peter Ginsberg, whose firm rates Celgene a strong buy and has advised the company. Ginsberg forecasts Thalomid sales will grow from an estimated $64 million this year to $107 million next year.
Still, some say Thalomid side effects at higher doses, such as a nervous system disorder called neuropathy, may cut sales and worry regulators. "The Thalomid data wasn't perfect," notes John McCamant, editor of
Medical Technology Stock Letter
. All the same, Celgene rallied 12%.
The meeting comes at a choppy time for biotech investors. The
Nasdaq Biotech Index
rose nearly 8% to 1126 Tuesday after falling Monday by roughly the same amount amid pessimism over the slowing economy.
But the biotech indices have generally held up better than Nasdaq, which is down nearly 30% from the beginning of 2000, pummeled by repeated bad news from top computer and technology stocks.
"There were a lot of positives at the ASH meeting, but also a lot of 'buy on the rumor, sell on the news,'" says McCamant.