Serono shares down but profit forecast stable

Despite a 4.8 percent downturn in the price of its shares by midmorning Wednesday due to halted trials on two of its drugs in development, analysts say that profit estimates for Serono, Europe’s largest biotechnology company, remain unchanged.

Late-stage trials on the drugs onercept, for the treatment of psoriasis, and of Canvaxin for the treatment of Stage IV melanoma, were halted on the advice of two data and safety boards.

In the case of onercept, two patients being treated with the drug last year were diagnosed with sepsis. One of the patients died as a result.

While sepsis is a recognized risk in such treatments for this condition, in this case it was determined that the risks outweighed the benefits of treatment with the drug.

The Canvaxin trial was halted when it was determined that the drug was no more effective in treating Stage IV melanoma than a placebo.

Part of the reason given for not revising down Serono’s profit estimates is that Canvaxin trials are still ongoing in the treatment of Stage III melanoma, an earlier stage of the skin cancer.

Also taken into consideration are the strong sales of another of Serono’s psoriasis drugs as well as a larger potential market for Rebif, the company’s Multiple Sclerosis drug, in the wake of another company’s withdrawal of another MS drug from the market in February.

Analysts are convinced that while investor sentiment might be affected by the announcements, the news sounds worse than it is and will have no long term effect on stock prices.

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