Biotech Tracker News - Profile of Tanox
March 31, 2003, BiotechTracker has launched its profile of Tanox. Valuation of the company is driven primarily by Xolair, as Tanox will receive approximately 10% royalties on worldwide Xolair sales. We expect Xolair to be approved in the U.S. for the treatment of asthma this year, and model worldwide sales of Xolair to reach $2 billion by 2013. Although Tanox will ultimately be required to pay 10% of these Xolair royalties to its former lawyers, the bottom line for Tanox is still positive, and according to our analysis the company is significantly undervalued.  Tanox has been developing TNX-901, a drug similar to Xolair, for the treatment of peanut allergies. Arbitrators have ruled that Tanox cannot continue to develop TNX-901 independently of its partners, so the fate of this drug is uncertain. We expect that Tanox and Novartis will choose to develop either Xolair or TNX-901 for the treatment of peanut allergies, and that Tanox will ultimately receive a royalty portion equal to or slightly greater than its Xolair royalty portion. When Xolair is approved for the treatment of asthma, it will be a more likely candidate than TNX-901 for development for the treatment of food allergy.  Tanox is also developing an anti-CD4 monoclonal antibody for the treatment of HIV infection. We project that this drug has a 13% probability of FDA approval in 2009. If approved, this drug could generate over $1 billion in worldwide revenue by 2013.  When Xolair is approved, Tanox would become an attractive acquisition candidate for Novartis. Novartis would recover Tanox's royalties, and end the long-standing disputes between the companies. Acquisitions of companies with a single approved drug, such as Scios, Cor, and possibly the Medicines Company, are attractive to larger biopharmaceutical companies attempting to fill their pipelines.
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