Prostate drugs keep rolling: Cell Genesys gets positive data

Cell Genesys Stock Surges on Positive Follow Up Data for Prostate Cancer Drug Candidate

Shares of biotechnology company Cell Genesys Inc. jumped Tuesday on positive follow-up data from the company's prostate cancer drug candidate.

The stock gained $1.39, or 32.3 percent, to close at $5.70 on the Nasdaq Stock Market. Shares have traded between $2.77 and $8.10 over the last 52 weeks. Volume Tuesday neared 60.3 million shares, more than 58 times its normal trade.

The company said follow-up data from a mid stage clinical trial of GVAX showed patients survived longer. Cell Genesys is using the same dosage in its ongoing late-stage study of the drug.

JP Morgan analyst Richard Smith reaffirmed a "Neutral" rating on the stock citing the data and said the company is a longer term play, with Phase III clinical trial data expected in late 2008.

"In the meantime, we see close management of expenses as necessary to reach the goal line," he wrote in a note to investors.

Cell Genesys was also given a boost by the recent Food and Drug Administration panel endorsement of Dendreon Corp.'s prostate cancer vaccine Provenge, he said. The FDA is expected to make a decision on whether to approve that drug May 15.

Meanwhile, Canaccord Adams analyst Joseph Pantginis reaffirmed a "Buy" rating with a $7 price target, also citing Dendreon's good news.

The data update from Cell Genesys can also help the company in its partnering discussions, he wrote in a note to investors.

"We view this GVAX prostate survival update as a strong incremental positive for Cell Genesys that further solidifies our projection that GVAX Prostate will play an integral role in the treatment of prostate cancer," he wrote.

Some on Wall Street urged caution, however. Lehman Brothers analyst Jim Birchenough noted that the study showed promising results compared to the current standard of treatment, but added that the small number of patients involved and other issues may have biased the results. He pointed to a number of Phase II studies that showed positive results that didn't pan out under further testing. "Indeed with only 22 patients as a basis for GVAX analysis and no way to control for patient selection bias, we believe that GVAX survival data is more likely driven by better patient baseline status than specific drug effect," he wrote.

Birchenough reiterated an "Equal Weight" rating and $3 price target on the shares.

CEGE What is the product?
GVAX is akin to DNDN's product in that it serves as a vaccine for tumor formation. It primes the immune system to help fight against cancerous cells by using whole-cells designed to stimulate an immune response. The vaccines are comprised of tumor cells that have been genetically in the laboratory that are modified to secrete GM-CSF, [see DNDN from yesterday] an immune stimulatory hormone that plays a key role in stimulating the body's immune response to vaccines. I don't buy the skeptic saying the study numbers are too small. Always another angle.

CEGE closed today's trading up 32% per share to $5.70.