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Whats the next catalyst & when?
Baxter's FloSeal actually uses bovine, but the Tisseel product uses human. (Not that it matters in the grand scheme)
http://www.ctsnet.org/baxter/product/931
Evithrom is DOA. Surgical time plays a huge role in deciding what products to use in surgery. The thrombin products are used once the procedure is essentially complete & the surgeon is just drying the field before closing. No surgeon is going to wait 30 minutes and the surgeon doesn't know if their going to need the product for hemostatis or the quantity so you'd be wasting resources by ordering it ahead of time.
If ZGEN could get Baxter to switch to rthrombin then they would be huge, but I don't know whether a clinical trial would have to be conducted.
I would like to get an answer from ZGEN's management or BSR why Baxter is not switching to rthrombin if the immunogenicity concerns are so important.
What do you mean another 50K trade? I see the one trade that just went through.
50K shares has to be a fund reducing their position. I think Orbimed is continuing to sell. They have a trading history of getting in early on biotechs & exiting before Phase III.
Someone sells 2K shares at the open every day & then it just drifts down on 100 share trades throughout the day. New short interest numbers come out tomorrow which may explain the continued weakness. I wish Efficacy could find another fund to support the price.
Apocalypse postponed?
Commentary: Best timers remain more bullish than the worst timers
By Mark Hulbert, MarketWatch
Last update: 3:08 p.m. EST Jan. 23, 2008
The U.S. stock market looked over the edge of the cliff on Tuesday and decided not to jump off - thanks to Ben Bernanke and his crisis team of psychologists at the Federal Reserve.
So, what's next?
Did Tuesday morning's low at 11,634.92 on the Dow Jones Industrial Average represent the capitulation low of the correction that began last fall? Or will investors, upon further consideration of what must be so awful in the financial world as to require an emergency Fed rate cut just days before a regularly-scheduled one, decide that happy days are probably not here after all?
For guidance, I decided to turn, as I have on several prior occasions, to the 10 newsletters with the best risk-adjusted market timing performances over the past 10 years. To be sure, you might wonder why I would even bother, since the best timers have, on balance, been wrong over the last three months, clinging to a bullish posture even while the great majority of newsletters were turning more bearish. See Nov. 15 column
But the past three months constitute the exception rather than the rule. If the past is prologue, the best performers are more likely to be right about the market's direction than the worst performers. But no system is perfect; long-term success requires a disciplined adherence to systems that work. So I advise against dumping a system with good long-term success because of a single misstep.
With that thought in mind, here is a synopsis of what the top timers currently are saying, listed in alphabetical order. (I have eliminated from the following list one of the ten top performers because it is a purely mechanical model based on the calendar. Its good performance notwithstanding, its current posture tells us little about the market's term prospects.)
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Blue Chip Investor: Very bullish. Editor Steven Check's equity valuation model is based on the stock market's earnings yield relative to the yield on corporate bonds; that model now classifies stocks to be more undervalued than at any time in the 28-year history Check has for this model. In fact, according to Check's calculations, if corporate earnings neither grow nor contract, and interest rates simply stay where they are currently, then the stock market would have to appreciate 37% just to b ring his equity valuation model back to the midpoint of its historical range. Check's model portfolio currently is 89% invested.
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Bob Brinker's Marketimer: Bullish. In his most recent issue, published in early January, editor Bob Brinker wrote that "the risk of a cyclical bear market decline in excess of 20% is not likely to materialize any time soon ... We expect the S&P 500 index to achieve new record highs this year and to reach the 1600's range in the process." Brinker's model portfolios are fully invested.
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Chartist and Chartist Mutual Fund Timer. Bearish. Editor Dan Sullivan turned bearish last week, and moved his model portfolios to a 100% cash position. See Jan. 18 column
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Investors Guide to Closed-End Funds: Moderately bullish. Editor Thomas Herzfeld's "U.S. Equity Funds" model portfolio is around 49% invested.
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Medical Technology Stock Letter: Difficult to classify. It may seem odd to include in this list a newsletter that is oriented more toward the medical technology and biotech sectors than to the overall market. But this letter, edited by John McCamant, deserves to be included for the simple reason that a hypothetical portfolio that was divided between the stock market and cash according to his recommended exposure level is in the top 10 for risk-adjusted timing-only performance over the last decade. McCamant's model portfolio currently is 92% invested, while his "Trader's" portfolio is aggressively bullish at 147% invested (i.e. 47% on margin). This averages out to a recommended exposure level of 119%, even though McCamant says that he believes that the negative "overall tone of the stock market... will continue for the foreseeable future."
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No Load Fund Investor: Neutral. Editor Mark Salzinger writes that he believes "2008 will be a difficult year for the equity markets. Declining growth and moderately rising inflation in the U.S. will keep a lid on the gains of most stocks, though the large-cap and mid-cap "growth" areas of the U.S. and international markets should hold up better than the rest." Salzinger is currently allocating 70% of his "Wealth Builder" portfolio (his most aggressive) to U.S. equities.
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Timer Digest: Bearish. Editor Jim Schmidt bases this newsletter's market timing model on a consensus of the top market timers. His consensus of the top 10n based on performance over the past 52 weeks is bearish, with 2 bulls and 8 bears. His consensus of the top ten for performance over the last two years is bullish, with 5 bulls, 3 bears, and 2 neutral. His composite timing indicator based on these two consensus readings, known as the "5 & 10 Consensus," went bearish last Saturday. The newsletter's model portfolios currently are fully invested in stocks or mutual funds.
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Vantage Point: Moderately bullish. One of the two indicators on which editor John Harris had been basing his bullish posture turned bearish last week. As a result he reduced his recommended equity exposure from 100% to 75%.
Where does this summary leave us? Three of these nine top timers are bearish, and the bullishness of two more of them is less than it was a couple of months ago. The average equity allocation among all nine is 69%. In contrast, the last time I conducted a survey of the top timers, last November, their average equity allocation stood at 83%. And none of the top timers was then bearish.
So there has been a significant deterioration in the bullishness of the average top timer.
Not all hope is lost for the bulls, however. Consider the recommended equity allocations among the 10n market timing records with the very worst records over the last decade. On average they currently are recommending a 13% exposure to the short side of the market. So even though the best timers aren't as bullish as they were a couple of months ago, they remain significantly more optimistic than the worst timers.
The bottom line is a muted bullishness. And this dovetails nicely with the message that emerges from a contrarian analysis of all newsletters, as opposed to just the top and bottom performers. That message has become less bullish as well in recent weeks. Read full story End of Story
Mark Hulbert is the founder of Hulbert Financial Digest in Annandale, Va. He has been tracking the advice of more than 160 financial newsletters since 1980.
http://www.marketwatch.com/news/story/contrast-between-best-worst-timers/story.aspx?guid=%7B9AFB865E%2D97C1%2D4837%2DB77D%2DE389BC7C430F%7D&dist=TNMostRead
At this point I wish Efficacy had not signed the standstill agreement & would have forced a sell of the company. Heck with the talk of $40 for my shares, I'll take $18.
Zgen, I would interested to know whether Baxter plans to change from bovine/human Thrombin to Rthrombin for their FloSeal & Tisseel products. These products are probably used as much as thrombin in our surgery dept. If Baxter doesn't think its important to convert to rthrombin then the uptake may not be as swift as some envision.
RockRat, I talked to several circulating nurses at my hospital to get a feel on what cases surgeons are using Thrombin. Used in the neuro & vascular cases to stop minor oozing.
The Thombin is accessible from the surgical Pyxis and reconstituted by the circulating nurse in minutes. They couldn't give me any figures, but stated that they use alot of Thrombin.
Hope that helps,
Back to RPRX, I put this lady to sleep for a hysterectomy and removal of the biggest freaking fibroid I'd seen in quite a while. Surgeon had to open her up since you couldn't see anything in the abdomen by laparoscope. The only thing I could think of during the procedure was if the surgeon could have removed the fibroid if the patient had been on Proellex for awhile.
I also reviewed some of the data on mifepristone and I tend to agree with JP that the anemia indication is as low risk as you can get.
When Proellex is approved its not going to be another ZGEN. The stock price is going higher even if I have to get a 2nd mortgage my house.
I've given up trying to figure out how biotechs will trade post approval, but I know its not worth holding a position when an FDA announcment is on the horizon.
The risk does not justify the reward in too many instances.
ZGEN, I think it has to do with the projected sales of rthrombin in 2008. Analysts have been decreasing their sales estimates and it takes awhile for any new product to capture the market. Alot of investors believe they can buy ZGEN in a yr. for the same price so why risk capital in this market. If rthrombin does $40 million in sales for 2008 does ZGEN deserve a $20 stock price?
I sold my ZGEN yesterday. I didn't think the upside was sufficient in this market to offset the downside risk, but I'm probably just hoping to buy lower since I like the pipeline more then rThrombin.
Good luck,
A Loophole Lets a Foot in the Door
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By ANDREW ROSS SORKIN
Published: January 15, 2008
The bad news reached Neil Ashe, the chief executive of CNet, as he lounged on the beach in Mexico on vacation with his family over the holidays. The company’s lawyer called to say that two hedge funds had secretly acquired the equivalent of a 21 percent stake in CNet and planned to mount a proxy contest to take over the board.
For Mr. Ashe this was surprising — and upsetting — on two counts. First, one of the funds, Jana Partners, had quietly approached the company earlier in the year and talked to Mr. Ashe about becoming a friendly, long-term shareholder.
“They indicated to us that they were a long-only deep-value hedge fund,” Mr. Ashe said at an investor conference. “I spent an hour with them on the phone answering questions about our business.” But in the aftermath of that conversation, “we didn’t hear anything from them again.” Mr. Ashe figured the firm had decided against making the investment.
And the other unhappy surprise? Jana and the second hedge fund, Sandell Asset Management, had magically acquired the equivalent of more than a fifth of the company without anybody knowing. Given the existence of the decades-old 13D rule, which requires investors to disclose stakes of more than 5 percent, and the Hart-Scott-Rodino Act, which requires activist investors like Jana to disclose when they invest more than about $60 million, how could it possibly be that the hedge funds could suddenly own the equivalent of 21 percent of CNet’s shares? How could it even be legal?
The answer: Hedge funds and other activists have quietly begun exploiting a loophole. Investors like Jana and others — including Carl C. Icahn, Nelson Peltz, and even the giant Canadian bank Toronto-Dominion — have begun entering into complex “swap” agreements with investment banks to get around the rules. The banks buy the shares on the investors’ behalf, but technically never transfer full ownership. Think of it as a pseudo-off-balance-sheet deal. Technically, these investors say, they don’t own the shares at all, just the “economics” of them.
It appears to be a legitimate version of the way Ivan Boesky “parked” stocks back in the 1980s by having a friend hold shares of the Unocal Corporation.
That maneuver concealed the ownership of the shares. The “seller” agreed to repurchase the parked shares at a prearranged time and price.
What today’s clever investors have noticed is that the law requires them to disclose only when they control more than 5 percent of the vote, not 5 percent of the economics in a company. So hedge funds use “swaps” to buy shares and — technically at least — strip out the voting power that comes with them.
All this is legal — though it’s so absurd it probably shouldn’t be. “The transparency that was supposed to be there just isn’t there anymore,” said Larry W. Sonsini, chairman of the law firm Wilson Sonsini Goodrich & Rosati. He is representing more than half a dozen companies flabbergasted by mystery shareholders, and is somewhat flabbergasted himself. “We have to take a new look at the rules.”
Of course, this isn’t the first time investors have found a legal way to skirt the rules — and in the process, created a corporate governance nightmare. A couple of years ago, several hedge funds did some fancy footwork to influence the outcomes of mergers and proxy fights by buying a voting stake in companies without actually holding the same economic interest in the business.
Now that idea has been turned on its head. Here’s a simplified version of how it works: An investor calls an investment bank and says, “Please buy 100 shares of company X. You can hold onto those shares in your name — and technically, you can do whatever you want with them. In six months, if the shares have gone up, you’ll owe me the difference. If they go down, I’ll owe you. And for all the cartwheels you’re doing for me, I’ll pay you a small fee.”
But here’s the rub: It is preposterous to believe that investors entering into such contracts have absolutely no influence over a company’s shares. The banks that put together these swaps are likely to take direction from their clients on how to vote, seeing as how those clients pay them millions a year in fees and commissions. Or, if the banks are holding the shares truly at arms-length as they say they are, they may decide not to vote at all — magnifying the importance of those who do vote, which, depending on which side of a proxy fight you’re on, can be a very good or very bad thing.
Even if the hedge funds do not have the ability to vote for themselves, their puffed-up “economic” stake gives them enormous sway over other shareholders and anxious boards.
In the case of CNet, Sandell justified its tactics by saying in a filing that the contracts did not give it “direct or indirect voting, investment or dispositive control over any securities” and therefore it disclaimed “any beneficial ownership in securities that may be referenced in such contracts.” Deutsche Bank and Lehman Brothers put together this swap.
As you can imagine, hedge fund investors like Jana did not want to comment when asked about the subject. One prominent investor called such swap arrangements “today’s third rail.”
A spokesman for the Securities and Exchange Commission said they were looking at the issue — but clearly they are not acting fast enough.
So why do investors go to such extremes to mask their trading? Money — lots of it. They can accumulate enormous stakes in companies without tipping their hand and driving up the share price. Once outed, the investors can then buy the shares on the open market — and thus gain the vote they didn’t have — at a hedged price. They also get the ability to play more easily with leverage, that is, debt. And they get what every would-be raider covets: the element of surprise.
To be fair, if everybody always played by the rules, all of this might not be a problem. In any case, the stealth swaps are legal, so the funds are doing nothing wrong. But given the possibility for abuse and the impact on other shareholders, this loophole should be closed.
http://www.nytimes.com/2008/01/15/business/15sorkin.html?_r=1&ex=1358139600&en=00a0f0ae70cbc57d&ei=5088&partner=rssnyt&emc=rss&oref=slogin
Tony, I think your going to run into the same bleeding or gastrointestinal problems seen with ketorolac. Dyloject looks like a better drug.
Nice day for Jav. CADX's failure may be sparking some more interest in the stock. Has anyone noticed that the JAV yahoo board has a new pumper? Any guesses who made the following post?
"Its a good thing we finally have a basher. Hell, this guy says JAV isn't a good stock cause they dont have revenues. lol JAV has its problems, including management, but I thought it was common sense to know all biotechs have zero revs before they get a drug approved. Hell, thats what biotech is. its discovery companies. Discovering new drugs.
This guy didn't even know what Dyloject was, but he thinks he knows something about the company."
Its our friend GabeWhatley. Remember how he posted that the stock could only go up if they sold, and how were they going to raise capital, etc?
Scientists grow rat heart in the lab
Experiment could lead to new treatments for cornorary disease
WASHINGTON - Researchers seeking new treatments for heart disease managed to grow a rat heart in the lab and start it beating.
“While it still sounds like science fiction, we’ve hopefully opened a new door in the notion that we can build these tissues and one day provide options for patients with end-stage disease,” said Dr. Doris Taylor, director of the Center for Cardiovascular Repair at the University of Minnesota. “We’re not there yet, but at least now we have another tool in our tool belt.”
Taylor led the team whose research appeared in Sunday’s online edition of the journal Nature Medicine.
Scientists have worked for years for ways to grow body parts. Many efforts have focused on heart valves as an alternative to the plastic or animal valves that wear out after being implanted in humans.
An estimated 5 million people live with heart failure and about 550,000 new cases are diagnosed each year in the United States. Approximately 50,000 die annually waiting for a heart donor.
Avoiding transplant rejection
Taylor said in a telephone interview that her team began by trying to determine if it were possible to transplant rat heart cells. They took the hearts from eight newborn rats and removed all the cells. Left behind was a gelatin-like matrix shaped like a heart and containing conduits where the blood vessels had been. Scientists then injected cells back into this scaffold — muscle cells and endothelial cells, which line blood vessels.
The muscle cells covered the matrix walls and lined up together, while the endothelial cells found their way inside to coat the blood vessels, she said. Then the hearts were stimulated electrically.
“By two days we saw tiny, microscopic contractions, and by seven to eight days there were contractions large enough to see with the naked eye,” she said. The tiny hearts could pump liquid at about one-fourth the rate of a normal fetal rat’s heart.
“Obviously we have a long way to go,” Taylor said. But the long-term hope, she said, is that a similar process could work with either human hearts from cadavers or pig hearts, with their cells stripped off and replaced by cells from the person needing a heart transplant to avoid rejection.
'More work to be done'
The next step is to take a pig heart, strip away the cells and repopulate it with cells from a pig to see if it will work in the larger heart.
Dr. John Mayer Jr., a heart specialist and researcher at Children’s Hospital in Boston, said the report was an “important paper that advances the ball down the road.” But, he added, “It’s pretty long road.”
Mayer, who was not part of Taylor’s research team, noted that this was done in a small animal and it remains to be seen whether the same can be done in larger ones. He also wondered whether blood would flow freely, without clotting, through the reconstructed blood vessels.
“I think this is an important contribution, with more work to be done,” Mayer said in a telephone interview.
In her research paper, Taylor also reports that the researchers are working on reseeding cells into other organs, including lungs, liver and kidneys.
The research was funded by the University of Minnesota and the Medtronic Foundation, the charitable arm of a medical company that makes heart devices such as stents and defibrillators.
http://www.msnbc.msn.com/id/22635550/
<<<<Any chance we will see PPS for JAV rise significantly as a result of the CADX implosion>>>>
CADX's failure may cause some investors to wait for positive results from the 2nd Dyloject Phase III trial. We need to address the cash issue, get positive remarks regarding UK sales, German approval, and it wouldn't hurt to sign a license for the remaining EU.
Diclofenac has a number of properties which make it an excellent choice for the post-operative pain indication. Single dose works for 6-8 hours, exhibits anti-inflammatory/ antipyretic/analgesic actions, one of the most potent NSAIDs comparable to ketorolac, less gastrotoxic then other NSAIDS. (ketorolac is the most gastrotoxic NSAID), less platelet dysfunction then most NSAIDS.
I don't see how Dyloject can't quickly replace ketorolac for the US market. Its a much better drug.
We made it back on the Regulation SHO Threshold Security List.
http://www.nasdaqtrader.com/aspx/regsho.aspx
I had a chance to listen to CADX's conference call and I can tell you with 100% certainty that Acetavance is crap compared to Dyloject. It takes 15 minutes to infuse the medication so that one point makes it dead in the water for post-operative pain.
They anticipate taking 9 months to conduct another trial and it would take several more months to get the regulatory approval so we are at least a yr ahead in gaining FDA approval for Dyloject. FDA is also concerned about safety issues with dosing over 48 hrs.
Acetavance did not decrease the amount of morphine needed as a rescue medication over the placebo group. They are trying to blame an increased pain severity in comparison to other trials as the reason for its failure. I have a better reason for the trials failure, it doesn't work.
We were aware of Acetavance (Acetaminophen IV) since this was mentioned by an analyst during one of JAV's presentations. You have to give large doses 1000mg and its still a weak pain reliever. Acetaminophen at doses greater than or equal to 2000 mg/day may also be associated with a significantly increased risk for upper-GI complications.
The problem with pain studies is that its subjective and individuals have varying pain sensitivity. Older patients need less narcotics, pts taking meds at home or use alcohol frequently have a tolerance, red heads need more meds, surgical technique or anatomical differences all play a role in how much pain people experience during the procedure & post-procedure.
The only competition at this point is Toradol in the US. If Dyloject can get approved in the US for post-operative pain before Acetavance then it will become the standard. If Acetavance is approved first for this indication then it would slow down Dylojects sales.
Diclofenac is an effective analgesic. Studies show that a single 50 mg dose can cut pain scores in half over a 4-6 hour period compared to placebo.
I had no idea CADX was waiting to announce Phase III results, but maybe thats why shorts have been increasing their position in JAV. Our stock price would have taken a hit if they had announced positive results for Acetavance. Hopefully CADX will drop the post-operative pain indication and try to gain approval based on the fever results.
RPRX - The standstill has provisions which prevent Efficacy from acting as you suggest.
JP mentioned the possibility of a licensing deal during the Dec/4th conference call so maybe we should give him a little more time before drawing conclusions.
Biotechs fight back
Created:
10 January 2008
Written by:
Jo Tura
Managers of funds investing in bio-technology companies remain resolute on their merits, and point in particular to the solid fundamentals exhibited by some biotechnology stocks.
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Their faith comes despite the fact that biotechnology as a sector has had a tough time lately. The Nasdaq biotech index has lagged the S&P 500 by over 50 per cent in the past five years and the Datastream World Pharmaceutical index has been 80 per cent behind the FTSE All-Share.
Since the birth of biotechnology as a sector at the beginning of the 1990s several funds have come and gone, and these types of medical science companies are now only available through two onshore UK funds from AXA Framlington and Franklin Templeton. However a number of offshore offerings have sprung up from European fund providers and there are two biotechnology investment trusts listed on the London Stock Exchange. And several healthcare funds invest a portion of their portfolio in the biotechnology sub sector.
Bottom fishing
There is much talk at the moment of biotechnology being at the bottom of its valuation range. After several years of sideways movement and 2008 looking grim for equities, investing in a high-risk, high-growth sector doesn’t seem like something investors will want any part of. “There is a school of thought that we are at historical lows in terms of valuations and we may be at the end of the storm here,” says Andy Smith, manager of the International Biotechnology Trust. “I don’t think you’d bank on that but we’re certainly close to the bottom. We have just about 9 per cent cash in our fund and we’re actually investing some of that today, in the odd one or two new holdings but also in our existing holdings, so professionals are today being net investors in biotech because valuations are so low.”
Michael Sjöström, manager of Pictet Biotechnology, which introduced a sterling share class last December, thinks that ambivalence to biotech has been driven by a lack of interest in healthcare stocks in general stemming from the problems pharmaceutical companies have been experiencing.
The pharmaceutical companies’ woes come in the form of the patent cliff, which will see patents on the drugs sold by large pharmaceutical companies run out between 2010 and 2013. As cheaper, generic drugs flood the market the large-cap pharmas are likely to see their revenues fall unless they can replace patent-expiring drugs with new ones.
“All this is actually good for biotechnology companies,” says Mr Smith. “If large drug companies want to refresh their pipeline, that replacement must come from biotechnology.”
Another problem biotechnology companies have been facing in the US (most funds are in the region of 90 per cent US companies, 10 per cent ex-US) is a relatively cautious approach from the Food and Drug Administration (FDA) – the body that gives its approval, or not, on drugs to be sold in the country.
“The FDA has been rightly cautious in my opinion,” says Mr Smith. “There have been drugs, such as the multiple sclerosis drug from Elan for instance, which have been approved too early. If you think back to the European issue all those years ago with thalidomide, the FDA is still immensely proud that it didn’t allow thalidomide on to the market and it has that heritage to protect. That means that not all drugs get approved as quickly as they were.”
Fundamental facts
The reasons to buy into the sector are solid, according to managers, as the fundamentals of many of the biotechnology companies are good, yet strong performers have been dragged down by sentiment.
In terms of top-line growth the industry has been delivering 20 per cent per year over recent years, says Mr Sjöström. “It has also been delivering in terms of medical clinical advances and there has also been a lot of merger and acquisition (M&A) activity, which illustrates the fact that this is an industry with a lot of attractive products,” he comments.
Sven Borho is a founding partner of OrbiMed, a specialist biotechnology and healthcare firm that manages the Biotechnology Growth Trust and the Finsbury Emerging Biotechnology trust. “This is as cheap as the biotechnology sector has ever been,” he says. “Yes, the sector is still relatively young, but it’s never traded at these low valuations and what is really perverse is that the sector trades at a discount to these pharmaceutical companies.”
The pharmaceutical companies, with their problems of patent expiration, lack of research and development creativity and single figure price-earnings to growth multiples (1.8 to 1.9 for the large pharma companies according to Mr Borho) are better received by the market than biotechnology, which has the fundamentals of top-line growth, strong earnings growth and no patent expiration problems on its side. “The problem is investor perception,” adds Mr Borho. “Particularly in the UK, I think people are still very unenthusiastic about biotech.”
Some managers feel that this could change this year as investors look for more defensive stocks to buy. One argument for biotechnology and for pharmaceuticals and healthcare in general is that people will always need healthcare and drugs. “If people – consumers – aren’t able to afford luxury items or the extras, they tend to continue to fund their healthcare or continue to fund healthcare goods and services,” explains Deane Donnigan, manager of the AXA Framlington Biotechnology and Health funds.
Pictet has already seen more inflows into its biotech fund and, to a lesser extent, into its healthcare funds. Mr Sjöström believes this is based on the defensive characteristics of drug companies. “We think there is something at work here that might help biotechs perform a bit better,” he says.
Even if biotechnology is not traditionally perceived as low-risk or defensive, Mr Smith predicts that as pharmaceutical companies come back into focus, biotech may come with it.
M&A winners?
A possibly more appealing argument in favour of biotechnology is the merger and acquisition (M&A) activity seen in the sector.
The patent issue has meant that larger drug companies have turned to smaller biotechnology firms to provide them with new drugs, sometimes through licensing, but often by simply buying them.
Last year saw a number of deals that benefited biotechnology funds with holdings in companies that ended up as M&A targets. Basingstoke-based Shire bought New River Pharmaceuticals, a US company, in April for $64 a share to access its attention deficit and hyperactivity disorder drug, Vyvanse. AstraZeneca paid a premium for MedImmune, according to AXA Framlington’s Ms Donnigan, because Pfizer, Merck and Novartis were also all in the running for the company. “They need growth assets to move what’s been a stalling top line for them of late,” she says.
At the end of last year Gyrus in the UK was bought by US-based Olympus and NGI Pharmaceutical was bought by Japan’s Eisai.
Reasons for M&A to continue into 2008 include the fact that many drug companies are still on the lookout for new products, and the fact that the small biotechnology companies will find access to capital difficult to come by.
Stephanie Fennessey, manager of the JPMorgan Global Life Sciences fund, thinks that larger-cap activity stole the show in 2007 and this year there will be more small-cap activity. “There weren’t a huge amount of smaller-cap transactions in 2007 and we believe that is a key catalyst for this year and think there will be more M&A activity in small caps,” she says.
Schroder Medical Discovery is a healthcare fund with 15 per cent of its portfolio invested in biotechnology companies. Its manager, John Bowler, sounds a warning for pharma/biotech M&A this year. “It has been the case that a steady stream of biotech companies have been bought or the larger companies have licensed in products,” he says. “But this has been going on for three or four years now so a lot of the easy pickings have been made,” he says.
Many of the biotechnology companies announced that they were looking for buyers, he adds, but some, such as Biogen Idec, admitted after several months that a buyer had not come forward.
Buying opportunities
Some funds are still carefully targeting biotechnology companies that may be bought. “We have really capitalised on companies that are on the verge of launching a product on to the marketplace because they are prime targets for pharmaceutical companies,” says Mr Borho.
Another of the investment themes in the OrbiMed-run trusts is to buy the largest biotechnology companies, such as Amgen, Genentech and Gilead, while they are at low valuations and growing their earnings. Some 20 to 40 per cent of the portfolio is selected using this strategy.
The third prong of the strategy is to look at earlier-stage companies. “There, we try to capitalise on scientific breakthroughs,” says Mr Borho, “finding the next big new drug category that’s in phase one clinical trial.”
Other funds specifically avoid early-stage companies. The Pictet fund is positioned in the middle of the spectrum of company size to avoid the high failure rate in early-stage companies and the mean-reverting growth of larger companies with a big portfolio of commercial products relative to their pipeline.
“We’re looking for companies where risk is not that high but growth is still present,” says Mr Sjöström. “We’re trying to identify companies that are about to enter a new product cycle, so are still ahead of that strong growth phase, or already in that growth phase but with years to go on it. The sweet spot for market cap is between $1bn and $5bn.”
Schroders’ Mr Bowler looks for visible growth in companies such as his biotechnology holding Biomarin Pharmaceutical. The company has just had a product approved to treat a rare condition that affects a tightly defined pool of patients that can’t digest certain foods.
Mr Smith, too, is wary of early-stage companies, although his trust does have around 9 per cent in unquoted companies. “My belief is that the best early-stage companies will always be funded and the others won’t make it,” he says.
“But I’m not bothered about that at all because, as investors, we don’t deal with the companies that don’t have a drug, who are about to do a drug, are in pre-clinical testing or have a few results in the lab. These are not the things we want to expose our investors to. We also don’t expose our investors to the biggest companies, so we don’t invest in Amgen or Genentech because they may not be able to double again. Amgen has gone down 30 per cent in the past year so the risks are to the upside with the big biotechs rather than the downside.”
Light at the end of the tunnel
So managers of biotechnology funds continue to pin their hope on what they see as strong fundamentals in many of the sector’s companies.
“The situation is perplexing and frustrating because biotechnology has been devalued for a while, but fundamentals, earnings growth and M&A activity have been good,” says Mr Borho. “I sometimes feel like a broken record talking about it because I can see the positives and it feels like the sector specialists are on their own here with a group no one else wants to invest in.”
Mr Borho’s hope is that earnings will win out and at some point share price performance will catch up. “You can’t have continued price-to-earnings deflation when earnings growth is 20 per cent. The deflation of the PE-to-growth multiple is at some point going to stop,” he says.
Mr Smith adds that last year’s flat performance masks some successes. While companies such as Amgen were down 30 per cent in valuation for their own specific reasons others were up, including his holding Gilead Life Sciences which rose 40 per cent in the year. “That gives me hope that if you are a specialist you’re more likely to generate returns that aren’t with the crowd,” he says.
UK Unit Trusts/OEICs Healthcare/biotech % chg over 1 year % chg over 3 years % chg over 5 years Fund size (£m)
AXA Framlington Biotech -3.87 6.35 55.63 41.38
AXA Framlington Health Inc 7.97 9.59 50.57 278.82
Franklin Biotechnology -2.73 4.07 41.02 5.19
L&G Health & Pharm Index Inc 2.17 20.31 24.15 29.47
Schroder Medical Disc'ry Acc 3.39 23.01 26.46 57.99
Threadneedle Global Health 1 5.32 23.06 39.72 4.97
Source: MorningStar 1/1/08 Figures are bid-bid, GBP, Gross Inc, No Cap
UK Registered Biotechnology Investment Funds % chg over 1 year % chg over 3 years % chg over 5 years Fund size (£m)
AXA Framlington Biotech -3.87 6.35 55.63 41.38
City Financial DiversAbs Ret Acc 11.17 N/A N/A 5.02
Franklin Biotech Disc A acc -3.8 1.31 34.43 33.71
Franklin Biotechnology -2.73 4.07 41.02 5.19
Nordea-1 Biotech Fd BP USD 4.64 24.41 87.65 46.95
Pictet F (LUX) Biotech-PC 13.5 40.79 101.15 944.09
UBS (Lux) EF-Biotech B 3.03 3.8 23.6 191.49
Source: MorningStar 1/1/08
UK Registered Healthcare Investment Funds % chg over 1 year % chg over 3 years % chg over 5 years Fund size (£m)
ABN AMRO Healthcare A EUR -0.72 11.91 12.47 84.28
AXA Framlington Health Inc 7.97 9.59 50.57 278.82
AXA WF Framlington Health AC USD 7.68 7.85 53.42 53.48
CAAM Funds Global Food & HCare C 5.78 30.62 34.76 14.82
Eaton Vance Emld WWHlth M$ 6.03 12.45 31.75 15.06
Fidelity Fds Gbl Health Care A 7.62 26.18 37.26 165.79
INVESCO Glbl Healthcare A 9.17 17.86 42.65 108.71
Janus Global Life Sci A $ 17.65 22.08 44.39 86.44
JPM Glbl Healthtech A (A)-USD 2.17 15.58 21.89 17
JPM Glbl Life Scncs A (D)-USD 4.87 -1.15 21.09 18.83
L&G Health & Pharm Index Inc 2.17 20.31 24.15 29.47
Merrill LIIF Wld Health A 17.84 26.05 44.69 111.56
Robeco Healthcare Equities D 0.34 17.09 21.54 106.36
Schroder Medical Disc'ry Acc 3.39 23.01 26.46 57.99
Threadneedle Global Health 1 5.32 23.06 39.72 4.97
UBS (Lux) EF-Health Care B 1.04 21.01 28.94 235.57
Wellington MP Glbl Healthcare G 5.02 34.25 78.02 373.46
Source: MorningStar 1/1/08
I think ISIS's recent collaboration with GENZ can be used as a starting point when trying to estimate RPRX's value.
Proellex & Mipomersen are multi-billion dollar opportunities with Proellex having 2X peak sales. Both have shown good safety data in Phase I & II trials. Both are seeking FDA approval and then expanding to larger indications.
There are a number of differences when trying to compare a sale of a company to a partnership, but it would be hard to value RPRX less then $500 - $700 million at this stage.
I couldn't sleep at night shorting this stock.
No webcast. "Following the presentation, you can view the slides by logging onto Repros’ website at http://www.reprosrx.com and selecting the “Events and Presentations”
The conference room must have lacked the technology since none of the presenters in the room had webcasts.
OT- I must have had a bad reaction to my meds this morning since I could swear Maria Bartiromo has red hair.
JP Morgan presentation today. I doubt RRPX will get much exposure from the presentation. Its not webcast & its at noon on the last day of the conference. Most analysts will probably be at lunch or a plane home when JP speaks.
I was hoping the additional shares would be purchased on the open market in order to support the share price. Another 1.5 million shares could dry up all the trading.
Efficacy just put the screws on the shorts. I'm sure they thought the buying pressure was about to end since Efficacy was close to the 20% threshold.
More Wachovia with IBIS new info
Isis Gets Its Mipomersen Partner in Genzyme Corp.
Event: After the market’s close on January 7, 2008, Genzyme Corp. and Isis Pharmaceuticals, Inc.
announced that the two companies had entered into a global alliance on the development and
commercialization of mipomersen (formerly Isis 301012), Isis’s lipid-lowering compound for the treatment
of high risk cardiovascular patients.
• Throughout a large part of 2007 there was investor concern about Isis’ ability to successfully sign a
partnership for this compound due to the lack of a demonstrated commercial success with Isis’ early
first-generation antisense compounds. Since May 2007 Isis has created significant interest in its secondgeneration
antisense technology and signed two significant partnerships with Bristol-Myers Squibb and
Johnson and Johnson for early stage cholesterol and diabetes compounds targeting novel pathways.
The mipomersen partnership is a significant advance beyond these earlier-stage collaborations as
mipomersen was the most advanced unpartnered pipeline compound and demonstrates Isis’ ability to
obtain a significant global partnership that we feel provides Isis stakeholders with excellent short-term
and long-term shareholder value. Due to the deal structure shareholders will benefit from significant upfront
and back-end loaded milestone payments, an equity investment by Genzyme, a standard standstill
agreement that makes it difficult for Genzyme to acquire Isis through “creeping” equity acquisitions, and
allows for Isis to enjoy a share of global annual profits. All in all, we feel that the deal terms are
extremely positive for Isis shareholders. Given Genzyme's ability to garner premium pricing for its
drugs, we have increased our estimated weekly price for 301012 from $30 to $75 per injection.
What is Next? FBI, a leading indicator: The T5000 biosensor system, is a novel diagnostic tool, with
no competitive product of similar sophistication on the horizon. Our contacts associated with DARPA
and the CDC have indicated that the FBI has made the decision to switch all forensic analysis over to the
T5000 within the next 2-4 years. A Defense Agency consultant has indicated that the FBI has fully
embraced the technology for conducting forensic analysis due to its high degree of accuracy and its
ability to get results with minimal sample quantity. Within the realm of the molecular genetics
community it is well accepted that the FBI is an early adopter of cutting-edge technology and a leading
indicator of future practice standards. Recall that the FBI was the first to embrace polymerase chain
reaction (PCR) assays in the mid-1980s and now it is a “household” molecular genetics tool with a reach
so vast that it has been introduced to the curriculum of every undergrad science major. Based on
conversations with key thought leaders in the field of diagnostics and infectious disease management we
believe four large diagnostic players are pursuing a partnership with ISIS for the Ibis T5000 business.
Although it is our impression that conversations have been ongoing for several months, we do not
anticipate seeing a partnership emerge until 2008 due to the breadth, complexity, and scope of the
potential deal.
Valuation- Increased 301012 Weekly Price:
Isis is composed of three value drivers; a therapeutics business composed of 17 compounds, a revolutionary
diagnostics business and the broadest intellectual pharmaceuticals property estate in the field of RNAtargeted
therapeutics. However, we believe the Street is predominately assigning value only one compound,
ISIS 301012, leaving room for the value in the market to expand. We believe there is unrecognized value in
the pipeline and in the T5000 biosensor system, a novel diagnostic tool with no competitive product of
similar sophistication on the horizon. Lastly, we believe that shareholders will continue to benefit from Isis’s
broad intellectual property position because whether it’s RNAi, single-stranded oligos, microRNA or RNA
splicing, it’s all mechanisms of antisense and companies can’t operate in the field without have access to the
Isis patent estate.
We value ISIS based on our 2011 revenue estimates of approximately $540 million, composed of $187
million from the sales of the T5000 systems and assay kits, approximately $277.6 million on royalties from
the sales of its lead product ISIS 301012 from marketing partners and the remaining $75 million from other
collaborative and partnership agreements.
We arrive at our Ibis Division T5000 revenue estimate based on an assumption that Bruker Daltonics will sell
280 systems in 2010, achieving sales of $112 million in 2010 with ISIS garnering approximately 25% royalty
on gross revenue from those system sales of roughly $28 million. By 2011 we believe that there will be a
total of approximately 500 systems in commercial use and that each system will be running approximately
4,500 assays annually, equating to $142 million in total assay sales booked by ISIS in 2011. In addition, we
assume this industry usage will generate $17.5 million in R&D contracts and outsourced assay services.
We arrive at our ISIS 301012 revenue estimate based on an assumption that the firm's lead product is
approved in 2009 for the treatment of familial hypercholesterolemia and 2011 for hypercholesterolemia,
achieves sales of $52 million in H2:11 and ISIS garners a 33% royalty on net revenue from those sales of
roughly $277 million from Genzyme. Our gross revenue estimate of $990 million is derived from our
patients-based model in which we assume approximately 167,000 heterozygous and homozygous familial
hypercholesterolemia patients on therapy, representing a 40% penetration into the HoFH market and a 15%
penetration into the HeFH market, at an annual cost of about $3,600 (up from $1,440). Additionally, we
model approximately 273,000 polygenic hypercholesterolemia patients on therapy.
We capitalize our 2011 revenue estimate of Ibis revenues of $182 million at 5-6x (in line with the 5-6x
multiples typical of small-cap diagnostic companies and a lower-margin business) suggesting a 2011 value
for the Ibis division of $937 million-1.12 billion, which we discount at 15% (a discount rate we apply to
lower-risk business opportunities since the T5000 is commercialized) to arrive at a 2008 value for the Ibis
division of $616-740 million. We capitalize our 2011 revenue estimate from the therapeutics and
collaborative partnership agreements of $352 million at 8-9x (in line with the 7-9x multiples typical of midcap
biotech companies with partnered products because of the higher margins afforded by royalty revenue),
suggesting a 2011 market capitalization of about $2.7–3.0 billion. We discount this rate at 20% (a discount
rate we apply to therapeutics with well-established clinical data) to arrive at a 2008 value for the therapeutics
division of $1.6-1.8 billion. We believe the market will assign a value of at least $500 million to ISIS’s 16
pipeline candidates, ownership in public and private companies, and intellectual property given that Merck
acquired SiRNA with a small pipeline and inferior intellectual property position for approximately $1.1
billion. Further validation is added to ISIS’s clinical candidates from the collaborations with Genzyme,
Bristol-Myers Squibb (BMS) and Johnson & Johnson (J&J), as these collaboration provide us will additional
conviction that ISIS will be able to garner additional partnerships that are similar in scope and value.
Additionally, we believe these recent collaborations reset the valuations that should be assigned to ISIS’s
pipeline programs. Specifically, BMS assigned a headline value of $200 million to the PCSK9 preclinical
compound and the $400+ million J&J deal assigned a headline value of approximately $200 million for ISIS
325568 in Phase I and the preclinical candidate ISIS 377131. In total, ISIS has 17 lead candidates in IND
enabling studies or clinical development, which are being developed either alone or in partnership with
Pfizer, Merck, BMS, J&J or smaller institutions (note we have only modeled ISIS 301012 reaching the
market). Further, like the PCSK9 candidate, which was never discussed prior to the BMS deal, ISIS has
numerous undisclosed preclinical candidates.
We arrive at this $500 million by looking at the total percentage of ownership and/or the rights to future
programs that Isis legally has through its collaboration and licensing agreements. For example, Isis will
recognize $60 million over the next two years guaranteed from J&J for the rights to ISIS 325568 and ISIS
377131 and ISIS could recognize and additional $265 million in milestones as these candidates advance
through clinical development. In addition, ISIS has rights to a minimum of 15% of Alnylam’s revenue (25%
of upfront payments and milestones) and assuming the market has valued Alnylam appropriately then 15% of
their future opportunity in current value equates to approximately $190 million alone. Further, Isis has rights
to revenues from various programs at OncoGenex, Antisense Therapeutics Ltd, Eli Lilly, Pfizer, BMS,
Merck, iCo Therapeutics, Rosetta Genomics, Imquest Pharmaceuticals, Achaogen, Ercole, and Sarrissa
Lastly, Isis has a broad proprietary pipeline that includes ISIS 113715, a second-generation antisense
inhibitor of protein tyrosine phosphatase (PTP-1B) for the treatment of Type II diabetes, which is in Phase II
development and Alicaforsen (being developed by Atlantic Healthcare), which is ready to enter Phase III
development for the treatment of ulcerative colitis (UC). Both compounds have successfully completed Phase
II trials. We are more confident in the future of ISIS 301012 than ISIS 3715 and Alicaforsen, which is the
reason we have only modeled future revenues for 301012. Positive data emerging from either program or the
establishment of additional collaborations could offer upside potential to our valuation. Adding $500 million
in pipeline value to the $1.6-1.8 billion value we attribute to the therapeutics business and the $616-740
million we attribute to the Ibis division we arrive at a 2008 value of ISIS of roughly $2.7-3.0 billion. Given
that we believe the firm will have about 89.6 million shares outstanding in 2008, a $2.7-3.0 billion market
capitalization is consistent with our $30-34 valuation range.
Carr noted the cash position & his usual line that partnering discussions have heated up since Dyloject obtained UK approval.
I think the conference is going to attract alot of investors. The JP Morgan biotech analyst mentioned JAV during the Marketwatch interview which is pretty significant in my opinion.
From Wachovia's latest report on ISIS:
"What is Next? FBI, a leading indicator: The T5000 biosensor system, is a novel diagnostic tool, with no competitive product of similar sophistication on the horizon. Our contacts associated with DARPA and the CDC have indicated that the FBI has made the decision to switch all forensic analysis over to the T-5000 within the next 2-4 years. A Defense Agency consultant has indicated that the FBI has fully embraced the technology for conducting forensic analysis due to its high degree of accuracy and its ability to get results with minimal sample quantity. Within the realm of the molecular genetics community it is well accepted that the FBI is an early adopter of cutting-edge technology and a leading indicator of future practice standards. Recall that the FBI was the first to embrace polymerase chain reaction (PCR) assays in the mid-1980s and now it is a “household” molecular genetics tool with a reach so vast that it has been introduced to the curriculum of every undergrad science major. Based on conversations with key thought leaders in the field of diagnostics and infectious disease management we believe four large diagnostic players are pursuing a partnership with ISIS for the Ibis T5000 business. Although it is our impression that conversations have been ongoing for several months, we do not anticipate seeing a partnership emerge until 2008 due to the breadth, complexity, and scope of the potential deal.
Valuation-
Isis is composed of three value drivers; a therapeutics business composed of 17 compounds, a revolutionary
diagnostics business and the broadest intellectual pharmaceuticals property estate in the field of RNAtargeted
therapeutics. However, we believe the Street is predominately assigning value only one compound, ISIS 301012, leaving room for the value in the market to expand. We believe there is unrecognized value in the pipeline and in the T5000 biosensor system, a novel diagnostic tool with no competitive product of similar sophistication on the horizon. Lastly, we believe that shareholders will continue to benefit from Isis’s broad intellectual property position because whether it’s RNAi, single-stranded oligos, microRNA or RNA splicing, it’s all mechanisms of antisense and companies can’t operate in the field without have access to the Isis patent estate.
We arrive at our Ibis Division T5000 revenue estimate based on an assumption that Bruker Daltonics will sell 280 systems in 2010, achieving sales of $112 million in 2010 with ISIS garnering approximately 25% royalty on gross revenue from those system sales of roughly $28 million. By 2011 we believe that there will be a total of approximately 500 systems in commercial use and that each system will be running approximately 4,500 assays annually, equating to $142 million in total assay sales booked by ISIS in 2011. In addition, we assume this industry usage will generate $17.5 million in R&D contracts and outsourced assay services.
We capitalize our 2011 revenue estimate of Ibis revenues of $182 million at 5-6x (in line with the 5-6x multiples typical of small-cap diagnostic companies and a lower-margin business) suggesting a 2011 value for the Ibis division of $937 million-1.12 billion, which we discount at 15% (a discount rate we apply to lower-risk business opportunities since the T5000 is commercialized) to arrive at a 2008 value for the Ibis division of $616-740 million."
The platelet study was the difference in Dyloject being a $250 million + drug in the US vs $100 million. There is no reason to use the primary NSAID (ketorolac)for post-operative pain once Dyloject is approved.
Ketorolac had over 43 million unit doses sold in the US in 2006 eventhough it has a black box warning. Once JAV does a little marketing then it will become the standard.
I don't see any reason why JAV couldn't do 50 million units within 2 yrs of approval since the trend in post-operative pain management promotes the increased use of NSAIDs. 50 million X $7 dose = $350 million.
ISIS, the trading in the stock should be investigated. 8 million shares traded before the announcement which is 4 times the normal volume. They dropped the price over $2 at the open & took out all the stop loss orders.
With 20 million shares short every game in town will be employed to limit the upside tomorrow. I just wonder how many of those short shares covered before the announcement.
ISIS is one of the most unloved biotechs, but its got alot more going for it then this deal.
ISIS's technology is still not respected even after this remarkable deal. It just shows how lazy most biotech investors are. ISIS has a number of important drugs in development, collaborations, and the IBIS division could be huge.
You could not have asked for a better deal. $375 million upfront with $1.5 billion in additional milestone payments & royalties. The company will never have to raise another dollar or dilute.
I was hoping for a buy-out, but a GENZ collaboration is the next best thing. Positive analyst/investor conference after the close.
$40 stock in a year.
Congrats.
Genzyme and Isis Announce Strategic Alliance Including Exclusive Worldwide License of Mipomersen
Monday January 7, 4:01 pm ET
Breakthrough, Potential Blockbuster Product for High Risk Cardiovascular Patients
CAMBRIDGE, Mass. and CARLSBAD, Calif., Jan. 7 /PRNewswire-FirstCall/ -- Genzyme Corp. (Nasdaq: GENZ - News) and Isis Pharmaceuticals, Inc. (Nasdaq: ISIS - News) announced today that they have entered a major strategic alliance in which Genzyme will develop and commercialize mipomersen, Isis' lipid-lowering treatment for high risk cardiovascular patients that utilizes novel antisense technology. As part of the strategic relationship, Genzyme will also have preferred access to future Isis drugs for CNS and certain rare diseases. The companies will host a webcast conference call today at 5:15 pm EST (2:15 pm PST) to discuss the transaction.
ADVERTISEMENT
click here
Genzyme will pay Isis $150 million to purchase five million shares of Isis common stock for $30 per share upon Hart-Scott-Rodino clearance. Upon completion of final contracts, Genzyme will pay Isis a $175 million up-front mipomersen license fee. In addition to this initial $325 million, Isis has the potential to receive significant milestone payments for mipomersen, which is currently in phase 3 trials. Once the product is launched, the two companies will share profits.
"This alliance is an excellent strategic fit for Genzyme's business model and culture," said Henri A. Termeer, Genzyme's chairman and chief executive officer. "Mipomersen is an innovative approach to addressing a real unmet medical need, and we believe it could prove to be the most effective lipid-lowering agent for high risk patients for whom conventional therapies are not sufficient. This potential blockbuster is a very Genzyme-like product. It provides significant benefit over the standard of care, targets a well-defined and severely ill patient population, and offers meaningful revenue and earnings potential."
"We feel that Genzyme is the perfect partner for Isis and for mipomersen," said Stanley Crooke, chairman, president and chief executive officer of Isis. "We have been very pleased with the quality and depth of interest in this flagship drug in our cardiovascular pipeline, and as we evaluated the licensing terms from various parties, we felt that Genzyme would value mipomersen appropriately as a pipeline-transforming product. This commitment to mipomersen, along with Genzyme's strength in drug development and marketing, made this relationship strategically compelling."
Mipomersen License
Mipomersen, formerly ISIS 301012, is a lipid-lowering drug targeting apolipoprotein B-100. Currently in phase 3 development, mipomersen has been shown in phase 2 trials to reduce cholesterol and other atherogenic lipids more than 40 percent beyond reductions achieved with current standard lipid-lowering drugs, enabling more patients to achieve lipid targets. These trials have shown that the treatment is well-tolerated, has a strong safety profile, and works equally well in the presence and absence of other lipid-lowering therapies including statins. A weekly injectable therapeutic, mipomersen is being developed primarily for patients at significant cardiovascular risk who are unable to achieve target cholesterol levels with statins alone or who are intolerant of statins. The drug has strong, broad patent protection.
Mipomersen's initial indication will be for patients with familial hypercholesterolemia (FH), with an anticipated filing in 2009. There are approximately 1.5 million people in the United States and Europe with FH, an inherited disorder that causes exceptionally high levels of LDL-cholesterol. After appropriate clinical development, the next indication pursued for mipomersen will be for other patients with high cholesterol at high risk of cardiovascular events.
Deal Terms
Isis will transition development responsibility for mipomersen to Genzyme over the next two years. In addition to the up-front payment, Isis also has the opportunity to receive from Genzyme up to $825 million in development and regulatory milestone payments plus up to $750 million in commercial milestone payments.
Genzyme and Isis will share mipomersen profits 50/50 when annual worldwide revenues reach $2 billion or more. The profit share begins with a 70/30 Genzyme/Isis split and reaches 50/50 on a sliding scale as annual revenues ramp up to $2 billion.
"Genzyme is reconfirming its 2008 and five-year earnings guidance, and we will manage the financial impact of this agreement within our previously stated goal of 20 percent compound annual growth in non-GAAP earnings per share through 2011," noted Mr. Termeer.
"We believe the profit sharing transaction we have structured with Genzyme is uniquely beneficial to Isis," added Dr. Crooke. "It allows us to benefit in the short term and over time through up-front licensing fees and milestones, while retaining substantial economic participation in the commercialization of the drug. We look forward to working with Genzyme on mipomersen as well as potentially on drugs for CNS and certain rare diseases."
Closure of the transaction is subject to clearance under the Hart-Scott-Rodino Antitrust Improvements Act.
About Familial Hypercholesterolemia (FH)
FH patients have high blood concentrations of LDL-cholesterol due to a genetic disorder which prevents proper metabolism of LDL-cholesterol. These patients experience a markedly increased risk of premature cardiovascular diseases (CVD) and CVD-related death. Familial hypercholesterolemia can be present in two forms: homozygous (hoFH), where the same defective gene is inherited from both parents, or heterozygous (heFH), where the defective gene is inherited from only one parent so that some function is preserved. The homozygous form is a very rare condition estimated to affect approximately one in a million people. Children with hoFH are at high risk for early coronary events and sudden death as young as age one. HeFH is more common, with a prevalence of approximately one in 500, and patients with heFH also experience elevated LDL-cholesterol and are at high risk for early coronary events. For undiagnosed or untreated heFH, the cumulative risk of a coronary heart disease (CHD) by age 60 years is 60-85% among men and 30-50% among women, with a mean age of onset of approximately 47 years.
About Genzyme
One of the world's leading biotechnology companies, Genzyme is dedicated to making a major positive impact on the lives of people with serious diseases. Since 1981, the company has grown from a small start-up to a diversified enterprise with more than 10,000 employees in locations spanning the globe and 2006 revenues of $3.2 billion. In 2007, Genzyme was chosen to receive the National Medal of Technology, the highest honor awarded by the President of the United States for technological innovation. In 2006 and 2007, Genzyme was selected by FORTUNE as one of the "100 Best Companies to Work for" in the United States.
With many established products and services helping patients in nearly 90 countries, Genzyme is a leader in the effort to develop and apply the most advanced technologies in the life sciences. The company's products and services are focused on rare inherited disorders, kidney disease, orthopaedics, cancer, transplant and diagnostic testing. Genzyme's commitment to innovation continues today with a substantial development program focused on these fields, as well as immune disease, infectious disease and other areas of unmet medical need.
http://biz.yahoo.com/prnews/080107/lam185.html?.v=1
Genzyme and Isis Announce Strategic Alliance Including Exclusive Worldwide License of Mipomersen
Monday January 7, 4:01 pm ET
Breakthrough, Potential Blockbuster Product for High Risk Cardiovascular Patients
CAMBRIDGE, Mass. and CARLSBAD, Calif., Jan. 7 /PRNewswire-FirstCall/ -- Genzyme Corp. (Nasdaq: GENZ - News) and Isis Pharmaceuticals, Inc. (Nasdaq: ISIS - News) announced today that they have entered a major strategic alliance in which Genzyme will develop and commercialize mipomersen, Isis' lipid-lowering treatment for high risk cardiovascular patients that utilizes novel antisense technology. As part of the strategic relationship, Genzyme will also have preferred access to future Isis drugs for CNS and certain rare diseases. The companies will host a webcast conference call today at 5:15 pm EST (2:15 pm PST) to discuss the transaction.
ADVERTISEMENT
click here
Genzyme will pay Isis $150 million to purchase five million shares of Isis common stock for $30 per share upon Hart-Scott-Rodino clearance. Upon completion of final contracts, Genzyme will pay Isis a $175 million up-front mipomersen license fee. In addition to this initial $325 million, Isis has the potential to receive significant milestone payments for mipomersen, which is currently in phase 3 trials. Once the product is launched, the two companies will share profits.
"This alliance is an excellent strategic fit for Genzyme's business model and culture," said Henri A. Termeer, Genzyme's chairman and chief executive officer. "Mipomersen is an innovative approach to addressing a real unmet medical need, and we believe it could prove to be the most effective lipid-lowering agent for high risk patients for whom conventional therapies are not sufficient. This potential blockbuster is a very Genzyme-like product. It provides significant benefit over the standard of care, targets a well-defined and severely ill patient population, and offers meaningful revenue and earnings potential."
"We feel that Genzyme is the perfect partner for Isis and for mipomersen," said Stanley Crooke, chairman, president and chief executive officer of Isis. "We have been very pleased with the quality and depth of interest in this flagship drug in our cardiovascular pipeline, and as we evaluated the licensing terms from various parties, we felt that Genzyme would value mipomersen appropriately as a pipeline-transforming product. This commitment to mipomersen, along with Genzyme's strength in drug development and marketing, made this relationship strategically compelling."
Mipomersen License
Mipomersen, formerly ISIS 301012, is a lipid-lowering drug targeting apolipoprotein B-100. Currently in phase 3 development, mipomersen has been shown in phase 2 trials to reduce cholesterol and other atherogenic lipids more than 40 percent beyond reductions achieved with current standard lipid-lowering drugs, enabling more patients to achieve lipid targets. These trials have shown that the treatment is well-tolerated, has a strong safety profile, and works equally well in the presence and absence of other lipid-lowering therapies including statins. A weekly injectable therapeutic, mipomersen is being developed primarily for patients at significant cardiovascular risk who are unable to achieve target cholesterol levels with statins alone or who are intolerant of statins. The drug has strong, broad patent protection.
Mipomersen's initial indication will be for patients with familial hypercholesterolemia (FH), with an anticipated filing in 2009. There are approximately 1.5 million people in the United States and Europe with FH, an inherited disorder that causes exceptionally high levels of LDL-cholesterol. After appropriate clinical development, the next indication pursued for mipomersen will be for other patients with high cholesterol at high risk of cardiovascular events.
Deal Terms
Isis will transition development responsibility for mipomersen to Genzyme over the next two years. In addition to the up-front payment, Isis also has the opportunity to receive from Genzyme up to $825 million in development and regulatory milestone payments plus up to $750 million in commercial milestone payments.
Genzyme and Isis will share mipomersen profits 50/50 when annual worldwide revenues reach $2 billion or more. The profit share begins with a 70/30 Genzyme/Isis split and reaches 50/50 on a sliding scale as annual revenues ramp up to $2 billion.
"Genzyme is reconfirming its 2008 and five-year earnings guidance, and we will manage the financial impact of this agreement within our previously stated goal of 20 percent compound annual growth in non-GAAP earnings per share through 2011," noted Mr. Termeer.
"We believe the profit sharing transaction we have structured with Genzyme is uniquely beneficial to Isis," added Dr. Crooke. "It allows us to benefit in the short term and over time through up-front licensing fees and milestones, while retaining substantial economic participation in the commercialization of the drug. We look forward to working with Genzyme on mipomersen as well as potentially on drugs for CNS and certain rare diseases."
Closure of the transaction is subject to clearance under the Hart-Scott-Rodino Antitrust Improvements Act.
About Familial Hypercholesterolemia (FH)
FH patients have high blood concentrations of LDL-cholesterol due to a genetic disorder which prevents proper metabolism of LDL-cholesterol. These patients experience a markedly increased risk of premature cardiovascular diseases (CVD) and CVD-related death. Familial hypercholesterolemia can be present in two forms: homozygous (hoFH), where the same defective gene is inherited from both parents, or heterozygous (heFH), where the defective gene is inherited from only one parent so that some function is preserved. The homozygous form is a very rare condition estimated to affect approximately one in a million people. Children with hoFH are at high risk for early coronary events and sudden death as young as age one. HeFH is more common, with a prevalence of approximately one in 500, and patients with heFH also experience elevated LDL-cholesterol and are at high risk for early coronary events. For undiagnosed or untreated heFH, the cumulative risk of a coronary heart disease (CHD) by age 60 years is 60-85% among men and 30-50% among women, with a mean age of onset of approximately 47 years.
About Genzyme
One of the world's leading biotechnology companies, Genzyme is dedicated to making a major positive impact on the lives of people with serious diseases. Since 1981, the company has grown from a small start-up to a diversified enterprise with more than 10,000 employees in locations spanning the globe and 2006 revenues of $3.2 billion. In 2007, Genzyme was chosen to receive the National Medal of Technology, the highest honor awarded by the President of the United States for technological innovation. In 2006 and 2007, Genzyme was selected by FORTUNE as one of the "100 Best Companies to Work for" in the United States.
With many established products and services helping patients in nearly 90 countries, Genzyme is a leader in the effort to develop and apply the most advanced technologies in the life sciences. The company's products and services are focused on rare inherited disorders, kidney disease, orthopaedics, cancer, transplant and diagnostic testing. Genzyme's commitment to innovation continues today with a substantial development program focused on these fields, as well as immune disease, infectious disease and other areas of unmet medical need.
http://biz.yahoo.com/prnews/080107/lam185.html?.v=1
ZGEN, I just took a position. Looks like a good valuation play even if the FDA gives them an approvable letter.
Best Stocks for 2008: Partnerships and takeover appeal at Isis (ISIS)
Posted Dec 31st 2007 11:45AM by Steven Halpern
Filed under: Newsletters, Stocks to Buy, Best Stocks for 2008
For 25 years, Steven Halpern, editor of TheStockAdvisors.com, has surveyed the leading financial newsletter advisors asking for their favorite stocks for the coming year. This article is one of 100+ ideas in the Best Stocks for 2008 report.
"Our favorite speculative play for 2008 is Isis Pharmaceuticals (NASDAQ: ISIS)," says biotech expert John McCamant, editor of The Medical Technology Stock Letter.
"The main reason to own ISIS is the strong potential for an extremely attractive partnership for their exciting anti-cholesterol drug candidate, mipomersen, or an outright acquisition of the company itself at a substantial premium.
"We have seen recent evidence of acceleration in deal activity as the Sanofi-Aventis/Regeneron deal was the richest we have ever seen for drug candidates only in Phase 1 testing. In turn, this has most likely upped the ante for doing a deal with ISIS for mipomersen, which is now in Phase 3.
"We believe that ISIS has the most attractive late-stage anti-cholesterol drug candidate in development and expect the stock to be much higher on a partnership or an acquisition.
"The strong data for mipomersen that was presented at the recent American Heart Association meeting -- which showed it had the stunning ability to reduce LDL (bad cholesterol) levels an additional 48% on top of statin therapy -- has cemented mipomersen as the one of the most valuable drug candidates in development.
"Mipomersen's unique effectiveness comes from its ability to specifically target apoB, a key cholesterol drug target that has previously been un-druggable using traditional small molecule chemistry. Two factors may trigger an acquisition as opposed to a deal.
"The first is: as the deal price goes up, the potential partner will crunch the numbers to see how much they might have to pay to get the whole ball of wax.
"The second factor that might tip towards an outright acquisition is the extremely strong intellectual property position ISIS has built in both antisense and mRNAI. Regardless of which of the two scenarios ends up unfolding, shareholders will be richly rewarded. ISIS is a buy under $18 with a target of $30."