Updated from 5:39 p.m. ESTShares of Millennium Pharmaceuticals ( MLNM) soared 21% after hours Wednesday after the biotech firm said it intends to seek regulatory approval in early 2003 for its experimental cancer drug, Velcade. The company also announced a host of upper management changes, including the resignation and replacement of its chief operating and financial officer. The Cambridge. Mass.-based biotech firm is developing Velcade initially as a novel treatment for multiple myeloma, a cancer of the bone marrow. The company said Wednesday that it intends to seek Food and Drug Administration approval based on results from a phase II study. Final results from this study will be
John Maraganore, Millennium's senior vice president of strategic product development, essentially one of the company's top scientists, is also leaving to become chief executive of an unnamed biotech firm. TheStreet.com has learned that another Millennium executive, Michael Kaufman, project leader in charge of Velcade, also left the company about six weeks ago to join a biotech startup. Kaufman's departure was confirmed by Millennium spokeswoman Kelly Lindenboom. The departures of these executives, especially Starr and Maraganore, have some fund managers concerned that they disagreed with the decision to file Velcade early. All the executive departures are completely unrelated to the Velcade filing decision, says Lindenboom. "Ideally, we would have preferred to hold the
Velcade news until after ASH," she says, referring to the American Society of Hematology meeting next week. "But we didn't think it would do us or our shareholders any good by releasing bad news today about the executive changes while holding onto the good news about Velcade." Millennium didn't offer any specific timeline on the Velcade filing other than to say it would happen in early 2003. The company intends to seek accelerated approval, which means the FDA would review the drug in six months. Such accelerated approvals are contingent on the completion of confirmatory studies, in this case, the Velcade phase III study. "Millennium is taking a more risky regulatory approach, no question about it, but the potential rewards are more than worth it," says ThinkEquity Partners analyst Ed Tenthoff. "This is really my best case scenario for Velcade because it moves up potential approval by a year," he adds. In his old model, Tenthoff was forecasting Velcade approval in late 2004; now that's pushed up to late 2003. Tenthoff rates Millennium overweight and his firm doesn't do banking for the company.