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Glaxo bets on experimental cancer drug
Glaxo partners with Human Genome on cancer drug; analysts point to blockbuster potential.
August 18, 2005: 12:06 PM EDT
By Aaron Smith, CNN/Money staff writer

NEW YORK (CNN/Money) - GlaxoSmithKline has thrown its big pharma weight behind an experimental anti-cancer drug being tested by Human Genome Sciences.

Glaxo (up $0.55 to $48.46, Research) and Human Genome (up $0.28 to $12.78, Research), which have partnered on various projects since 1996, will split costs and potential profits on HGS-ETR1, a drug that is being tested to kill tumor cells. If successful as a multi-use drug, it could be used to fight non-small cell lung cancer, non-Hodgkin's lymphoma and colorectal cancer.

"It could be the next Avastin," said Hanzhong Li, analyst for Suntrust Robinson Humphrey, referring to a Genentech cancer treatment that had $447 million in sales in the first half of 2005. Avastin sales have grown rapidly since its debut in February 2004 and could hit the $1 billion mark this year.

Li said that HGS-ETR1 has strong sales potential because it is being tested to treat "a broad spectrum of cancers." However, the drug still faces two or three years worth of testing so it is difficult to project sales, said Li. Even if the drug successfully completes clinical trials and is rapidly approved by the Food and Drug Administration, it would not enter the market earlier than 2008.

"It does have blockbuster potential," said Alexander Hittle, analyst for A.G. Edwards. "[Glaxo] may have seen something in the data that leads them to be particularly optimistic about this."

Hittle said that if HGS-ETR1 is successful, it could one day be used to prolong the life of cancer patients by managing the disease, just as the HIV virus is currently managed through drugs.

Glaxo spokeswoman Gaile Renegar said this is latest agreement a "long-standing relationship" with Human Genome. "We obviously wouldn't be exercising our licensing options if we didn't have confidence in it," said Renegar.

Human Genome spokesman Jerry Parrott said his company would benefit from Glaxo's financial strength, drug developing expertise, marketing force and global presence.

Mark Monane, biotech analyst for Needham, said the 50-50 split is a win-win and demonstrates the growing importance of biotechs.

"It's another example of biotech, the home of innovation, and big pharma, which has been very successful in marketing, getting together," said Monane. "Gone are the days where biotechs would give things away for single-digit royalties."

London-based Glaxo is one of the world's largest drug companies, with $39 billion in 2004 sales. Founded in 1992, Human Genome is based in Rockville, Maryland and does not have significant revenues.

The analysts do not own shares in the companies mentioned. Suntrust trades Human Genome shares. A.G. Edwards owns Human Genome stock.

For a biotech story on stem cells, click here.  Top of page

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