Replies to post #20970 on Biotech Values

[DewDiligence]

>does torcetrapib have anything to do with PFE's purchase of Esperion?<

No. (I’ll answer for PGS because I think he’s traveling today.)

[poorgradstudent]

re: torce

Consider the following:

1) You're in the minority of people who do not tolerate lipitor well. So by putting torcetrapib into the market as a combo with lipitor, PFE realizes that a minority of patients will simply not take the combo due to the inclusion of lipitor. That is one area of lost revenue.

2) PFE is eventually going to lose lipitor patent protection soon. Major loss of $$$.

3) PFE is soon going to be challenged by generic statins (see BI's post)... another potential major loss of $$$.

Of all the above, the loss in revenue for #1 is the smallest.

So by combining lipitor and torce, Pfizer attempts to basically blackmail doctors and tells them that IF they want their patients to get torcetrapib, then they will have to take them off competing statins. They are trying to minimize (or abolish) the loss of revenue from #2 and #3 while sacrificing #1.

Imagine if they put torce out there by itself. Docs would be free to substitute for lipitor, and pfizer's loss in revenue through #2 and #3 would be huge... so huge that it would dwarf the gain in revenue experienced from #1.

By making torce a combo, Pfizer is forcing docs not to substitute. This allows them to artifically extend premium pricing for lipitor past its patent expiration dates, as well as possibly even gaining some scripts as docs who may have put their patients on some other statin may be compelled to move them to lipitor / torce.

The big question mark is whether pfizer depletes their good will with doctors. But if the combo works as well as hoped, the medical benefit may be hard to ignore even if doctors are annoyed at pfizer's actions.

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Esperion:

As dew said, torce and esperion really don't impact each other. Esperion's drug was an injectible and more for acute situations. Lipitor isn't extremely effective in opening up narrowed arteries, but the hope for esperion's drug was that it would be effective in regressing plaque volume.

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>would you reconsider ARQL if it is selling for near cash levels after selling the chemistry business?<

For a trade, yes. Otherwise, my lack of enthusiasm for arq501, and the very very early state of the other drugs makes arql rather unexciting for me personally. I wouldn't want to hold arql for another 18 months as they crawl through a subsequent series of new phase I trials for the pipeline drugs.

(I'll be travelling later on this afternoon)