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An experimental cancer drug from


(IMMU) - Get Immunomedics, Inc. Report

could help deliver a one-two punch to patients suffering from non-Hodgkin's lymphoma.

A summary of early, but generally positive, test results on the company's drug, Lymphocide, were released Tuesday, ahead of next month's meeting of the American Society of Hematologists.

The so-called ASH annual meeting, running this year from Dec. 7 to Dec. 11, is one of the biggest medical get-togethers of the year. The ASH buzz -- and the accompanying Wall Street strategizing over possible winners and losers -- officially kicked off Tuesday with the public unveiling of research abstracts.

Immunomedics is garnering some early attention because Lymphocide, if ultimately approved, could prove to be another blockbuster in the fight against NHL, a cancer of the immune system that currently affects about 275,000 people in the U.S. Another 55,000 people are diagnosed with the disease every year.

The first such blockbuster NHL drug, Rituxan, has made its creators,


( DNA) and

Idec Pharmaceuticals

( IDPH), two of the biggest biotech companies on the block.

If Rituxan is good for NHL patients, maybe Rituxan plus Lymphocide is better. That's one of the working theories being explored by Immunomedics and its researchers. In a small, midstage test of this combination therapy on 18 NHL patients, the company found no signifcant side effects in 12 patients available for evaluation. Five patients also had "complete responses" to the therapy, an encouraging indication of efficacy. Based on these results, the company expects to move ahead with late-stage tests of the combination therapy with larger numbers of patients. These tests would provide more definitive efficacy results.

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"These results are encouraging," says Larry Smith, biotech analyst at Gerard Klauer Mattison. "Now, the numbers in the study are too small to draw any concrete conclusions, but there should be more details available during ASH." Smith rates Immunomedics a buy; his firm hasn't done underwriting for the company.

One hedge fund manager who is long Immunomedics concurs. "The results are right in line with what I expected. I'd like to see more numbers, but I think the company should have some nice momentum going into ASH."

Of course, there are doubters who aren't willing to simply overlook the study's small size, or some of the fine print.

"I was disappointed, actually," says another hedge fund manager, who has no position in Immunomedics. While acknowledging Lymphocide's good safety profile, this hedge fund manager was expecting to see more patients evaluated and better visibility into the drug's efficacy. His big sticking point: The 18 patients tested by Immunomedics in the study had never taken Rituxan before. That means the positive response shown by the five patients could have been a result of Rituxan alone, and not the combination with Lymphocide.

"If Immunomedics had done the test with Rituxan-refractory patients

those who failed to respond to the drug, I would have been more impressed," he says.

The company is actually in the middle of a late-stage test of Lymphocide, by itself, in Rituxan-refractory patients. Results are not expected until the second half of next year. If these results are positive, Immunomedics will use them to file for the drug's approval with the Food and Drug Administration.

Gerard Klauer analyst Smith says that if all goes well, Lymphocide could hit the U.S. market in early to mid-2004, with worldwide sales reaching $800 million by 2006.

Much of that revenue, however, will flow to


(AMGN) - Get Amgen Inc. Report

, which licensed North American rights to Lymphocide late last year. Amgen has already paid $18 million to Immunomedics for the drug's marketing rights, and it has agreed to pay another $65 million in additional payments triggered by undisclosed milestones in the drug's development. Amgen will also pay royalties to Immunomedics for Lymphocide, estimated by Smith to be about 20% on the first $100 million of sales, and 30% on sales of $500 million or more. These royalty rates are similar to those paid by Genentech to Idec Pharmaceuticals for Rituxan.

Both Rituxan and Lymphocide are monoclonal antibodies that target and destroy B-cells in a person's immune system. Non-Hodgkin's lymphoma occurs when these B-cells become malignant. Rituxan works by binding to a receptor called CD20 that sits on the outside of B-cells. Lymphocide works the same way, but binds to a different receptor called CD22.

Shares of Immunomedics closed Tuesday up 45 cents, or 2%, to $19.44. Volume was heavy at 865,000 shares, about three-and-a-half times the average trading volume. The stock's 52-week high of $24.25 was reached on Nov. 6, 2000. Its most recent high was $21.40 on June 29.