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Genetech Inc. (DNA); Biogen Idec Inc. (BIIB) – Promising Drug Falls Short

The drug Rituxan, which is marketed by both Genetech Inc. (DNA) and partner Biogen Idec Inc. (BIIB), has failed to make any headway in the fight against lupus, a disease affecting the immune system and targeting more than one million Americans each year. There has never been much progress toward a cure, and some felt that Rituxan would be that miracle.

The medication is already approved as a treatment for rheumatoid arthritis and some types of cancer, but the hope – that Rituxan might be effective against lupus – has fallen through. While the companies realize the serious challenges in developing a treatment for lupus, the Chief Medical Officer for Genetech, Hal Barron, has been quoted as saying he is “…disappointed in the results”.

With the recent news, Genetech stock fell 7.2%, while Biogen’s fell 5.2%, showing that investors were just as disappointed. At the same time, stock for Human Genome Sciences Inc. (HGSI) dipped 4% on the news of Rituxan’s failure. HGSI is in development for a lupus drug which works in similar fashion to the failed medicine.

No new drugs have been approved for lupus in over twenty years, and the ones that are being used have very serious side effects. The company that can create an effective lupus treatment could see profits of $750 million or more per year. While one form of lupus has proven resilient to Rituxan, Genetech and Biogen are hopeful that it will be useful in treating other forms of the disease. Research and trials are currently underway.

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