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Sales of Corixa cancer drug Bexxar lagging

By Luke Timmerman
Seattle Times business reporter

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But after a decade of clinical testing, and a three-year ordeal to get it approved by regulators, the drug isn't selling as well as originally expected. The Seattle biotech company said yesterday the targeted-radiation drug for lymphoma had $2.2 million in sales in the second quarter, a performance that puts it on track to fall short of its first-year goal of about $20 million.

Still, Corixa put on a positive face during a conference call with analysts. Chief Operating Officer David Fanning said Bexxar sales increased from $1.3 million in the prior quarter, and a record number of orders were placed for the drug in July.

The company also did not back away from its sales goal. Fanning said the company is confident in its strategy for promoting Bexxar to patient groups, and among cancer doctors and radiation specialists. The main pitch is that Bexxar can cause long-term remissions in patients who have failed with other treatments.

But even if Corixa reaches its first-year goal — which would require sales in the second half to jump nearly fivefold — it is still a long way from reaching its dreams. In March, Fanning said there are 7,500 to 12,500 American patients who could benefit from Bexxar, and at $27,000 per patient, it could mean more than $300 million a year in sales.

"We recognize we still have a lot of work ahead of us to meet our sales objectives," Fanning said yesterday.

Bexxar sales Q2 2004 $2.2 million Q1 2004 $1.3 million Q4 2003 $1.2 million (debut quarter) Source: Corixa

Despite the slow sales, Corixa said the success of some programs means it does not expect to lose more than the $60 million to $80 million it has forecast for this year.

Corixa Chief Executive Steve Gillis made it clear Bexxar won't be fattening up the bottom line soon. He said Corixa and its partner, GlaxoSmithKline, plan to spend $8 million to $10 million promoting the drug this year, meaning it will take $28 million to $33 million of sales for the drug to start turning profits.

Gillis spent some time on the call trying to steer attention to Corixa's other programs. He pointed to several positive steps this year, including an eight-year, $150 million guaranteed supply contract to make vaccine boosters for GlaxoSmithKline. Corixa also got about $12 million from the National Institutes of Health for immunology research, and the company has started human testing of a tuberculosis vaccine and an allergy treatment.

Paul Latta, an analyst with McAdams Wright Ragen, who owns Corixa stock, said it is unlikely the company will meet its Bexxar sales goal. He said the drug has a tough road ahead because it is complicated to administer, and it is up against a billion-dollar blockbuster for lymphoma, Rituxan, which is simpler to use. He said some investors have stopped paying attention to the company because of the stock's decline and the slow Bexxar sales.

Corixa said it hopes to buy the rights to another cancer drug. But Latta said it has limited purchasing power, with a stock price of $4.41 at yesterday's close and a cash reserve of $168 million that's largely budgeted for other research and development programs. The company also borrowed $100 million at 4.2 percent annual interest last year; that money is due in 2008, unless its stock price rises to $9.17 and the debt converts to stock.

Latta said he's hopeful Corixa's vaccine boosters will start making money over the next several years, once GlaxoSmithKline delivers its vaccines to the market and starts giving Corixa a fraction of the sales.

"They (Corixa) are in a box," Latta said. "There's a way out of the box, but it's going to take a few years."

Luke Timmerman: 206-515-5644 or ltimmerman@seattletimes.com

Copyright © 2004 The Seattle Times Company

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