Phase III Trial Expenses For Diabetes Treatments Now Forcing Acquisitions Of Small Cap Biotech Firms: FDA Has "Raised The Bar" For Approval Due To Recent Cardiovascular Issues
67 WALL STREET, New York - October 26, 2009 - The Wall Street Transcript has just published its Biotechnology Report offering a timely review of the sector to serious investors and industry executives. This 70 page feature contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.
Topics covered: Heightened M&A Activity - Trend Toward Orphan Disease Drug Development - Generic Drug Competition - Current Length Of FDA Approval Process - Ownership Ego Preventing Shareholder Returns - IPO And Secondary Offering Window Opening - Big Pharma R&D Pipeline - Decreased Clinical Development Risk - Impact Of Health Care Reform - Convergence Of Large-Cap Biotech And Pharmaceutical Companies - Easier Credit For Small Cap Biotech Companies - Developments In Cancer Chemotherapeutics - Gene Delivery Technology
Companies include: ADVENTRX (ANX); Abbott Labs (ABT); Advaxis (ADVX); Amedisys (AMED); Amgen (AMGN); Amylin Pharmaceuticals (AMLN); Antares Pharma (AIS); BioDelivery Sciences (BDSI); Biogen Idec (BIIB); Biomarin (BMRN); Boston Scientific (BSX); Bristol Myers (BMY); CVS Caremark (CVS); Celgene (CELG); Cerner (CRN); Cerus (CERS); Coke (KO); CombiMatrix (CBMX); Coventry Health Care (CVH); DARA (DARA); Eisai (ESALY); Eli Lilly (LLY); GenVec (GNVC); Gilead (GILD); GlaxoSmithKline (GSK); Health Management Associates (HMA); Human Genome Sciences (HGSI); Inspire Pharmaceuticals (ISPH); Intellect Neurosciences (ILNS.OB); InterMune (ITMN); International Stem Cell (ISCO.OB); Javelin Pharmaceuticals (JAV); Johnson & Johnson (JNJ); Keryx Biopharmaceuticals (KERX); Kraft (KFT); MAP Pharmaceuticals (MAPP); Medco (MHS); Merck (MRK); Merit Medical (MMSI); Novartis (NVS); Novelos (NVLT.OB); Novo Nordisk (NVO); Nutrisystem (NTRI); OSI Pharmaceutical (OSIP); Orexigen (OREX); Pepsi (PEP); Pfizer (PFE); Rite Aid (RAD); Schering-Plough (SGP); Takeda (TKPHF); Teva Pharmaceuticals (TEVA); Viropro (VPRO.PK); Walgreens (WAG); Wyeth (WYE); XOMA (XOMA); ZIOPHARM (ZIOP).
In the following brief excerpt from just one of the interviews in the 70 page report, an expert analyst discusses the outlook for the sector and for investors.
Dr. Liana Moussatos, Ph.D., Vice President, Equity Research, Emerging Pharmaceuticals, joined Wedbush Morgan Securities, Inc., from Pacific Growth Equities, where she was a Senior Research Analyst. Prior to that she came from UBS Global Asset Management, where she was Director and Portfolio Manager of the UBS Global Biotech Funds for about five years. Previously, Dr. Moussatos was with Bristol-Myers Squibb, where she was a Manager in University and Government Licensing, External Science and Technology, and she also worked with Sloan-Kettering Cancer Institute in the Office of Industrial Affairs and the National Cancer Institute in the Office of Technology Development. Dr. Moussatos received her B.S. in Entomology, and her M.S. in zoology and biochemistry from Clemson University. She received her Ph.D. in plant pathology from the University of California, Davis, and completed a postdoctoral research fellowship in cellular and molecular physiology at the Yale School of Medicine.
TWST: Are small companies carrying the technology through to production, or is the trend to sell or out-license at some point during the clinical process?
Dr. Moussatos: The normal trend is if the disease is an orphan disease, which means it has 200,000 patients or less, or they are targeting some kind of medical condition where there are only specialized centers and you would not need a big sales force, then the smaller companies might build their own sales force. But if it's for a cholesterol drug or a diabetes drug, that's too big for a small company to market on their own. Additionally, the FDA in the last year and a half or so has raised the bar, especially for diabetes drugs because some of the ones on the market had cardiovascular issues and patients died from them. So the FDA raised the bar and made it necessary to do bigger and more expensive studies. Now it takes a large company with deep pockets in order to run a Phase III trial on a new diabetes drug now. As a result, you will see partnering - small companies can't really take care of all the primary-care providers for those kind of big markets.
TWST: Are there certain drugs or types of drugs for which companies are focusing on research efforts?
Dr. Moussatos: Orphan diseases. The government encourages companies to develop drugs for orphan diseases because there are so few patients. If the government didn't help out the companies in some way or make it easier for them, no one would develop drugs for diseases like that. There is a company I cover called BioMarin, and the ticker is BMRN. I have a neutral rating on it. They develop drugs for orphan diseases. One of their drugs is for a genetic disease and it has about 1,500 patients in the world. No company would develop a drug for so few patients unless the government would help protect their intellectual property and give them enough time to sell the drug, and allow them to charge a lot of money for the drug in order to recoup their research expenses and make a profit.
TWST: After the patent is up, generics are allowed to enter the market?
Dr. Moussatos: Right. When all the intellectual property has expired, then generic companies can come into the market. Before that happens, they start filing with the FDA in order to get approval to come out with a generic as soon as the intellectual property for the branded drug is totally expired. There are typically a lot of lawsuits that go on back and forth because the company that originally made the drug would like to extend the patent life as long as possible so they can get their money's worth for all the effort they made. Because the generic companies don't have to do extensive clinical trials, they just come in and sell a copy of the drug; they sell it at a discount. The companies that make the branded drug, the original drug, can't compete on price because they've already spent so much money developing the drug through clinical trials that they can't afford to do that. They would be selling at a loss.
The Wall Street Transcript is a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs and research analysts. This 70 page special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.
The Wall Street Transcript does not endorse the views of any interviewees nor does it make stock recommendations.
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