KV Holders: Pricing Backlash Seems Likely (KV-A)

March 12, 2011 · Filed Under fda, Financial, General, politics · 3 Comments 

When we first covered the rebirth of KV Pharmaceutical Co. (KV-A) for its Makena drug aimed to prevent premature birth, we knew this was going to be a home run due to FDA market exclusivity.  Premature births result in costs that run into the billions yearly to healthcare providers and insurers.  Now it seems very likely that there is going to be a backlash in the form of public outrage that works its way into both the legal system and the political outrage venues against the company.  A price hike seemed certain after getting FDA approval for exclusivity, but the degree of the gouging is going to be where the line gets drawn in the sand between high stakes capitalism and grand larceny.  Keep in mind that yours truly believes in and supports the belief that capitalism is the incentive behind most creation.  In this case, it does not take a rocket scientist to realize that KV is very likely going to have yell a “Do over!” on its pricing.

It seems that KV decided that the price per patient should now be $1,500.00.  The price was about $15.00 per patient before KV got this exclusive in an off-label use regime.  What do you think is going to happen when politicians arguing against the cost of medicine start bashing a company for literally a one-hundred-fold increase in the price of a drug?

Forbes’ David Whelan wrote in his Health Dollars blog “Is KV Pharmaceutical A Flat-Out Evil Company?” and Derek Lowe outlined a more balanced or methodical approach to this called “KV Pharmaceuticals Gets Away With Pricing on Makena” at Seeking Alpha.

Here is the take from a capitalist-minded centrist who would generally rather have less government involvement in most cases.  There is going to be more backlash against KV on this in the weeks ahead.  It is one thing when reporters and patients are angered by what they see, but companies generally tend to not do as well when they are the target of politicians and consumer activists.  KV will probably take a lot more incoming heat from this move.

KV shares have already risen exponentially from the bottom.  This stock was above $20.00 in 2008 before it woes began, yet it literally fell to under $1.00 at the lows in 2010.  Shares closed on Friday at $11.99 with a 5.14% drop on that day.

JON C. OGG

New Hope for Radiation & Chemo Toxicity

November 30, 2010 · Filed Under Cancer, fda, Infections, politics, R&D · 1 Comment 

An FDA notice today seems to have gone almost entirely unnoticed.  This is something that  should have been a key stand-out event today in the world of cancer treatments even if some may have anticipated this development.  Cleveland BioLabs, Inc. (NASDAQ: CBLI) announced that its CBLB502 was granted Orphan Drug status by the FDA.  This is a drug under development to treat exposure to radiation for “prevention of death following a potentially lethal dose of total body irradiation during or after a radiation disaster.”  The indication is one thing.  The ramifications are another.

Today’s Orphan Drug designation qualifies CBLB502 for an accelerated review process, as well as tax credits, financial assistance for development costs, and seven years of marketing exclusivity if it is given FDA approval.

It was just back in July 2010 that Cleveland BioLabs’ CBLB502 was granted fast track status from the FDA for reducing the risk of death following total body irradiation during or after radiation disaster.

We noted that there is a big difference here between the indication and the ramification.  There is currently no FDA approved medical counter-measure for this indication.  That is the spark or the catalyst.  But there is another issue to consider here and that is the potential off-labeling.  If you know of any cancer patients who have had to suffer through radiation treatments, you also know about the limitations and the toxicity.  Patients can only be given so much radiation.  We are not going to jump the gun here, but a potential off-label treatment down the road could be stronger dosages of radiation used with this drug.  Ditto for chemotherapy.  It is too soon to come to that conclusion at this time, but worth consideration.

Cleveland BioLabs notes that CBLB502 “is a bio-engineered derivative of a microbial protein that potentially reduces injury from acute stresses, such as radiation and chemotherapy.”  This mobilizes several natural cell protective mechanisms, including inhibition of programmed cell death, reduction of oxidative damage, and induction of regeneration-promoting cytokines.  CBLB502 is being developed by Cleveland BioLabs under the FDA’s Animal Efficacy Rule. This approval pathway requires demonstration of efficacy in representative animal models and safety, pharmacokinetic, pharmacodynamic, and biomarker testing in healthy human subjects.

The Orphan Drug Designation applies to the prevention of rare diseases/disorders that affect fewer than 200,000 people in the U.S., or that affect more than 200,000 people but are not expected to recover the costs of developing and marketing the treatment.   The designation also allows for a possible exemption from the FDA-user fee and assistance in clinical trial protocol design.

The company has strategic relationships with the Cleveland Clinic, Roswell Park Cancer Institute, ChemBridge Corporation and the Armed Forces Radiobiology Research Institute. Don’t underestimate that military use.  Radiation toxicity is one of those micro-sector treatments that most hope will never be needed.  The problem is that when it is needed, it is urgently needed and the raw costs of such treatment become immune from traditional economics.

The company is still rather new as it was just formed in 2003 and it has seen a rather rocky performance since its late-2006 IPO.  Shares are actually down on the day by almost 1% at $6.67 versus a 52-week range of $2.80 to $7.24.  As the news has been anticipated, there is little reaction on the news.  If the efficacy and the safety profile can be proven, the company may get to write its own ticket.  Even if the safety profile proves to be less than many approved drugs, that might not assure that approval is still denied.  Stay tuned.

JON C. OGG

ARIAD (ARIA) Up 5% On Court Ruling

August 24, 2009 · Filed Under politics · Comments Off 

ARIAD Pharmaceuticals, Inc. (ARIA) and its co-plaintiffs today announced that the U.S. Court of Appeals for the Federal Circuit has granted their petition for rehearing en banc and has vacated its April 2009 decision in the appeal that Eli Lilly and Co. filed in 2008.

All twelve judges of the Federal Circuit will now rehear and reassess the merits of Lilly’s appeal. This decision by the Federal Circuit concerns a judgment holding Lilly liable for infringement of U.S. Patent No. 6,410,516 licensed to ARIAD by Harvard University, Massachusetts Institute of Technology and the Whitehead Institute for Biomedical Research. ARIAD is the exclusive licensee of the technology and patents.

Douglas A. McIntyre

Value in Biotech: Do Low P/E Ratios Make For Cheap Stocks? (AMGN, BIB, CEPH, CBST, GENZ, PDLI)

August 22, 2009 · Filed Under Cancer, fda, multiple sclerosis, politics · Comments Off 

Biotechnology has historically been a very tough segment for investors to find “value” in.  Usually, the multiples of earnings and revenues are high and many of the emerging companies have no revenues or earnings and will not for years to come.  Yet we recently found a study of biotech analysts, investors, and portfolio managers from BIO and Thomson Reuters which showed how many influential investors in the new tougher world of lower valuations are looking at traditional low-price/earnings ratios and other traditional investment valuation metrics in evaluating biotech stocks.  So this week we ran a screen of some of the top 50 biotech stocks and wanted to review the following companies:

Amgen Inc. (NASDAQ: AMGN)
Biogen Idec Inc. (NASDAQ: BIIB)
Cephalon Inc. (NASDAQ: CEPH)
Cubist Pharmaceuticals Inc. (NASDAQ: CBST)
Genzyme Corporation (NASDAQ: GENZ)
PDL BioPharma, Inc. (NASDAQ: PDLI)

In each of these we reviewed the share prices and why these are trading where they are.  We also gave detailed data from Thomson Reuters for 2009 and 2010 consensus earnings and revenue estimates, as well as what their forward P/E and Times-Revenues figures are.  Also included are average analyst target prices and any recent calls.  We also gave the caveats, issues, or suppositions behind each company and a layout of what lies ahead.  We also had a market cap criteria, and while all of these companies are over $1 billion in market cap we were willing to look down as low as $400 million.  These six companies also greatly exceeded our average daily volume minimum of 250,000 shares.

Lastly, these were reviewed alphabetically rather than by any order of preference because each company and each case is rather unique.
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Novavax Brings In Rain Maker For Vaccines (NVAX)

July 21, 2009 · Filed Under flu, politics, vaccine · Comments Off 

There are certain titles that matter in all companies such as CEO, Chairman, and CFO.  In biotechnology and medical or drug companies, it is the chief science officer.  But when you are a relatively emerging vaccine company like Novavax, Inc. (NASDAQ: NVAX), there is another position that might be able to greatly boost the future… the Senior Vice President of International and Government Alliances.
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White House signals suport for biosimilars (NVS, AZN, AMGN, DNA, GENZ, GILD, CELG)

June 26, 2009 · Filed Under fda, General, generic drugs, politics · Comments Off 

The Obama Administration in a letter released Thursday recommended that seven years is enough time to protect brand-name biotech drugs from cheaper generic competition, roughly half the time sought by industry lobbyists.

“Innovation is driven by appropriate competition, and the administration’s policy will spur that competition,” said the letter from Office of Management and Budget Director Peter Orszag and Nancy-Ann DeParle, director of the Office of Health Reform.

Making generic biotech drugs, called biosimilars, available to the masses is part of the Obama Administration’s strategy to lower the price of the prescription drugs, many of which can cost in excess of $20,000 a year per patient.

A shorter time of market exclusivity for brand-name drugs may be detrimental to some biotech companies. Brand-name biotech drug makers such as Amgen Inc. (Nasdaq: AMGN), Genentech Inc. (NYSE: DNA) and Genzyme Corp (Nasdaq: GENZ), Gilead Sciences Inc. (Nasdaq: GILD) and Celgene Corp. (Nasdaq: CELG) are fighting against biosimilars to protect exclusivity for their products.

The Biotechnology Industry Organization, which represents brand-name companies, “is extremely concerned” that seven years is not enough time, and may limit product development.

Yet it could be beneficial to generic drugmakers such as Novartis AG (NYSE: NVS), as well as drugmaker AstraZeneca plc (NYSE: AZN), which recently began targeting the biosimilars market.

See related story on biosimilars.

 

United Health gains as insurance reform doubts creep (UNH)

June 18, 2009 · Filed Under General, politics · Comments Off 

United Healthcare (UNH) shares are up more than a point on stronger-than-usual volume for this time in the session, on speculation that President Obama will need to cede more ground to the private insurance system already in place in order to pass healthcare reform legislation.

In the options market, calls are outnumbering puts at a ratio of about 2.5-to-1, in what appears to be directional market bets by traders.

United Health is the opposite bet on an Obama healthcare plan. And on several fronts, the Obama plan is meeting new resistance.

For starters, the timing of any new federal insurance plan appears to have been pushed back. The Washington Post reports today that a bipartisan set of reforms proposed by the Senate Finance Committee could be delayed until after the July 4 Senate recess.

It also appears that Senate Democrats already are ceding some ground on key reform tenets. One idea that could gain bipartisan support is a proposal by Sen. Kent Conrad (D-N.D) to form insurance cooperatives that are fun by consumers, rather than the government.

Other healthcare stocks that might benefit from Obama plan alternatives include Humana, Wellpoint, Aetna, Cigna, Coventry Health and Healthnet.

Obama Keeps Target of Generic Biologics: Focus on Anemia (AMGN, JNJ, NVS)

June 15, 2009 · Filed Under Cancer, fda, generic drugs, politics · Comments Off 

Politics and healthcare are two words which bring about unquantifiable risks for many biohealth investors.  In President Obama’s speech today, he did say how he wanted biologic drugs to have an easier path for generic competition in the field.  This is not necessarily a new call from the administration, but it is a continued push against the biotech field.  That was a broad statement where you never know how far it can or how far it will ultimately go.  But the president did specifically note anemia as a target for the generic competition.  Again, this is a repeat, but it means a further direct push that is not being let up on.  That puts Amgen Inc. (NASDAQ: AMGN) for its Aranesp and Epogen as a front and center assault target of the administration if you take the statements at face value.

Amgen generated $15.003 billion in 2008 total revenues.  Its growth petered out as the 2007 revenues were $14.771 billion and the 2006 revenues were $14.268 billion.  Aranesp, for the treatment of anemia associated with CRF (both in patients on dialysis and patients not on dialysis), had global sales of $3.1 billion for all of 2008.  EPOGEN, for the treatment of anemic adult and pediatric patients with CRF who are on dialysis, sales in the United States were roughly $2.5 billion for each of the last three years.
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Obama Rocks Up Stem Cell Stocks (ASTM, CYTX, GERN, NBS, OSIR, STEM, KOOL)

March 9, 2009 · Filed Under politics, stem cells · Comments Off 

There are major gap-ups this morning in stem cell stocks after Friday evening’s news that President Obama is signing an executive order which will lift the Bush ban on funding of embryonic stem cell funding.  This is supposed to be signed today, although what is interesting here is that this is not really new news other than the timing and the formality.  Many of these stem cell stocks will trade more on a “vote of confidence” rather than over what this means as far as “new news” is concerned.

The following prices are as of 8:19 AM EST.
Aastrom Biosciences, Inc. (NASDAQ: ASTM) +87% at $0.62
Cytori Therapeutics, Inc. (NASDAQ: CYTX) +38% at $3.20
Geron Corporation (NASDAQ: GERN) +29% at $4.99
Neostem, Inc. (AMEX: NBS)
Osiris Therapeutics, Inc. (NASDAQ: OSIR) NOT TRADED…. in pact with Genzyme, but for adult stem cells.
StemCells Inc. (NASDAQ: STEM) +55% at $2.15
Thermogenesis Corp. (NASDAQ: KOOL) +41% at $0.57

JON C. OGG

Obama Rocks Up Stem Cell Stocks (ASTM, CYTX, GERN, NBS, OSIR, STEM, KOOL)

March 9, 2009 · Filed Under politics, stem cells · Comments Off 

There are major gap-ups this morning in stem cell stocks after Friday evening’s news that President Obama is signing an executive order which will lift the Bush ban on funding of embryonic stem cell funding.  This is supposed to be signed today, although what is interesting here is that this is not really new news other than the timing and the formality.  Many of these stem cell stocks will trade more on a “vote of confidence” rather than over what this means as far as “new news” is concerned.

The following prices are as of 8:19 AM EST.
Aastrom Biosciences, Inc. (NASDAQ: ASTM) +87% at $0.62
Cytori Therapeutics, Inc. (NASDAQ: CYTX) +38% at $3.20
Geron Corporation (NASDAQ: GERN) +29% at $4.99
Neostem, Inc. (AMEX: NBS)
Osiris Therapeutics, Inc. (NASDAQ: OSIR) NOT TRADED…. in pact with Genzyme, but for adult stem cells.
StemCells Inc. (NASDAQ: STEM) +55% at $2.15
Thermogenesis Corp. (NASDAQ: KOOL) +41% at $0.57

JON C. OGG

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