Genentech’s Next Big Bet: New Cystic Fibrosis Drug : Biotechnology: DNase could become a leader in treating symptoms of the congenital disease.

NEW YORK —  Biotech leader Genentech Inc. is gearing up for its next potential blockbuster--a drug to treat cystic fibrosis.

This week, Genentech completed final clinical trials for DNase, its drug for cystic fibrosis, a congenital respiratory disease that at any one time afflicts 30,000 Americans, killing most by age 30.

Genentech will submit its application for Food and Drug Administration approval within the first quarter of 1993, and the company is working overtime to complete an advanced manufacturing plant that can make large quantities of Pulmozyme, the drug’s commercial name.

Much rests on DNase’s success. Genentech’s two leading drugs are facing new challenges in the market. The government has given the green light to researchers to find a cure for cystic fibrosis using experimental gene-therapy procedures, which, if successful, could hurt DNase down the road.

Analysts have predicted DNase sales could reach $500 million by the late 1990s for cystic fibrosis alone, even more if the drug is found effective in treating other respiratory ailments such as chronic bronchitis, which affects millions.

DNase “is the most important product in Genentech’s development pipeline,” said Linda Miller, a managing director at PaineWebber Inc. “They have a rich pipeline that any biotech or drug company would envy, but there’s nothing so finished and as promising as DNase.”

DNase improves lung functions and reduces the incidence of infection in cystic fibrosis patients. “Because there is a slowdown in deterioration, it may result in prolonging life,” but that hasn’t been proven, Genentech Chairman G. Kirk Raab said in an interview.

Meanwhile, he said gene therapy, while very exciting, “is nothing new to us” and does not pose a threat to DNase. “It is pioneer medicine, and how long it will take to make available to patients and whether it will be safe and effective, the jury is completely out on that.”

The technique involves replacing defective cystic fibrosis genes in the breathing passages. If it works, it would correct a genetic flaw that causes respiratory symptoms and might cure the most lethal element of the disease. But even the most optimistic say it will take at least six years until any gene-therapy treatment is widely available.

“‘Cure is too strong a word,” Miller said of gene therapy, though she noted that successful treatment could mean a brief “window of opportunity” for DNase. Meanwhile, the drug has an opportunity to become the leader in treating symptoms of cystic fibrosis.

Genentech needs another winner. The two key products that generate all the company’s revenue “are a bit questionable in terms of their ability to grow or even maintain the size of their markets,” said Miller, referring to Protropin and Activase.

In 1991, sales of Protropin, a human growth hormone used to treat abnormally small children, totaled about $185 million. The drug’s orphan drug status--a guarantee of seven years of market exclusivity because it treats a rare disease--expired in October.

“Others are trying to get into the market,” Raab conceded, though Protropin has a 70% share. Eli Lilly & Co. already makes a similar growth hormone called Humatrope. Both companies are expected to be shielded from further competition until Humatrope’s orphan drug status expires in early 1994.

On another front, sales have been declining for Activase, which dissolves clots in heart attack victims. Last year’s sales of $196 million were off 7% from 1989 as the cardiology community challenged the drug’s $2,200-per-dose price.

“It is well known that streptokinase, a much cheaper but possibly equally effective product, has been gaining market share,” said a report by Joseph Edelman, an analyst with Prudential Securities Inc.

Genentech has spent about $55 million financing a major study comparing Activase to streptokinase, which is made by Hoechst and costs about $300 a dose, and other drugs.

Raab said favorable results from the study, to be completed in April, could result in increased market share for Activase.

“When the battle is over, we can dedicate ourselves to working with the cardiology community and emergency room physicians so that more patients receive the drug,” Raab said. In the United States, of the heart attack patients who could benefit from Activase, only 20% receive the drug, compared to 40% in Europe.

Raab said he isn’t worried. Neither are investors. Genentech stock is now trading very near $39 a share, its 52-week high.

“For a young biotech company--even though we’re the old one--the future has always been less than perfectly clear,” Raab said. “But we have two very successful products on the market. I see DNase as very exciting, and there are lots of other products in the pipeline.”