2009: the year ahead

One of the major events scheduled for 2009 is the finalisation of Roche's acquisition of Genentech. Having been initially outlined in July 2008, when Roche proposed to acquire the outstanding publicly-held interest in Genentech for US$89.00 per share in cash, or a total payment of approximately US$43.7 billion, the deal has since stalled. After considering the offer, Genentech concluded that Roche's proposal significantly undervalued the company.

At the time, the offer represented a one-day premium of 8.8 per cent to Genentech's closing price of US$81.82 on 18th July and a one-month premium of 19.0 per cent to Genentech's closing price of US$74.76 on 20th June. However, many analysts predicted that the move undervalued the company and saw Genentech's refusal coming, pricing the company higher at between US$100.00 and US$120.00 per share. Genentech shares have recently been trading between US$81.00 and US$84.00.

With both companies refusing to move, the current situation could ultimately work in either's favour. With Roche drawing out the process, it may be possible to extract a lower price for Genentech's remaining shares. However, it looks more likely that a delay will benefit Genentech shareholders as final results from the NSABP C-08 study of Avastin (bevacizumab) plus chemotherapy in adjuvant early-stage colorectal cancer are expected in the first half of 2009. Following an interim analysis in October 2008, the independent Data Monitoring Committee overseeing the trial recommended that the study continued as planned. Investors are watching the study closely since it may open up a major new market for Avastin and the news may strengthen Genentech's position when negotiating a higher bid from Roche. Additional results are expected from studies investigating Avastin in breast cancer and Rituxan (rituximab) as a potential lupus treatment, possibly further strengthening Genentech's case.

With the current financial climate set to continue into 2009, there are sure to be more companies adopting cost saving programmes and re-aligning their activities to focus on drugs that offer near-term value. It is expected that the development of many early-stage drug candidates will be put on hold or discontinued as companies look to streamline and reduce cash expenditure. As was seen in 2008, funding will still be a big hurdle for biotech companies, with many expected to merge and consolidate or disappear altogether.

Access to new drugs looks set to remain an issue. However, in the UK, the National Institute for Health and Clinical Excellence (NICE) has just issued new guidelines, which should improve access to life-extending drugs for people dying from cancer. NICE appraisal committees will now follow the new guidelines, which were drawn up following a public consultation, when reviewing treatments that may extend the lives of patients who are terminally ill.

The guidelines cover drugs that would normally be deemed too expensive for standard NHS use and which are licensed for a terminal illness affecting a small number of patients with less than two years to live. The drugs will have to meet set criteria in order to be approved for NHS use, including being shown to extend life by at least three months compared with standard NHS treatment. Experts estimate that some 10,000 cancer patients a year in the UK could benefit from the move. However, how these guidelines are put into practice over the next 12 months will give more of an indication of real impact.

Matthew Dennis - Editor, Cancer Drug News