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Cancer drug may prove to be a blockbuster

Millennium's stock is soaring on robust sales

Email|Print| Text size + By Todd Wallack
Globe Staff / December 10, 2007

Millennium Pharmaceuticals Inc.'s only drug on the market, Velcade, is shaping up to be a potential blockbuster.

Shares in the Cambridge biotechnology company's stock recently hit a three-year high after Millennium reported surprisingly robust sales for the cancer drug, the company's only drug on the market.

Analysts say doctors are increasingly relying on Velcade to treat two types of cancer, multiple myeloma and mantle cell lymphoma. This week, Millennium plans to present additional studies showing the drug's effectiveness at a medical conference in Atlanta.

"There's a lot of momentum for the drug," said Dr. Nancy Simonian, the company's chief medical officer.

Millennium recently estimated US sales alone will grow 20 percent this year, to $265 million, higher than initially expected. And a Cowen & Co. analyst, Rachel McMinn, predicted in a research report that US sales will probably climb to $420 million by 2009. McMinn predicted international sales will increase from roughly $500 million this year to $921 million in 2009, giving Velcade well over the $1 billion in annual worldwide sales that's used to define blockbuster in the pharmaceutical industry.

Though Millennium sells only Velcade in the United States, its partner Johnson & Johnson sells Velcade in more than 85 other countries and has provided Millennium with a steady stream of royalties and other payments.

The excitement about Velcade has sent Millennium's stock soaring in recent months. The shares hit a three-year high of $15.77 on Nov. 28. And the stock closed Friday at $15.07, up 51 percent in the last three months.

Millennium, founded in 1993, now has a stock market value of close to $5 billion, making it one of the biggest biotech companies in Massachusetts. It has 960 employees, including 850 in the state. Last quarter, Millennium reported a $1.7 million loss on $122 million in revenue.

Velcade is part of a class of drugs called proteasome inhibitors, which block key processes in cancerous cells and cause them to die. Traditionally, it has been used to treat myeloma only after first trying other treatments. But yesterday and today, Millennium is presenting data from 20 trials at the annual American Society of Hematology conference showing the drug is effective as a front-line treatment for multiple myeloma. The company is also testing Velcade's effectiveness in treating other types of cancer, such as non-Hodgkin's lymphoma.

Still, Velcade faces plenty of competition, such as from CelGene Corp.'s Revlimid drug. Some of its competitors are expected to release their own dazzling data at this week's hematology conference, which could hurt Millennium's stock.

In addition, at least two drug makers, Proteolix Inc. and Nereus Pharmaceuticals Inc., are in the early stages of developing next-generation proteasome inhibitors that could compete with Velcade.

"I don't think we know at this point how the market will shake out," said Howard Liang, an analyst with Leerink Swann & Co., of Boston.

Though Millennium brought Velcade to market, the drug was discovered by ProScript, a small biotech. ProScript was purchased by Leukosite in 1999, which itself was sold to Millennium a few months later. At the time, Velcade was an obscure molecule, called PS-341, in early clinical trials. But Millennium soon realized its potential after it showed strong results in early tests.

After several years of additional development, Millennium won federal approval to market the drug in the United States in 2003.

Millennium has also developed other experimental drugs to treat cancer and inflammation. But so far, Wall Street has been skeptical. Last month, Millennium said it would scuttle development of an experimental drug to treat rheumatoid arthritis after it failed a mid-stage trial.

The company's efforts to develop drugs "continue to disappoint," Citigroup analyst Yaron Werber wrote in a research note.

"While Millennium will continue to develop other candidates . . . the products are early in development and we lack confidence that these drugs can be competitive from the data seen thus far."

Todd Wallack can be reached at twallack@globe.com.

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