From Forbes, I find that CSFB has lowered its target price for OSI Pharmaceuticals, co-owner (with Genentech) of the new cancer therapy Tarceva. This is a HER1/HER2 compound (more the former than the latter), which makes it rather similar to AstraZeneca's Iressa.

Tarceva has lived in Iressa's shadow throughout its development, and OSI's stock has moved in response to market perceptions about how much better (or worse) their drug is in comparison. Here's a chart for the last year - take a look at that mighty jump in late April. That's when clinical results were announced that made Tarceva look like it would perform better than Iressa when it hit the market. As you see, people got a bit enthusiastic.

But check out that recent dip, which is a reponse to Genentech's attempt to inject some reality into the expectations of shareholders since the drug was launched last month. Their estimate for the number of Tarceva patients wasn't what the stock's cheerleaders wanted to hear, and it's not quite what OSI's been putting out, either. It's not often you see two companies disagreeing so publicly over their shared drug's profit potential.

There's pressure on the other end of the expectations game, too. The conclusions from a large Iressa clinical study, ISEL, will be released soon - AstraZeneca has said by the end of the year. It's widely thought that this one will make Iressa look a bit better than it does at present - that is to say, pretty much like Tarceva looks now. Quoth CSFB:

"We expect ISEL (Iressa Survival Evaluation in Lung Cancer) to meet its primary endpoint of survival," the research firm said. "A statistically significant result will reinforce existing physician impressions of the two drugs as clinically comparable--despite likely Wall Street squabbling over percentage differences in survival and inevitable differences in subset groups."

But, as mentioned in that last link, Morgan Stanley is sticking with the rosier view:

"The company made an effort to clarify what it considers a market misunderstanding. . .Management's comments were more in line with our thinking and contrary to what we believe were highly conservative comments by development partner, Genentech. . .We expect Tarceva's broad label will allow OSI and Genentech to market Tarceva to a broad patient population. . .we believe that the Street is underestimating the profitability of this drug to OSI."

Well, I'm not being paid to render an opinion - at least, not as much as those folks on the Street, anyway. But for what it's worth, I'm with CSFB on this one. (Some readers may recall that when OSI jumped back in April that I said that if I owned it "I'd have been knocking things over on my desk to get to my phone to sell. . .") In the end, I'm not sure how different these two drugs are going to be. It's a case of near-simultaneous development, the kind I was talking about the other day, and those don't always work out too well. And there's a longer-term problem which is going to affect the whole oncology market: I think that the days of being able to market all kinds of cancer therapies to everyone are beginning to disappear.

But whether Tarceva turns out to be different from Iressa or not, it's still probably not good news for Imclone, whose Erbitux targets the same pathways - just much more expensively, and perhaps not to much more benefit, if any. I took a pile of abuse back in April in that same post where I talked about selling OSI, advising IMCL shareholders to get out at $70. They should have. Hey, there's still time!