For Subscribers

Get the complete article now!

Six Analysts and top management from seventeen sector firms examine the Specialty Pharmaceuticals sector in this 95 - page Special Focus - Specialty Pharmaceuticals Issue from The Wall Street Transcript available at (212/952-7433) or www.twst.com

TWST: Maria, would you start us off today by defining your coverage area?

Ms. Phillips: I cover a group of companies that fall within the specialty pharmaceuticals sector, which is loosely defined by four different types of companies, including marketing companies, generic drug companies, drug delivery companies and development stage companies. In total, we have roughly 23 names under coverage. Ultimately, every one of these companies has one end goal: to transition into a fully integrated pharmaceutical company. All of these companies can be thought of as somewhere along that transition.

TWST: Maria, what are some of the new product launches that you’ve been keeping an eye on?

Ms. Phillips: On the generic side, obviously there’s Prilosec, which is a possibility. Wellbutrin is also a possibility for Andrx (ADRX) and Augmentin is a possibility for Teva (Nasdaq:TEVA).

TWST: Maria, what are a few names that are topping your lists?

Ms. Phillips: On the generic side, we also have Teva as our top pick. The only thing I would add to what has already been said is that Teva has 62 ANDAs pending and 19 first to files. That’s more than twice their next competitor, which is Barr with about 28. With so many drugs pending at the FDA, Teva does not have the dependence on one product over another that other companies have. We also like Teva because of the strength of their proprietary product, Copaxone, and the fact that there could be some significant catalysts. I think Dave mentioned Augmentin already, and there is also a potential summary judgment for Remeron by the end of this year. In addition to Teva, we’re also looking at Barr. They’re relatively inexpensive relative to the group. There has been really good management execution. The generic Adderall launch is also going well. The stock price recently took a hit as people thought of Barr as a women’s health company that would be impacted by the cessation of one of the arms of the Women’s Health Initiative trials. They do have a very small, 48 million business in plant-derived estrogen, but it’s just a trivial portion of their business. The strength of their business is really driven by their ANDA pipeline, including more than 10 oral contraceptives that are expected to drive their next phase of growth. In addition, there are some contractual obligations, like being able to launch Ciprofloxacin before the patent expires, that we think will drive growth for the company. On the specialty side, like everyone else, we think King has just gotten ridiculously inexpensive. As Marc alluded to before, even if you remove sales from Levoxyl, a product that investors fear may face generic competition, the stock still looks inexpensive. On the small cap side, we think Atrix (ATRX) has demonstrated great management execution. They’re transitioning away from being a dental company and dramatically increasing their pharmaceutical pipeline. They’ve recently received approval for a hormone therapy product for prostate cancer called Eligard. We think that product offers significant advantages, including convenience and lower testosterone breakthrough rates relative to its competitors, which are Lupron and Zoladex. Finally, I think Sepracor is probably getting interesting at these levels as well. They’re trading not that far beyond their sales for Xopenex, which is their unit dose form of levalbuterol. I believe that the metered dose inhaler, which is currently in Phase III and presumably faces less FDA risk since they’ve already received approval for the same compound in the unit dose formulation, will compete in a market 2 to 3 times bigger. So Sepracor looks like an interesting opportunity, even without valuing the rest of the pipeline.

1) Specialty Pharmaceuticals - In an in-depth (11,600) words) Analyst Roundtable, Dr. Steven B. Gerber, CIBC World Markets, Marc Goodman, Morgan Stanley, Maria Legatos-Phillips, Banc of America Securities, Erick Lucera, Independence Investment LLC, David Steinberg, Deutsche Bank Securities, examine the outlook for the sector and share specific stock recommendations.

2) Pharmaceuticals - In an in-depth (2,900 words) Analyst Interview, Rodney C. Singleton, G.W. Henssler & Associates, Ltd., examines the outlook for the sector and share specific stock recommendations.

3) CEO interviews (average 2,500 words). Top management of 17 - sector firms examine the outlook for their firm and the sector.