Replies to post #88189 on Biotech Values

[drbio45]

apoA1 Milano

I have always felt that is a drug that can change cardiovascular care. I just do not believe that Pfizer had made strides in the manufacturing, and that is what has always been the issue.

The company that can manufacture it efficiently and at a reasonable cost will have a blockbuster.

[mcbio]

Re: MDCO call

In general, I’d agree with your contention that drugs out-licensed by Big Pharma (or Big Bio) warrant a more skeptical view than those out-licensed by academia.

Thanks for the response.

ApoA1 Milano may be an exception, however. Fifteen months ago, PFE shocked the world by proclaiming that it would no longer develop drugs for cardiovascular indications: #msg-32523077. Hence, one could say that PFE’s decision to out-license ApoA1 Milano merely means that PFE is doing what it said it would do.

Moreover, MDCO fancies itself a specialist in resuscitating failed drugs from Big Pharma/Big Bio by virtue of having in-licensed Angiomax from BIIB.

Whether MDCO can hit pay dirt a second time remains to be seen, but they aren’t risking much in the ApoA1 Milano deal because the economics are heavily backend-loaded. In the webcast slides (see link in #msg-44863685), MDCO disclosed that only $20M of the $410M in potential milestones to PFE are attributable to events prior to regulatory approval. Further, if ApoA1 Milano fails to attain annual sales of $500M, MDCO’s total milestones payable to PFE are capped at $110M.

Perhaps more important, MDCO does not consider ApoA1 Milano to be a typical cardiovascular program where clinical trials have to be enormously expensive. It will be interesting to see how MDCO defines the market for this drug in a way that enables it to run small, targeted studies. Whether MDCO can pull off this market-definition task is probably the greatest risk in the program, IMO.

LOL. The 46:30 mark of the call was the highlight with the caller continuing to ask questions about the manufacturing process and questioning whether or not the small up-front payment suggested that PFE had no confidence in the compound. You could tell the CEO was perturbed.

It sounds like ApoA1 does at least have a ways to go. MDCO management acknowledged that there is some work that still has to be done on the manufacturing front, although they noted that manufacturing was a key focus of their due diligence so presumably they believe they'll be able to get where they need to. Also, they don't even expect to start Phase 3 trials until 2014 so, again, this compound has a ways to go. Presumably concerns over the lengthy timeframe left for development are outweighed by the large market opportunity?

I would assume the big concern if one is to consider an investment in MDCO is the possible near-term generic competition next year for Angiomax. Do you believe that the likelihood of generic competition for Angiomax is already priced into the stock valuation or is it not priced in because it's not a certainty yet? Perhaps any further weakness in the stock as a result of possible or actual generic competition for Angiomax could be a buying opportunity in light of the opportunity with ApoA1.