BioTech Stock Commentary - Millennium
Beaverton, OR– July 3, 2003. As expected, Millennium (NASDAQ: MLNM) announced on June 30th, a partnership with Ortho Biotech Products, a unit of Johnson & Johnson (NYSE: JNJ), to commercialize Velcade, Millennium’s novel drug for treating multiple myeloma. We highlighted Millennium in the June 2003 BioTech Stock Report and we discussed this type of an agreement where Millennium would retain all U.S. commercialization rights and profits from the drug, and keep an option to co-promote the drug in certain European countries and receive royalty payments on sales outside the U.S. Except for the amount of upfront payments, which was smaller than we anticipated, we were right on the mark. Millennium said it will receive an upfront payment of $15 million and may receive additional payments of up to $125 million once Velcade gains approval outside the U.S. In addition, Millennium can collect up to $330 million if Velcade is approved outside the U.S. for the treatment of other hematological cancers such as non-Hodgkin's lymphoma, as well as a range of tumors, including breast and colon cancer. Another $65 million in incentives is tied to the drug's sales.  It’s a decent deal especially since Ortho Biotech and J&J will work together on new worldwide development programs for Velcade where costs can reach up to $500 million. The ultimate goal is to prove the drug can treat multiple forms of solid and hematological cancers and eventually reach a bigger market, translating into bigger revenue streams and earnings. This deal should significantly reduce costs and cash burn for Millennium, resulting in millions of dollars in payments, and only gives away a percentage of sales outside the U.S., giving Millennium the stronger cash position that it needs. We foresee Millennium’s share price to take a breather since the only other anticipated news for the company is the release of Phase III APEX (comparing Velcade as single agent with high-dose dexamethasone, a commonly used therapy for this disease) clinical data at the end of the year and the launch of Velcade. We recommend harvesting profits in Millennium’s stock but we’ll be revisiting the company time to time for an opportunity to find a decent entry point.  Then on July 2, Millennium announced they initiated a Phase II clinical trial with Velcade for injection in patients with relapsed or refractory mantle cell lymphoma. The three-stage study will assess time to progression, response rate, duration of response and overall survival in patients with this disease following one or two prior chemotherapeutic regimens. Mantle cell lymphoma is an aggressive form of non-Hodgkin's lymphoma. And now for some housekeeping. Next week, we’ll be on vacation, so there won’t be any email updates, but the August report will be released as usual, the last Friday of the month. Have a safe and happy Fourth of July!
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