|
20th February
2003. Here we go
again – the same tune “Stocks are
trading lower mainly because a collection of economic indicators
combined with war fears are producing investor uncertainty”.
In
regards to the biotech sector, there was bad news for Biogen
(NASDAQ: BGEN) as the
company announced that European regulators rejected its drug
Amevive, for the treatment of moderate to severe psoriasis. The
European regulators requested additional information that will
require several years for Biogen to assemble, as a result the
company withdrew its application for approval. However, Biogen
indicated that the decision would have no impact on its 2003
financial figures, but it will be evaluating the effect on
guidance for 2004 and beyond. Biogen estimates operating earnings
for 2003 of about $1.63 to $1.78 a share, excluding items. Wall
Street’s average earnings estimate is $1.68 a share on revenue
of about $1.29 billion for Biogen's 2003. Undoubtedly, this delay
will have an impact on earnings growth. At one time, the
company’s expectation for Amevive was to have 12,000 to 16,000
patients on therapy by the end of the first year on the market. By
the end of its third year on the market, the company expects
Amevive to achieve annual sales approaching $500 million. If the
company were to achieve its $500 million goal, Biogen would have
to achieve nearly 30% share of the biologic market in the U.S. and
European markets. With the delivered news, Amevive’s future
outlook is clouded and with competition on the horizon, it becomes
less clear.
As
Wall Street frets over the competitive landscape as who will be
the lead psoriasis treatment, Amgen's (NASDAQ: AMGN) Enbrel,
Johnson & Johnson's (NYSE: JNJ) Remicade, or Genentech (NYSE:
DNA) /XOMA’s (NASDAQ: XOMA) Raptiva, we have other concerns. As
we listened to Biogen’s conference call, we see broader
implications especially for the European market for new drugs. Our
interpretation of the matter at hand, the European regulators has
raised the bar when it comes to approving a new class of drugs.
European regulators were not concerned about the safety of Amevive,
but rather they wanted the company to conduct new trials comparing
Amevive with standard psoriasis treatments such as cyclosporine,
methotrexate and oral retinoids. As far as we are concern, its
like comparing apples to oranges. Secondly, Biogen needs to
conduct clinical trials on patients with severe psoriasis who
weren't helped by existing treatments. Amevive is a new class of
drug being tested for safety and efficacy. In our opinion it’s
questionable why the European regulators took such a stiff stance
on Amevive, especially since Biogen claimed to have submitted
identical packages to the U.S. Food and Drug Administration (FDA)
and to the European regulators. The situation has become
complicated and we will change our rating on Biogen from a hold to
a buy.
The
consolidation trend continues in the biotech sector as Enzon
(NASDAQ: ENZN) and NPS Pharmaceuticals Inc. (NASDAQ: NPSP)
announced its intention to “merge as equals" with nearly
equal divisions of board seats and shareholder ownership that is
expected to close in June 2003. The stock-for-stock transaction is
valued at approximately $770 million. NPS and Enzon said by
combining both management and scientific talent it would become a
new biotechnology company. Enzon will provide the commercial
infrastructure and both the revenue and cash flow from its four
marketed products. While NPS has a late stage pipeline that
include two high-profiled drugs that are being developed for the
treatment for osteoporosis and secondary hyperparathyrodism (HPT).
With
the proposed merger, Enzon will lose its status as a profitable
biotech company to one that may become profitable sometime down
the road, perhaps by 2006. However, the companies believe value is
created when combining their resources, money and pipeline. But
Enzon is taking on risk, as according to the conference call,
Enzon has not seen any new clinical data for NPS’s key drugs,
Preos and Cincalcet HCl except the 12-month data for Preos. What
is also worrisome is that Amgen, NPS’s partner in the
development of Cincalcet HCl, has been tight-lipped about
Cincalcet HCl. Drivers for NPS are the FDA filing in 2003 for
Cinacalcet HCl and the anticipated release of Phase III clinical
data this fall. If the clinical development is positive, the drugs
can lead the new company to profitability. However, judging how
both shares prices traded on Thursday, Wall Street didn’t buy
into the deal. Unfortunately, based on today’s closing stock
price, Enzon investors received no premium value for their shares.
No doubt strong conservatism in Wall Street is questioning the
synergy of these two companies.
We
agree that NPS may have gotten the better end of the deal. With
regards to Preos, the new company will have stiff competition with
Eli Lilly’s Forteo, which is already on the market for
osteoporosis and functions in a similar manner as Preos.
Overcoming Forteo’s market share is not impossible, but will
pose a significant hurdle for Preos. Cincalcet HCl has less
competition and fits nicely with Amgen’s market strategy to
provide therapies for kidney dialysis patients, who suffer from
secondary HPT. The fact that Amgen is associated with Cincalcet
HCl is a good sign.
Good news for Dendreon's Provenge, the
company will present new data at the 13th International
Prostate Cancer Update held in Vail, Colorado that show Provenge
can induce durable remission in advanced prostate cancer. Provenge
is Dendreon's investigational therapeutic vaccine for the
treatment of prostate cancer. As we said in our February report,
we are very enthusiastic about Provenge.
Contact:
Nadine Wong
Company:
BioTech Stock Report
Voice:
503-649-1355
Fax:
503-649-4490
|
| To
subscribe to the Biotech Stock Report - click
here!
DISCLAIMER
The above information transmitted via BioPortfolio has been provided by the original publishers
Nadine Wong of Wong & Wong Inc the publishers of the Biotech
Stock Report and http://www.biostockreport.com
("BSN") a financial information, news, and
software service focusing on event-driven biotechnology and
pharmaceutical research. The Service is provided by Nadine
Wong of Wong & Wong Inc ("NWWW").
It is not guaranteed as to completeness or accuracy by BioPortfolio, the
BSN publishers, or any person. Such Information is neither an offer to sell nor a solicitation to buy the securities of any company. Opinions expressed are subject to change without notice. The Information and views provided by
BSN are prepared by BSN employees and in no way reflect the views or efforts of BioPortfolio Limited., any of BioPortfolio's employees or officers. BioPortfolio, and BioPortfolio's employees and officers, as well as
BSN’s employees and officers, in no way accept responsibility for any of the
BSN content published on
www.bioportfolio.com/.
While all reasonable care has been taken to ensure that the Information contained herein is presented in good faith, and is not untrue or misleading at the time of publication, BioPortfolio, and
BSN make no representation as to its accuracy or completeness and it should not be relied upon as such. The Information is supplied on the condition that the reader or any other person receiving the Information will make his or her own determination as to its suitability for any purpose prior to any use of the Information. From time to time, BioPortfolio and any officers or employees of BioPortfolio, as well as
BSN, and any officers or employees of BSN, may, to the extent permitted by law, have a position or otherwise be interested in any transactions, in any investments (including derivatives) directly or indirectly the subject of this report. Also BioPortfolio and
BSN may, from time to time solicit business from any company mentioned in this report. This report is provided solely for the information of viewers of BioPortfolio and/or viewers and subscribers of
BSN and BioPortfolio information services, who are expected to make their own investment decisions without reliance on this report. Neither BioPortfolio nor any officer or employee of BioPortfolio, nor
BSN, or any officer or employee of BSN, accepts any liability whatsoever for any direct, indirect, special or consequential damages or loss arising from any use of this report or their contents. This report may not be reproduced, distributed or published by any recipient for any purpose without the prior express consent of the publishers. Nothing contained herein shall be construed as conferring by implication, estoppel or otherwise any license or right under any patent, trademark or copyright of BioPortfolio,
BSN or any third party.
The value of the investment(s) to which this report relates and their income
yield(s) may go up or down. The investment(s) referred to in this report may not be suitable for private investors: if you are in any doubt you should seek advice from your investment advisor. Changes in rates of currency exchange may have an adverse effect on the value, price or income of investments. Statements as to past performance of any investment are not a guide to future performance. The levels and bases of taxation can change, and if you are in doubt you should seek independent professional advice. In some cases it may be difficult for you to sell or realize your investment or to obtain reliable information about its value or the extent of the risks to which you are exposed.
THIS INFORMATION IS PROVIDED "AS IS" AND NO REPRESENTATIONS OR WARRANTIES, EITHER EXPRESS OR IMPLIED OF ACCURACY, MERCHANTIBILITY FITNESS FOR A PARTICULAR PURPOSE OR OF ANY OTHER NATURE ARE MADE WITH RESPECT TO THIS INFORMATION OR TO ANY EXPRESSED VIEWS PRESENTED IN THIS INFORMATION. |
