Perhaps NVS provided the notice to Teva that a submital to the ANDA had been made.

I thought Teva and NVS agreed that a 100? day advance notice of a launch would be provided by Sandoz before launching m-copax. Perhaps the major amendment was the bioequivalence study results. This may be a final piece of info that FDA has asked for, hence prompting NVS and MNTA to believe they are close to approval. Perhaps Sandoz informed TEVA that they had submitted this amendment as part of the notice to launch. I believe that any lab data submital maybe considered a major amendment to the ANDA (even if it is bioequivalence and not clinical trial results). I know it may surprise some of you that TEVA could potentially spin this as a positive.

This is just speculation, but perhaps Sandoz wants to provide notice of intent to launch if the final pieces fall into place (FDA approval of what they might believe to be a final piece of information, favorable trial results, etc.).

FL

You're right diagnostics is a pretty wide net to cast. However when I look at the successes and failures it is apparent that the successes all had strength in in-situ hybridization for chromosome analysis. The formula has been simple when vysis was bought out I looked for something similar and got into Ventana and then CALP.

I believe the trend toward personalized medicine is unmistakable. I'll post if I find any interesting publicly traded firms in this space.

All in all, its only a partial offset for the beating being taken elsewhere in my portfolio. TWM has also helped keep some in the green but this is a short term vehicle and I have gotten burned in the past holding this type of a short position too long.

Regards
FL

Personalized medicine has probably been my most profitable investment themes over the past 10 years. Three companies I invested in got bought out at substantial premium(Vysis by ABT, Ventana by Roche and now Calp). However, I have had notable flame outs as well MZTh.PK.

I'd be interested if readers of this board are aware of other under the radar diagnostic testing firms. Obviously the acquisition theme can cut both ways when it does not work out, as in the case of GPRO.

Regards
FL

I think you are dreaming if you think either of the two factors you mentioned would sway Teva to retract its ANDA. Fact of the matter is that their ongoing investment is minimal and the admission that they are not making progress with the approval would further reinforce the impression that MNTAs technology is far superior. This could be damaging in terms of the perceptions of copaxones vulnerability.

The majority of the analysts that follow Teva have projected approval of t-lovenox by the end of 2011. If this does not happen and the estimates get pushed back further, I believe that the overhang on MNTA will begin to lift by years end.


With regard to the technical analysis, it appears that we have reached the point were it works until it does not work anymore, and you are now searcing for a new pattern. Perhaps the patent trial will provide an impetus for further gains.

FL

Looks like Mylan has taken a page out of the Teva playbook
by trying to pass off Natco's knock off as copaxone. How many feel it is likely to undergo the same fate (i.e., as long or a longer ANDA review as Teva's t-enox)?

FL
________________________________________________________________
By then, Natco had successfully commercialised a generic version of the MS drug in the Indian market as well the Ukraine. For many other regulated markets of US, Europe, Australia, New Zealand, Japan and Canada, it has tied up with US generic giant Mylan to market and distribute the drug.
_________________________________________________________________

Thats what I mean. Both the citizens petition verbage and the patent litigation claims construction language spin comes straight from the Teva spin machine.

Regards FL

That's because their research comes straight from the Teva press releases.

Regards FL

At the Annual mtg CW said that the financing completed at the end of 2010 was based on the cash position at the time and was conducted under the assumption that Teva launch was imminent (based on Teva's statements). He indicated that these conditions have changed and that there was no further need for additional financing.

If anything, Palo Alto is keeping the pressure on to use some of the cash flow to offset option grants. I don't think this will happen but it is setting a tone that long term investors are concerned with dilution.

FL

Analysts had little choice but to raise estimates. Not only had MNTA eclipsed their previous estimate but they also announced that the royalty would increased since m-enox was the sole generic for a year.

Raising estimates maintains their consistency with Teva launching in the 2nd half of 2011.

FL

I agree that the under-performance is unwarranted. NVS gets painted as a European Company, so it drops due to European sovereign debt concerns, then it gets hit again due to the strength of the Swiss currency.

Go Figure!

FL

_______________________________________________________
bottomline I think MNTA needs a positive catalyst.
_______________________________________________________

It has been said that 90% of as stocks movement is attributed to the sector dynamics (don't ask me who said it). Biotechs like the broader market are getting hammered so it is questionable whether a MNTA catalyst would register with investors, or whether it would be simply overlooked.

I believe that this is precisely what happened to MNTA this week. In a normal climate the NEJM article coauthored by Janet Woodcock the director of the Drug Evaluation and Research (CDER) at the Food and Drug Administration (FDA) would be deemed a strong catalyst. This article clearly articulated a place for high tech characterization methods such as MNTA employs in FOB drugs.

Just as importantly, the County is looking at rating agency imposed fiscal austerity. Health care accounts for approximately 17% of budgetary spending in this country (nearly twice the rate at most industrialized nations). Biologic drugs are one of the biggest ticket items in the entire health care budget. The NEJM clearly indicated that lower cost biologics are a necessity for the county and are on the horizon. What company is better positioned to capitalize on this this fledgling market? CW indicated that there was considerable outrage that Teva and Biogen would raise the cost of their MS drugs last year when public budgets are strained to the breaking point.

I contend that the market was simply to scarred and stupid to recognize this catalyst. This created a buying opportunity for those that recognize it. If this isn't enough, there are several other potential catalysts on the horizon. These are detailed on the MNTA Read First Page and include the following:

1)m-copax FDA decision could come at any time- I believe the market is presently ascribing 0% upside for this event; Thus, I feel like the downside is limited and the upside could be a 100% from here.

2)Similarly, patent litigation on m-copax could also play favorably for the same reason;

3)clinical launch of m-402;

4)announcement of a FOB partnership; etc

These things will play out over time.


FL

Funny, as a NVS shareholder I distinctly recall Marth about a year ago indicating that NVS' oral MS Drug candidate (fingolimod-Gilenya) had considerable side effect warts that linguinimod wouldn't exhibit. His inference was that linguinimod was a much better drug. Too bad that efficacy also counts. I know he was under pressure to show an heir apparent for copaxone, however statements like this continue to erode creditability.

FL

lotrel had $1B in sales in 2005 before the generic competition. I don't think NVS got triple damages but I think the settlement is north of $1B.

FL

More bad news for Teva.

http://www.bloomberg.com/news/2011-07-21/teva-reports-settlement-of-novartis-suit-based-on-generic-lotrel.html

A little more info on the lotrel settlement.

http://www.bloomberg.com/news/2011-07-21/teva-reports-settlement-of-novartis-suit-based-on-generic-lotrel.html

FL

Not very satisfying to have no idea what the settlement terms were. Initially NVS threatened treble damages on any ill gotten gains Teva may have received by launching at risk. All mention of the litigation ceased a couple of years ago.

I believe Lotrel was a top 10 drug for NVS and still had a couple of years of patent protection when Teva launched at risk. The settlement hit could be significant. This could provide another reason to to tune into TEVA's CC on the 27th.

FL

You may be referring to the citizens petition from the Duke medical center MD's which were later found to have received significant support from Sanofi.

Either way FDA denied those m-enox claims that clinical testing be conducted in the same manner they have dispatched the m-copax citizen petitions.

I think if FDA wanted clinical testing they would have denied the 505J pathway request.

FL

In addition to FDA's acceptance of m-copax under the 505J pathway, FDA has now rejected 3 citizen petitions which have specifically requested clinical trials. As such, any chance that they would reverse their position at this late date and require clinical trials is extremely remote.

FL

Here is the link.

http://www.globes.co.il/serveen/globes/docview.asp?did=1000665568

FL

Looks like the Globe started counting the wait for t-enox when momenta got their approval rather than when Teva filed the ANDA. Or maybe the quote should read " Teva has promised approval is imminent for the past year".

FL

Anyone that knows anything about courtroom procedure would have guessed that no real revelations came out during direct testimony of Dr. Irit Pinchasi. Analysts look for anything to bolster their point of view. I'd be more interested in his cross exam. Then again maybe he is not the witness to make the point of ineq. conduct during cross.

Either way you're correct that this is a nothing issue.

FL

Negotiations have occurred. Obama met with the Canadian Prime minister about 2 months ago and they talked specifically about the pipeline. Because the pipeline will cross the border it is subject to approval by the State Dept. Hillary initially went on the record in support of TRP. However, she has been extremely quite for the past 10 months or so. Reportedly they will reach a decision before the end of the year.

The Canadians have made no secret that the Chinese have made several overtures to secure a share of the oil sands. Enbridge is extending a pipeline to the Pacific Coast to expedite shipping.

Keystone also has offered producers in the Wiliston Basin the right to ship oil from the Baaken using the pipeline. This was crucial to winning Montana's backing of the pipeline.

It seems crazy, we are looking for ways to jump start our economy yet cannot agree that a project that secures our energy future and results in several billion in construction spending should go forward. Obama is trying gimmicks and tricks such as tapping the strategic oil reserve to try to get the economy to respond yet his administration seems unaware that there is a glut of oil in Cushing and there are considerable uncertainties about future supplies which could be appreciably resolved by their simply approving this project. Perhaps with today's awful employment report, they will look at other ways to stimulate the economy.

FL

TRP- Keystone Pipeline

Dew will probably think I'm advocating another conspiracy theory, but you have to wonder about whether our Government plays favorites with industry. TRP proposed the Keystone pipeline extension and submitted all the environmental evaluations over a year ago. A portion of this pipeline is designated to move crude from Cushing OK. to the refineries on the Gulf. Presently there is a huge bottleneck which has led to stop gap measures such as trucking the crude to the Gulf.

The majority of the generals of our military have signed a petition to get the State Department to approve this project since it would secure a long term stable source of oil for this country (i.e., Canada). It would also create thousands of jobs, yet the State Department is held hostage by the left wing opposition such as Dennis Krusinich.

It appears that the government may favor the Enterprise Partners pipeline despite the fact that it is way behind in terms of Env. studies etc. Does anyone know how taxes are levied for pipeline companies. Seems like the taxes on the corporate profits probably outstrip any sales taxes from the Canadian Company. Either way the investment in this infrastructure project could have been creating thousands of much needed construction jobs while reducing our dependency on oil from the Middle East.

I have heard the arguments that oil sands generate more greenhouse gas and that portions of the pipeline would cross the Ogalala Aquifer. However, the oil sands are here to stay since the price of oil will remain in the profitable range. If the oil does not go to the US it will go to China. Investments are being made in the processes which reduce carbon emissions. Pipelines can be built with secondary containment so the leak issue can be resolved through engineering and permit requirements. As such, these arguments do not hold up. I believe, the State Department delays are designed to provide time for competing pipelines (for the Gulf portions of the project) to come to the table. Hate to be suspicious, but this smacks of political insider dealings.

http://www.reuters.com/article/2011/07/07/transcanada-idUSN1E7661HO20110707?feedType=RSS&feedName=rbssEnergyNews&rpc=43

Everolimus (Afinitor®) is shaping up to be a pipeline in a single drug. If I'm not mistaken it is currently approved for 4 indications. Breast cancer looks to be far and away the largest indication yet. This from a drug with a pathway (mTor)that analysts initially indicated would not amount to anything significant.

http://www.novartis.com/newsroom/media-releases/en/2011/1528340.shtml


FL

Attached is a summary of the Baker Bros holdings which provides a summary of recent changes to their portfolio. Unfortunately, it does not specify whether the purchases were made on the open market.

http://www.tickerspy.com/pro/Baker-Bros.-Advisors

FL

Charlie

Sorry I missed the tone of your earlier post. I've just been getting the impression that I lot of uninformed investors want to plow into any shale gas or oil play. Like anything, it needs to be taken with a grain of salt.

You are correct that vertical joints and fractures are common in bedrock. However, as indicated below: initial hydraulic fracturing is generally along bedding planes due to anisotropies which exist within the shale. However, as presented further in the article vertical fractures formed along the least principal stress axis were a major contributor to production for ER.

What I was stressing was my belief that most of the problems attributed to fraccing are likely the result of either operator error (too high pressures) or inadequate characterization, or both. I believe that the vast majority of the fraccing operations are conducted in a safe manner.


What is your feeling about the longevity of some of the shale gas plays now being touted.

Regards FL

http://www.aogr.com/index.php/magazine/cover_story_archives/may_2008_cover_story/
J1 Joints

"Initial hydraulic fracturing was restricted to the Marcellus and other black shale source rocks of the Appalachian Basin. Early cracking was in the plane of bedding, largely because the microscopic strength anisotropy generated by early compaction favored horizontal microcracks. Fluid within this suite of microcracks eventually collected to drive mesoscopic scale joints that were separated by as little as 30-50 centimeters. At this point, the orientation of these joints was controlled by the earth’s stress field, principally the least compressive stress."

I agree that some E&P companies are just concerned with producing gas at the lowest potential cost and therefore may not invest in reservoir analysis. However, long term investors are interested in the overall Barrels of Oil Equivalent (BOE) which is a function of how long the reservoir will continue to produce. Without some analysis, it is impossible to estimate whether the return on investment will be sufficient to cover infrastructure investments or whether it will sustain longer term profitability.

If wells produce only for a few years and rapidly decline in production. It is pretty expensive to determine this behavior by drilling a lot of wells that go bad quickly rather than characterizing the reservoir through a solid geologic exploration program (i.e., one that allows geologic properties to be projected from the initial exploration points).

FL

Like a lot of things the truth lies between the two endpoint views that are being espoused. Fracking is generally safe as long as the pressure limits calculated based on the lithostatic overburden weight are maintained within the range necessary for horiz. fractures to propagate. If these pressures are exceeded vertical fractures could develop which allow gas to migrate vertically to aquifers.

I'm sure that some overstating of resources is occurring due to the reservoir conditions I previously described. For this reason, investors can not assume that all E & P companies are equal.

FL

This thread appears to be growing stale. I wonder to what extent MNTA is deliberately vague about the FOB program for the following reasons:

1) the regulatory pathway has existed for approximately a year, therefore prudence dictates that they let the regulatory framework evolve before telegraphing their plans. To have announced anything prior to the pathway taking shape would have been premature.

2) I also invest in NVS and they have about 50% of the currently marketed FOB products making them the current largest player in this market and they are extremely secretive about what specific FOB products they are developing. It is no wonder looking at the amount of litigation required to bring a FOB to market. I don't think MNTA wants to plant themselves firmly in the cross hairs of a competitor until absolutely necessary.

3) Until late in 2010, MNTA had some cash constraints on how many irons they could keep in the fire. This cash constraint is clearly lifting.

I suspect that by fall we will have news on FOB partnerships.

Regards

FL

Representative core samples can be collected and analyzed but it is more difficult and expensive. I suspect that some smaller E&P companies cut some corners and may not invest in collecting data which allows for better estimates of the long term reserves.

Regards
FL

Be careful of any reserve estimates made for shale formations. Downhole geophysics (think Schlumberger) usually plays a big role in the characterization of formations which allows the reserves (oil or gas)to be estimated. Porosity logs are based on clean formations (i.e., limestone and sandstone with little if any clay or shale). Geophysical logs (neutron, gamma density, sonic etc.) are not suited for characterization of shale formations.

Therefore the estimates are based on initial production or whatever estimates of porosity that can be made from core samples etc. The problem is that it can be difficult to collect good shale core samples for characterization. The rock tends to expand when the overburden rock pressures are removed. This can inflate the estimate of porosity. The best way of estimating the effective porosity is by examining the well hydraulics. This may be prompting some of the reserve revisions that the NYT is referring to.

These are some of the reasons I'm skeptical of some of the shale gas reserve estimates.

FL

This related article provides an estimate of Big Pharma's ability to maintain revenues.

http://prescriptions.blogs.nytimes.com/2011/06/27/acquisitions-not-research-fuels-new-drugs/

Regards FL

I'm glad the NYT ran the article since it expresses several concerns that I have. My background is hydrogeology/engineering geology and not necessarily petroleum geology, however I deal with the same rock properties and characterization issues likely to be faced by the gas reservoir engineers working on these formations.

The key factor is the effective porosity or the interconnected porosity. Shales may have a total porosity in excess or 50% however much of this porosity is totally isolated such that gas and liquids locked up in the clay matrix (shale is composed of clay minerals)is totally inextractable. The effective porosity may range from 0.5% to maybe 9%. From what I have read, the Marcellus shale eff. porosity tends to range around 4 to 5%. In my opinion, this is probably sufficient to maintain decent long term gas flow toward the fracture which was created by fracing if the reservoir pressures are maintained. Other formations might not possess as high of a effective porosity leading to high initial gas production but relatively rapid depletion.

The Marcellus is lower Devonian in age so it was subject to several orogenies (episodes of mtn building). This subjected the rock to considerable stress which likely caused microfractures which increased the effective porosity of the bedrock. the good news is that the stresses primarily propagate horizontally along planes of weakness in the shale. If they were to have propagated vertically, much of the gas would have been lost from the reservoir.

My guess is that the NYT concerns probably relate to formations where the effective porosity is low. Knowing human nature, I'm certain that some firms are overstating the reserves by overestimating the effective porosity. Wells in low eff porosity shale might produce well during the short run but the yield will taper off if the pores are not interconnected. Effective porosity less than 1% would probably result in rapid gas depletion since the gas migrating out of the rock matrix pores via molecular diffusion would be insufficient to support gas extraction. This would result in a well which would probably not be economically viable over the long term.

I'm certain that some of the recent surge in small drilling and exploration companies are under pressure to secure financing. The temptation to overstate effective porosity by a couple percent is probably too great to resist.

My advise is to follow the big players XOM, Chevron, COP since they have the reservoir engineers that are trained to look at this issue in depth.

FL

quote
___________________________________________________________________
I'd be curious if that was intentionally omitted for obvious reasons.
____________________________________________________________________

Could be. They indicate that tolerability is being evaluated however, it would seem that they could provide a summary of what percentage of the subjects completed the trial.

Thanks

FL

slide 20 from my earlier post indicates that the their nucleoside is capable of

"Rapid and efficient conversion to the triphosphate form and long triphosphate form half-life in human hepatocytes"

Does this make it any more viable?

regards
FL

Thanks for the response mcbio.
____________________________________________________________________
How many clinical trials has peramivir already failed? I remember the one from several years ago where they claimed the needles weren't long enough or something. Seemed like a joke to me. Also, gout is becoming an increasingly crowded field and they are behind a lot of people.
____________________________________________________________________

However, I'm not aware of Phase 3 Peramivir failures since the drug has been introduced intravenously. Based on a google search, it appears that the drug was not effective when administered intramuscular. Is that what you were referring to? I have to believe that BCRX has moved beyond that since CDC purchased Peramivir under the emergency use provision during the 2009 pandemic and is paying for the ongoing Phase III. It is also on the market in Japan and Korea. However, they appear to have monetized the royalty stream provided by their partners. Seems like BCRX blew the opportunity to complete the phase III during the 2009 pandemic when the study was much easier to enroll. Perhaps the FDA discussions had not progressed far enough to determine the structure of the clinical trials. Now it will take considerable time to enroll enough subjects to meet the endpoint.

With regard to gout, now that NVS' Ilaris is out of the picture, who beyond RDEA (Phase 2B) and SVNT are active in developing or marketing gout medications. Krystexxa from SVNT has a listed SE of severe allergic reaction, so there appears to be room for competition. Supposedly the gout market is large and growing. This appears to be another sad statement about health care trends in the developed markets.

The attached slide show from today's BCRX presentation suggests that BCX4208 is synergistic with the current standard of care and it doubled the number of patients achieving goal(from 40% on SOC to 80% with BCX4208). Unfortunately, tolerability info was not presented.

http://files.shareholder.com/downloads/BCRX/1300517143x0x477334/57e002ad-c2f6-4231-9cfb-0342fdcfa02e/BCRX Wells Fargo Healthcare Conf Handouts FINA

For now there does not appear to be strong reason other than valuation to get serious. At a market cap of $175M, BCRX will be an extremely cheap play if global pandemic fears ramp up. Remember 2012 is right around the corner! Just joking.

Thanks
FL

Any thoughts about BCRX

NVS' recent failure to win approval for its gout drug prompted me to take a look at Biocryst. They have a gout drug in Phase II and the US Gov recently ponied up money for their phase III clinical trial for peramivir (flu treatment). The following bloomberg article peaked my interest.

My opinion is that BCRX is likely to be dead money until either swine flu re-emerges or theit is news on the trial or partnering of one of their candidates. I fully expect that the results of the Phase 3 Peramivir trial will be positive since there is adequate evidence from the 2009 emergency use authorization to draw inferences about the treatment effectiveness. Furthermore, peramivir has been approved in Asia.

The cash situation looks tenuous, but they appear to be looking to partner their gout drug.

FL

http://www.bloomberg.com/news/2011-06-09/swine-flu-variation-emerges-with-power-to-resist-drugs-researchers-say.html?cmpid=yhoo

One of the things CW emphasized during the annual mtg was that the long term strategy for MNTA has always been to establish a revenue stream by introducing fully substitutable products via the ANDA pathway and then use the revenue stream for novel drug development. I think some of the hires show that MNTA is shifting some of the brainpower emphasis to novel new drug research.

FL

Thanks

Saw $300 million reiterated in Rocky's recap in message 3822. A bout the only thing I had some differences with was his take on the investor reaction to Palo Alto's anti dilution speech. I did not hear any strong opposition from investors to the idea of a buyback. Since I think there were only about 5 us there it must have been some conversations from his row rather than an open question or comment.

I would support MNTA offsetting the granting of options by buying a commensurate number of shares as long as their cash flow allows them to do so. Palo alto indicated that they have been in discussions with MNTA for several months on this issue, so I think this was an attempt to rally other shareholders. They probably started about August last year.

I thought CW gave a very general answer to my question regarding the denial of the Teva citizens petition. I thought it would be an opportunity for him to state that the decision had not been delayed, it had been denied. He chose to speak to the broader Teva spin efforts rather than the substance of the CP denial. You could tell that he thought that the whole matter of the Teva spin machine was humorous.

I thought the GS discussion of the price increases in the MS market was interesting but it was not reiterated at the Annual meeting. I think Teva garnered quite a bit of ill will with the last round of price increases for copax. Obviously it was not limited to them and was an attempt to stabilize revs after Gilenya entered the market. His comments at GS definitely indicated that a generic drug in this space is highly awaited. I think it will not be hard to ramp sales once m-copax enters the market.


FL

____________________________________________________________________
Palo Alto comes across in this incident as clueless, disingenuous, or both.
___________________________________________________________________

My wife and I were on vacation in Boston and decided to attend the meeting. I think Palo Alto might have been slightly disingenuous. I don't think they believe that MNTA will initiate a significant buy back even though they asked for it. I thought they want management to realize they are keeping close tabs on all the sources of dilution between the options and shelf offering. My take is that this was meant to make management think twice about further dilution. Palo Alto's suggestion that the buybacks be made to offset the issuance of additional options seems reasonable (especially from the their perspective of having to answer to investors on a quarterly and/or annual basis).

CW reiterated that the offering was made based on information at the time including Teva's statements that they would launch in the near future.

Most of the information presented was a rehash of recent presentations. However, I thought CW went into some detail into why it has been hard to partner M118. Basically he discussed the size of the trial which would be required for this drug. I thought he estimated the cost of clinical trials at $300 million (This is from memory). He was pretty emphatic that MNTA would not go it alone despite the their improving cash situation. Rocky, I'd be interested in your take on CW discussion of M118. I'm not sure if I'm recalling the cost of the trials correctly.

FL