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Banc of America downgraded OSI Pharmaceuticals (OSIP
) to market perform from buy.
Analyst Michael King says he's surprised by AstraZeneca's disappointing news of failed trial data for its lung cancer drug. He says the news is negative for OSI's Tarceva (epidermal growth factors [EGF] Receptor inhibitor), as both drugs are similar.
King notes OSI, with Genentech and Roche, is currently conducting trials of Tarceva in both front-line and refractory non-small cell lung cancer. While it is difficult to determine the impact to OSI's model, King cut his worldwide fiscal 2002 to fiscal 2007 Tarceva revenue estimates to $264 million, $580 million, $929 million, $80 million, $160 million and $270 million, respectively.
He assumes the class of drugs that inhibit epidermal growth factors -- enzymes found in more than 50% of cancer types that set off a whole chain of events needed for the tumor cells to survive and spread -- will be relegated to use in patients with refractory disease, which is a significantly smaller market.
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