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Sorry, I was referring to the fact that Deb025 seeks to disrupt the interaction between CypA and NS5A (see link) whereas EDP-239 seeks to inhibit the non-structural 5A (NS5A) protein encoded by the hepatitis C virus. In either case it appears that the two drugs are approaching the same target via two different pathways. Is this correct?
Please excuse my limited understanding here, but is it likely that NVS interest in Enanta is a combination drug with Deb025? Would it be unusual for a combination drug to seek to disrupt what seems like a pretty focused target (NS5A)? Again, just trying to gain insights where NVS might be headed.
Thanks
FL
http://www.plosone.org/article/info%3Adoi%2F10.1371%2Fjournal.pone.0013687
Any thoughts on NVS motivation. Because Deb025 also targets the NS5A protein target is it less likely that they are looking at combination drug? Would two drugs addressing the same pathway be likely to act synergistically?
Is NVS trying to stake a claim to dominance in drugs addressing this pathway since it is less crowded than other pathways? Are they ultimately looking to strike a deal for a combinations treatment with a drug addressing another pathway?
I know that is a lot of questions, but NVS does not tend to talk about their HCV program all that frequently, so I'm not certain where they are headed. Their pipeline summary suggests the intent to file Deb025 next year.
Thanks
FL
NVS claimed that the share repurchases last year were done to offset dilution which occurred as a result of the Alcon acquisition. However, they have conducted several different buybacks in the past 5 years and have increased the dividend each year. NVS has tried to return cash to investors and was not rewarded by wall street despite sales and income growth which outpaced their peers. We will have to see how things play out this year when no growth is expected.
FL
I'm inclined to agree the more some of the facts get released. However, it is obvious to me that NVS's competitors and there investors are more than happy to try to slow Gilenya's uptake by claiming it has a bad risk benefit profile.
During an investor conference about a year ago Bill Marth from Teva indicated that Laquinimod would have a much better safety profile than Gilenya. He forgot to mention that the efficacy would be about half that of Gilenya. I think that Biogen and Sanofi supporters are more than happy to get negative Gilenya stories out in the media even if it has questionable merits. Hopefully the reviews progress quickly.
FL
Epsteins discussion/slides on the Gilenya deaths is worth a listen. For those that did not hear it, I've cut and pasted the transcript below.
<<What I want to do now before I move on is try to put the Gilenya story and to give you a little bit more perspective, given what we've seen in the press of late. You've all heard about the recent death of a patient that died less than 24 hours after she took her first dose of Gilenya. She went through her normal -- the normal 6-hour observation period. There was no ECG taken. And it was really uneventful and unfortunately, she passed away during the evening and we do not yet have a detailed autopsy report.
That event triggered the health authorities around the world to begin discussions with us about the product and the label and to look at overall benefit risk for the product. What I want to do now is be fully transparent with you and give you a complete overview of MS patients that have ever died after having taken Gilenya. The overview covers more than 30,000 patients who've been treated since 2003 in both clinical trials and in the post-marketing setting. And I want to emphasize that it's very unusual, perhaps unprecedented for a company to disclose all cause of mortality in this therapeutic area. So as a result, I'll show you the numbers now and we'll talk our way through those.
When we compare our data overall with the background rate of overall death as well as cardiovascular death in comparable population, we see no imbalances whatsoever. Also when we look at our controlled clinical trials, which are covering thousands of patients over several years, we see the rate of death is not elevated when compared to placebo. Since 2003, there have been a total of 31 MS deaths. 11, which is the number you see in the press are mentioned in the EMA's press release of January 19. These are patients that were in Gilenya from between 2 weeks to 3 years with the exception of that one U.S. case, which I already mentioned to you.
In addition, for full transparency, there were 20 cases not mentioned in the EMA's press release, bringing the total number to 31 and as you can see here, a number of these patients that have been off Gilenya for quite some time, some as long as 3 years. There are also people that passed away because of traffic accidents, suicide and the like. We are confident that Gilenya has a strong benefit risk profile and we believe this brand will continue to provide significant growth to our company. But as I said as a result, the regulatory authorities have started reviews both in Europe and in the U.S. In the interim, the EMA has asked that the patients who go through that 6-hour screening also have continuous ECG monitoring. The French have taken a more aggressive approach. The FDA's ongoing safety review, you can read off the chart, has told us that there are no interim recommendations at beyond the current label at this point in time. And I think over the next couple of weeks to months, we'll get more clarity after any changes that are required.>>
The slide indicated that of the 11 deaths being investigated by the EU 3 were due to cardiac disease. Additionally, the woman who died in the US was reported to be 59 years old and had recently had surgery.
Based on this color the situation may not be as dire as the initial media headlines suggested. I worry that there are entities out there that might influence media to slow Gilenya uptake before competitors release their own oral MS drugs. I'm looking forward to the review committee sort the risks out.
FL
Unlike Tsabri, which has a side effect of a rare brain infection, the possible Gilenya cardiac side effects (i.e., bradycardia (a slow heart rate) or atrioventricular block (a problem with the conduction of electricity in the heart)are not as uncommon. Also the NVS instructions for administering the drug are pretty rigorous (see link below). Therefore, the review will need to consider whether all of the requirements were met.
FL
http://www.pharma.us.novartis.com/assets/pdf/REM/Gilenya_HCP_letter.pdf
I was aware of the rail transport. However, I'm certain that none of the rail lines would cross the Sand Hills or other vulnerable portions of the Ogallala.
FL
The fact that there is serious discussion of exporting LNG a clean cheap fuel while we are importing oil a dirtier more expensive fuel is unbelievable. We have used CNG in vehicle fleets for transportation for more than 30 years but have failed to adopt a national policy which would expand its use for transportation despite obvious economic, environmental and national security benefits.
I'm not against LNG and in fact I invested in Golar for many years. I just never thought the flow of nat gas would be out of the US.
It is amazing the way gas development technology has changes things in the past few years. I only wish public policy would catch up with the resource.
FL
Interesting turn of events if TRP was to develop portions of the pipeline within the US but leave the border crossing until Obama is out of office and a State department approval is more likely. The Baaken link and the link up of the gulf refineries with Cushing is probably still economically viable.
http://www.cnbc.com/id/46063296?__source=yahoo|headline|quote|text|&par=yahoo
FL
TRP originally filed for approval in 2008. The NEPA Environmental Impact Studies received positive opinions from the State Department and were put out for public comment. As a result of negotiations with the States and Feds,numerous safeguards were added to the design. The recent reversals are clearly the result of environmental activist pressure brought against the president. I guess nothing is final until the public comment period closes. However, there was significant comment flowing both ways on this project.
There are so many things that Obama could have done which would have made more sense rather than delaying the project until after the election. For instance, the leg of the pipeline from Cushing OK to the Gulf refineries could have been approved. This would help alleviate the oil glut in Cushing (as did the recent pipeline flow direction reversal). It would also help the refineries which are configured for sour crude which Venezuela has historically supplied. Significant oil was being carried out of Cushing via tanker truck, thus increasing the potential for environmental problems.
I also think the pipeline will be built at some point but it will be a major campaign issue that Obama will suffer from.
FL
Well the Obama administration has once again nixed the Keystone pipeline. In doing so he has acted contrary to Hillary and the State Department views, numerous labor and construction unions, several generals who signed a petition that it was in the Country's best interest to lock up a long term stable source of petroleum. The refineries and the majority of the States crossed by the pipeline all advocated on its behalf. Even Nebraska indicated that they were in favor, assuming it would be routed around the Sand Hills area. The environmental impact studies were signed off on. But this is all for naught.
As Pickens has pointed out a couple times this Country is one old 300 lb Saudi prince away from an energy catastrophe. If war breaks out between Iran and Israel, the straits of Hormuz could be shut down sending oil to $150 a barrel overnight. These scenarios show why the generals felt it was important enough to sign the petition in favor of Keystone. This will come back to bite Obama. I just hope it doesn't cripple the Country when it does.
FL
Two big China launches for NVS.
http://ih.advfn.com/p.php?pid=nmona&article=50789609
I don't think it is a sign of corp culture deterioration, however there have been several upper management changes at NVS so the JnJ problems have taught me to be vigilant.
Your timing in espousing the Pharma demographic tailwind was perfect since NVS just announced the launch of Galvus and Lucentis in china today. I know you have been promoting this investing theme for quite a while.
As you know the FDA request for additional testing on Galvus has been a sore spot with me. The expansion of Galvus to China demonstrates continued worldwide expansion despite the FDA setback. I don't see that Januvia is available in Mainland China, so at least it appears that NVS has beaten Merck to at least one major market!
FL
I keep convincing my self that there should be a premium for being an innovator. Pharma, biotech had a long standing premium valuation which has evaporated. I agree with the PBM comment, as a society we need to value companies that bring cures to patients rather than the ones that squeeze margins. The PBM game is already hitting the point of diminishing returns. Walgreens pushing back against ESRX is just the start. Any company who's business model is to go out year after year and try to squeeze margins in the distribution channel is going to hit resistance at some point. Kudos to Walgreen for fighting back.
I'm watching NVS to see if the Lincoln Neb QA issue is an isolated case or the early signs of a change in corporate culture, such as was observed at JnJ McNeil.
If this period of multiple contraction continues, I believe that Pharma is closer to the end of the multiple contraction than many other market segments.
FL
I have touted NVS growth in emerging markets for the past 5 or more years on the Yahoo board. In that time I've watched the earnings double and the PE get halved. A frustrating period indeed! NVS has diversified considerably with a much stronger presence in growth areas including vision care, vaccines and most recently FOB/Biogenerics. Yet it gets viewed by Wall Street as a pharma with the bulk of its products going off patent. I though NVS hiring Symonds as CFO would be able to change the perceptions since he came from Goldman with lots of Wall Street contacts. However, it has not mattered and the PE multiple has continued to contract.
At the present time the emerging market tailwind is is largely being offset by the pricing pressures coming from developed countries with older populations which require many drugs. This trend is likely to continue for a time since austerity programs are spreading.
What I can't understand is how so much of the pricing pressure is focused on the solutions providers such as big pharma whereas the health care insurance companies are largely immune from these pressures. I saw an interesting graphic which broke down health care costs as a percentage of GDP and then looked at which components of the health care industry have fared better over the past 5 years. The insurers come out ahead of pharma and the device makers.
Unfortunately, my investing psych would rather reward the solutions providers rather than the middleman. I'll maintain my core position in NVS but I continue to look elsewhere for growth and excitement.
Regards
FL
MNTA has shown that They will rigorously defend their IP. However, TEVA has shown on several occasions that they are not afraid of launching at risk, burying the opponent in legal motions negotiating a way out.
The 2013 patent litigation is only a little more than a year off. I have not completely written off the idea that TEVA may find a way to get their Lupenox to market, however I think it is less likely that it will clear the bar as a biogeneric.
FL
Personally I'm betting on FDA approval of m-copax before t-enox. Of course the patent litigation or settlement will have to run its course.
The annual 15% price increases on copax underscores my investment in MNTA. I think that there will be significant public pressure to get cheaper alternatives to market quicker as austerity measures come to this Country. Look at what a tough line NICE has drawn in the UK.
Efficiency and cost controls have been my investing themes for 2011 and 2012. MNTA and Nuance have worked out well. I also invested in FSYS thinking that an energy policy which emphasized natural gas made too much sense (environmentally, economically, etc.). This one has not played out.
I now believe that an important exception to the cost savings investment theme is in energy. The lobbying and political will is simply to strong for this country to take actions that are in its best interest. Hence we go year after year without an energy plan.
FL
I think the explanation is quite simple. We are approaching the year anniversary of the Teva minor deficiency letter with no approval in sight. Berstein realized they were losing creditability parroting the TEVA line that approval was imminent at any moment. Besides MNTA has had positive news flow the past couple months regarding successful defense of their intellectual property, FOB deal with BAX, and that they were a likely take out candidate in 2012. These factors combined with no news on T-enox made upgrade decision timely.
FL
Hasn't Berstein consistently been negative on MNTA due to the T-enox overhang which was on the verge of approval any day? Is this a sign of capitulation on the part of analysts thinking that TEVA was going to eat MNTA's lunch?
FL
SA had some interesting insights on the influence of PM on big pharma.
FL
http://seekingalpha.com/article/311676-the-losers-in-the-changing-healthcare-system?source=yahoo
I agree. Your previous post left a caveat that the downtrend needed to be confirmed and that the potential reversal(upturn)at the beginning of the week needed to be confirmed by a day of follow through. But that is precisely my point we have entered a totally news driven environment where any news out of Europe has the potential to cause a 180 deg market direction change.
I just think in the current market the cycles have broken down where you can't project a decent trend line for any duration to allow worthwhile TA. I know you will term this as volatility with discernible trends. However, IMO the usefulness of TA breaks down if you are looking for corroboration on too short of a cycle.
It is interesting to note that the MNTA correlation to the news cycle and the rest of the market appears to be diverging. Since MNTA presently sells to the US market and will do so for the foreseeable future it is pretty insulated from the European headwinds. For this reason it provides a little bit of a hedge from my NVS exposure.
I'm long MNTA for a different long term reason. The demographic trend and economics strongly favors companies that can efficiently bring cost effective bio-generics to market. I think we will see this as a strong trend as austerity programs come to the shores of the US. That said, we need to see confirmation of the m-enox promise in the next few months. If this confirmation comes either in the form m-copax ANDA approval or FOB alliances with a major pharma then MNTA should be awarded a substantially higher PE multiple on top of share price increases due to upward earnings revision.
That's my dream, we'll see how it plays out. In the mean time I have done well with MNTA by trading around my core position using covered calls.
Good Luck
FL
We'll
In all due respect, you have to admit that technical analysis is not working particularly well right now. Only a few days ago you were cautioning that the S&P would experience a major downtrend. While I enjoy many of your posts, they confirm my earlier assessment that TA works until it no longer works. Right now, we are in a market that is whipsawing experienced traders. I think the TA definitely needs to be taken with a grain of salt.
FL
I noticed the same. For some reason the NVS share price has been very sensitive to these credit crises. If early 2009 is any indication this is a great time to add shares. In early 2009 NVS did not exhibit any earnings issues and increased the div by 20%. At some point the market will award an appropriate multiple to the secular growth NVS has exhibited. In the meantime the dividend yield continues to move upward.
Regards
FL
Sanofi may go slow with the AG. But hasn't MNTA's royalty clause been enacted with Sandoz? Would Sandoz retract if the AG fron Sanofi is retracted?
I can see a scenario where it would be in MNTA's advantage to go after a hefty settlement from Watson/Amphastar or at least threaten it to get Sandoz to renegotiate the royalty provision of the contract. It will be interesting to see it play out.
FL
Given that it appears that Ampha infringed the 466 patent, at least to gain ANDA approval, what is the potential that the judge uses the next week of TRO extension to strongly prod the parties toward settlement. Seems like the threat of a PI and the possibility of future civil damages lawsuits should get the parties to find some kind of compromise.
Is more discovery potentially in order (i.e., what QA/QC procedures will Ampha use during production that will not infringe?
FL
What did you make of the $1.5B litigation reserve for improper marketing of Depakote?
http://www.chicagotribune.com/business/breaking/chi-abbott-books-15-billion-charge-for-potential-settlement-20111019,0,5684463.story
Gilenya press release
Seems like 50% of patients completing the 5 yr trial might be a bit low given the advantage of oral delivery. I wonder to what extent the discontinuationa are due to side effects vs. medical community steering patients away until more data is collected.
FL
http://www.novartis.com/newsroom/media-releases/en/2011/1555145.shtml
With all the Amphastar TRO wrangling, I did not here much about the closing arguments in the Copaxone patent trial. Were there any surprises? Has it changed anyone's handicapping of the potential for overturning the Teva patents.
FL
Sprycel and potentially serious lung complication could be good news for gleevec and tasigna.
http://www.fda.gov/Drugs/DrugSafety/ucm275155.htm
Would expedited discovery apply just to Amphastar-Watson records or might MNTA subpena FDA to be allowed to view their files. While this could be very interesting (in a perfect world), I'm certain both FDA and Amphastar would have the opportunity to remove or redact files due to trade secret and/or Agency confidentiality.
Based on my quick perusal of the attached file it looks like the files could be subpenaed from FDA but I don't think the process could be completed under the guise of expedited discovery.
http://www.fda.gov/downloads/AboutFDA/CentersOffices/CDER/ManualofPoliciesProcedures/ucm073572.pdf
Regards
FL
I put less weight on SNY ridiculing Amphastars capabilities since we saw much the same approach when MNTA was getting close. However, you can definately add me to the category that feels that some political force was brought to bear to gain Amphastars approval. Was the Amphastar lawsuit against FDA dismisses, retracted and the files sealed? Perhaps lawsuits are a new path to approval. I considered NVS Suit to gain Omnitrope approval more of a nudge to get the FDA to take a stand given the lack of regulatory guidance. The Amphasta claims of bias were much uglier and perhaps political pressure for a settlement due to projected litigation costs were too great for the FDA to resist. Does the FDA fund litigation from the general operating budget?
I know I tend to be too quick to claim conspiracy, but it would seem highly improbably that the FDA issues identified earlier this year would get resolved so quickly. I suspect we will never know since any agreement has been sealed, and Amphastar has now likely dropped any lawsuits against the FDA (likely part of the agreement).
FL
Amazing that in the 6 months since the FDA rebuttal on March 15 that Amphastar was able to quit slinging mud and address all the deficiencies identified by FDA.
Perhaps Kroll was able to come up with just 1 or 2 incriminating photos, or perhaps political pressure was brought to bear from another source. Either way we will never know.
FL
Follow on Biologic companies meeting with FDA
Investorgold, the attached article provides some of the rationale why the progress to announce follow on biologic partnerships has been slow. The majority of the industry appears to be waiting for the FDA guidance to be released. Now that it is close the FDA has been meeting with interested parties. The present climate is simply too risk adverse for companies to make significant investment without having a clearer picture of the regulatory process. I think we can expect the partnership progress to move quicker once the regulatory guidance is finalized. That assumes that the guidance follows the process described in last months NEJM article.
FL
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=62941793
Got to admit feeling blindsided and that something is fishy. The FDA's response to Amphstar's lawsuit a few months ago made it seem that Amphstar's Lovenox candidate was wholly deficient in the majority of the evaluation criterion developed by the FDA. If this is true and the labeling concerns get worked out then you will probably see a rash of generic firms suing for approval.
I think there is another act to play out on this, flash crash rebound style.
FL
While elements of my conjecture may have occurred (the Bioequivalence test data being submitted and considered by FDA as an amendment to the ANDA), Dew has pointed out that Teva and NVS never reached an agreement on the notice to launch provision I spoke about. I had thought it was part of an out of court negotiated agreement. But apparently, it never went farther than discussions.
I do believe that Bill Marth got wind of the submital of the Bio Equivalence data and is spinning that it will considerably lengthen the ANDA review. Perhaps this revelation came out of the trial as others suspect. I'll go back to work now and quit conjuring things up.
FL
Just speculation but perhaps the notice was given in case a the pieces fall into place for a launch by year end.
FL
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