Maybe Martha Stewart should have hung on to her shares in ImClone Systems Inc. after all.
This week, European researchers reported that ImClone's experimental cancer drug Erbitux appears to be effective, helping some of the sickest colon cancer patients live longer.
It was just the latest promising news from the biotechnology sector, which is seeing stock prices soar after being dragged to historic lows by scandal at ImClone, high-profile regulatory setbacks and outright scientific flops.
The Amex and Nasdaq biotech indexes have risen more than 40 percent since April, reaching heights not seen since the mapping of the human genome was announced three years ago.
For a while, biotechnology companies were complaining that the Food and Drug Administration was slow in the drug approval process, chilling investment. They decried as overly cautious its reluctance to sign off on their new class of drugs, which are made from living organisms in contrast with previous compounds that derived from chemicals.
Unlike their more blunt-edged chemical predecessors, biotech drugs attack diseased cells while leaving healthy cells alone -- a novel process that required new agency expertise to review.
But it appears that FDA commissioner Mark McClellan, confirmed in October by the Senate to a position left open by President Bush for almost two years, is making good on promises to speed drug approvals.
Last month, the FDA approved, after a scant four-month review, Millennium Pharmaceuticals Inc.'s drug Velcade to treat the blood cancer multiple myeloma.
"Everything in the field of oncology has changed," said Kathy Giusti of New Canaan, Conn., who was diagnosed with the disease in 1996 and is president of the Multiple Myeloma Research Foundation. Giusti hasn't used Velcade because her disease is under control for now, but she's glad it's available if her cancer worsens.
The FDA also last month approved AstraZeneca's Iressa, a novel therapy for a form of lung cancer. Earlier this year, it approved Genzyme General's drug for Fabry's disease and Biogen Inc.'s drug Amevive for psoriasis. And an influential agency committee has recommended that the FDA approve Genentech Inc.'s asthma drug Xolair.
The biggest boon to the sector, though, was Genentech's announcement May 19 that its experimental drug Avastin, taken with chemotherapy, can help the sickest colon cancer patients.
"It has extended my life," said 81-year-old colon cancer patient Beatrice McQueen of Oakland, Calif., who is a volunteer in Genentech's Avastin experiments. "I'm grateful that I'm one of their guinea pigs."
Just seven months earlier, Genentech had announced that Avastin failed to help breast cancer patients, highlighting the fickle nature of biotechnology. Genentech stock fell to $28.89 after that bad news was announced in September. This week it surpassed $73.
That volatility raises caution flags for some investors. Biotechnology remains a highly speculative investment, with scientific news rather than profits moving the stocks.
The biotechnology sector enjoyed record stock prices immediately after the mapping of the human genome was announced in 2000. Shortly afterward, the sector crashed because of several high-profile failures, culminating with the FDA's refusal in December 2001 to consider ImClone's sloppily prepared application to market Erbitux.
Martha Stewart's friend Sam Waksal, who resigned as ImClone chief executive and pleaded guilty to insider trading, awaits sentencing next week. Stewart was indicted Wednesday and pleaded innocent to charges related to selling ImClone stock just before the FDA rejection of Erbitux became public.
Even as those cases play out, ImClone's comeback continues. Its stock jumped into the $40 range after ImClone and Bristol-Myers Squibb Co. said Thursday that they would use the recent European data to resubmit their application for Erbitux. Stewart had sold her ImClone stock at around $60 and it later dived to a 52-week low of $5.
Analysts are hopeful the FDA will approve Erbitux sometime next year, putting ImClone's regulatory and legal woes behind it.
"That seems like a million years ago," said Moors Cabot analyst Jim McCamant. "Emotions change and perceptions change quickly in biotechnology."
On the Net:
American Society of Clinical Oncology: http://www.asco.org
Multiple Myeloma Research Foundation: http://www.multiplemyeloma.org