12:00 AM
Apr 27, 2009
 |  BioCentury  |  Finance

Avastin's tender mercies

The negative outcome of Genentech Inc.'s adjuvant colorectal trial of Avastin bevacizumab was a nice illustration of why investors and companies do expected value calculations - and why investors were happy to tender their Genentech shares to Roche for $95 a share last month.

Buysiders and both companies had put the trial's chances of success at anywhere from 50/50 to 60/40, with potential to have moved Genentech's price from as low as $70 to as high as $120.

In a February SEC filing, Roche gave Avastin a 55% chance of success as an adjuvant in colon cancer, reduced from the 61% probability of success it had assigned the trial in November 2008.

Roche noted in the same filing that it assigned adjuvant non-small cell lung cancer (NSCLC) testing a 38% chance of success, down from the 55% it had assumed in November 2008.

In its own February SEC filing, Genentech gave the adjuvant colorectal indication a 61% chance of success. It was less optimistic for adjuvant use in breast and lung cancer, for which it assigned 50% and 55% probabilities, respectively.

Sven Borho of OrbiMed Advisors said, "I would have given it little better odds than a flip of the coin. It was not a surprise at the end of the day."

Oliver Marti of Columbus Circle Investors agreed: "I always thought it was 50/50," he said.

Roche ended up taking the hit. The pharma's shares fell CHF16 (10%) to CHF137.40 on Wednesday, the day it announced that Avastin plus FOLFOX chemotherapy missed the primary endpoint of an improvement...

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