3
for treating a rare genetic disorder, is
already generating consistent revenue
streams for the company. We antici-
pate that the new products will do
equally well for Genzyme. However,
Genzyme will have competition in the
Fabry disease market. Transkaryotic
Therapies (NASDAQ: TKTX) also has
a recombinant enzyme for treating this
patient population and it too is safe
and efficacious. More importantly,
Transkaryotic submitted their BLA
before Genzyme, so they may get FDA
approval and "Orphan Drug Status"
first. If so, Genzyme won't be able to
market Fabrazyme for 7 years, but we
don't think this will significantly im-
pact Genzyme, as the patient popula-
tion is relatively small. It will be more
important though for Transkaryotic, as
this would be their first product for the
United States (U.S.) market.
Genzyme has yet another product
on the market that hasn't matured yet,
but should bring in significant revenue
for the next 5 to 10 years. This product
is RenaGel, and it is used to reduce
phosphate levels in kidney dialysis
patients. Phosphate is a byproduct of
the human body's metabolism, and
medical researchers are finding that
high levels of phosphate that accumu-
late in the blood of dialysis patients
between dialysis treatments are associ-
ated with accelerated hardening of the
arteries. Sales of RenaGel have in-
creased, and we expect it will grow fur-
ther, as the company is investigating
whether RenaGel should be prescribed
for more dialysis patients.
Genentech (NYSE: DNA) als o is
in our BioPortfolio, and it, too, has
products with great potential in late
stage. In particular, Genentech is at-
tempting to expand the uStock of two
marketed products, Rituxan and Her-
ceptin, and it has three new products
in Phase III. These include Tarceva,
which is being developed with OSI
Pharmaceuticals (NASDAQ: OSIP)
for a broad range of cancers that ex-
press the epidermal growth factor re-
ceptor; Avastin, a recombinant human-
ized monoclonal antibody (rhuMab)
against vascular endothelial growth
factor, to treat metastatic breast can-
cer; and Xanelim, a rhuMab that binds
specifically against CD11a positive
lymphocytes, which is being devel-
oped with XOMA (NASDAQ: XOMA)
to treat psoriasis. Of the three prod-
ucts, we think highly of Avastin,
which inhibits new blood vessel forma-
tion in metastatic cancer patients. Re-
sults from early clinical trials that were
sponsored by the company demo n-
strated that Avastin was efficacious.
This led the company and clinical in-
vestigators to halt the Phase II clinical
trials early so that they could design a
more sophisticated and definitive
Phase III clinical trial. Based upon
these results and the need for new
therapies against metastatic breast
cancer, the FDA has designated Avas-
tin as "fast track", which could exp e-
dite its path to market. If all goes well,
which we are confident it will, Avastin
has an excellent chance of reaching the
market and should be able to garner
market share, which means increased
revenue streams for a biotech that his-
torically has done well.
For the psoriasis market, Genen-
tech will have stiff competition, as Bio-
gen submitted a BLA to the FDA last
year for Amevive, and is waiting to
hear if Amevive will be approved.
However, we believe the FDA will
have concerns with Amevive, as stud-
ies in animal models and humans re-
port that Amevive can cause T cell
depletion, which would make patients
vulnerable to infections. Xanelim and
Amevive are both efficacious, so the
FDA will have to determine their com-
fort level, as increased infections are
an adverse event reported for both of
these biologicals and Immunex's
(NASDAQ: IMNX) Enbrel. Given this
information, it's difficult to say which
one will receive FDA approval first for
psoriasis. We anticipate Amevive will
get approved, but in our opinion, the
psoriasis market is huge, so there is
room for all three biologicals, as some
patients may not respond to the first
approved agent.
Another one that comes to mind is
Medimmune (NASDAQ: MEDI). Early
this year, Medimmune acquired Avi-
ron, another biotech in our BioPortfo-
lio with a promising vaccine candidate,
FluMist. FluMist is a live influenza
virus that has been crippled so that it
cannot cause disease. The live virus
has advantages over the routine dead
virus vaccines, as it is capable of in-
fecting cells in the nasal pasStocks
where it is deposited, but is unable to
spread further into the body. Last year,
the FDA review panel was concerned
with FluMist's safety profile in the
BioTech Stock Report, April 2002
"In investors' eyes,
these developments
are making the
biotech sector far
less dependent
upon Big Pharma
companies than in
the past."
