Replies to post #50607 on Biotech Values

[DewDiligence]

Re: Miller and biogenerics

Let’s look at Miller’s statement one more time because it’s such a gem:

“Biosimilar Producers: With the 12-year exclusivity written into the proposed PDUFA legislation, don’t bother. If you do bother, realize you are investing in a pack driven by perception and not fundamentals. Be nimble and don’t get greedy”.

I concur with the points BI raises in msg #50607. However, I think Miller’s main misunderstanding of the biogenerics arena is that he thinks 12 years of exclusivity will be applied to already-approved biopharmaceuticals with a brand new clock.

Let’s take Novo-Nordisk’s blockbuster NovoSeven as an example. The U.S. patent on NovoSeven will expire in 2011, allowing biosimilar FVIIa products to enter the market at that time. But Miller evidently thinks that NovoSeven will get 12 years of brand new marketing exclusivity when a biogenerics bill is signed into law. It doesn’t work that way!

(I expect that Miller will now say, No, he never meant to imply that there will be 12 years of new exclusivity for existing biopharmaceuticals. But there is no other sensible way to interpret Miller’s silly comment quoted above.)

The reality of the emerging biogeneric/biosimilar field is that there are approximately $65B (!) of annual sales from biopharmaceuticals that are either off-patent already or will be off-patent within the next few years. I’ve posted a table of such products in #msg-20699044.

If biogenerics is not a robust area for biotech investing, then nothing is.

[read_this_n0w]

Very much like your comments there
Thoughtfull and very much to the point.

insm ceo also did mention a handfull of US companies able to produce biogenerics and a limited competition there, its one of the few smaller one's i see benefitting there

and i concur with your comments

[croumagnon]

"So the proposed 12-year exclusivity period is by no means final."

Agreed, but given previous similar legislation being justified on the basis that "this is how big companies are able spend money on research", I suspect that is has a 90% chance of passing. So David Miller's statement is correct in that respect...

"the proposed 12-year exclusivity clock starts ticking when the referenced biologic product wins FDA approval"

Again I agree but so what? You and Dew give some current examples that will not have 12 year protection but that is not the bulk of the business. Again, I fail to see how David Miller is wrong on that one...

"The competition for generic biologics will be very limited, probably to no more than a select handful of companies."

So!!! all it takes is that a few companies succeed for each generic biologic and the field becomes crowded. Again, David Miller's argument is good...

"these companies do not trade on “perception” as Miller stated like the development-stage biotechs he likes to cover in his rag, but rather on fundamentals"

This argument of yours is borderline ridiculous. Perception is always part of the trade whether the company has good fundamentals or is just a beginning small biotech. Any rise in the stock price is based on what is perceived as the future not just what the present fundamentals are...

"In reality, he sometimes shows a lack of a grasp of the underlying facts, and as a result, makes ridiculous statements. But that’s okay with most of his subscribers, because to many of them, he’s a celebrity, regardless how well his investment advise pans out for them."

Am I detecting a bit of jealousy in that tone... LOL...

David Miller is not a prophet or a guru and he sometimes makes error in judgements as we all do. However, overall, I have found his writings and his advice to be on target and well thought through. I think your frontal attack on him is a bit over the edge and perhaps driven by jealousy. As for Dew's attack on David Miller, I believe it is mainly driven by his desire to promote GTCB as a front runner for biosimilar products. While I share his enthusiasm for GTCB, I think he is a bit too single minded when it comes to that particular topic...