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CHICAGO -- Abgenix ( ABGX) and Amgen ( AMGN) said Saturday that their targeted cancer drug, ABX-EGF, was effective in shrinking tumors in patients with advanced colon cancer, but the scope of the drug's efficacy may fall short of Wall Street's elevated expectations.

According to an interim look at 40 patients in an ongoing phase II study, four patients treated with ABX-EGF -- or 10% -- saw their tumors shrink by at least 30%. Patients in the study, all of whom had failed chemotherapy, were given ABX-EGF once weekly for eight weeks, and then assessed for tumor response. The data were presented today at the annual meeting of the American Society of Clinical Oncology.

The fact that ABX-EGF invoked a 10% response rate in these very sick colon cancer patients is clinically meaningful -- and robust enough for Abgenix and Amgen to continue the study, which is now enrolling 150 patients. But that may not be good enough to appease some of Wall Street's biotech fund managers, who have bid up Abgenix shares in anticipation of a response rate in the upper end of the 10% to 15% range, or even higher.

"This data is preliminary but we're encouraged to see responses in patients that are heavily pre-treated," says Gisela Schwab, Abgenix's chief medical officer. "This signals activity of ABX-EGF in this patient population." Schwab adds that other than a skin rash (more on that later), ABX-EGF caused no significant safety problems, including no antibody formation or any type of hypersensitivity reactions.

One biotech hedge fund manager is not as sanguine. "From my perspective, this data is a disappointment because I expected ABX-EGF to perform better than Erbitux," he says. This fund manager was long Abgenix in the weeks leading up to ASCO but currently has no position in the stock.

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