Gilead’s Loss, Maybe InterMune’s Gain (GILD, ITMN)

December 23, 2010 · Filed Under Cancer, R&D · Comment 

Gilead Sciences, Inc. (NASDAQ: GILD) terminated its ARTEMIS-IPF Phase III trial which was ongoing for its ambrisentan in patients with idiopathic pulmonary fibrosis.  This is not one of those good halts.  The trial was halted due to lack of efficacy.

This is potentially a huge win for InterMune Inc. (NASDAQ: ITMN).  We recently noted the situation driving it up and called it a quest for ten-baggers after Europe’s EMA adopted a positive opinion that recommended granting marketing approval for its Esbriet (pirfenidone) in adults for treating mild to moderate idiopathic pulmonary fibrosis.  That EMA decision was after the FDA in the United States rejected the drug despite a positive indication in a panel review.

Last week there was a come-along analyst call in InterMune from Wedbush calling for a $55 target due to this new unexpected development.

Sometimes smaller companies win on accident over their larger rivals.  Gilead shares are down 1.1% at $35.95.

InterMune shares are up 1% at $36.70 versus a 52-week range of $8.34 to $49.46.  It was just as recently as December 16 that InterMune shares were down at $14.27.

Long live the ten-baggers!

JON C. OGG

Analysis of Real Value of Beckman Coulter in Buyout (BEC)

December 10, 2010 · Filed Under Financial, M&A, R&D, Research · Comment 

Beckman Coulter, Inc. (NYSE: BEC) is on fire after announcing that it is for sale.  The company provides biomedical testing instrument systems, tests, and supplies for clinical laboratories worldwide.  We wanted to see what it can fetch in a sale to see if investors should hang around for more or whether they should take the money and run.

Private equity firms are expected to be the buyers, although other industrial companies might have an interest.  Reports are out the Beckman Coulter has hired Goldman Sachs to help it explore its options.

The shares closed at $57.09 Thursday and its market capitalization was just under $4 billion.  Shares are now magically at $72.75.

2010 has been a very rough year as its summer guidance punished shares with more than a 20% loss.  Its CEO also left after a five-year tenure and no real explanation was offered.

The stock is up over 27% this morning at $72.75 and shares put in a new high for 2010 today. The new 52-week range is $43.95 to $74.85.

We took a look at the stock options trading but investors will need to go out to FEB-2011 to get enough time value.  The $75 CALLS are trading above $3.00, implying that shares need to be acquired for more than $78.00 for the options trade to work out.

As you saw elsewhere, this company had a monumental rise from 1990 to the early 2000s.  The problem is that by 2005 shares peaked above $70.00 and the prices in the mid-$70′s acted as key resistance on the chart again in 2007, 2008, and again in 2009.  Today’s move puts the stock above $70.00 for what appears to be the first time in 2010.

You never know what a buyer will pay if there is major interest or if a bidding war develops.  This news today just created what some investors would call a phantom $1 billion in added share value by market capitalization alone.

If you average out the 2010 and 2011 estimates from Thomson Reuters, you get close to a $4.00 EPS target.  There is also only an expected 4% revenue growth for 2011 to $3.82 billion in sales.  The current share price comes to more than 18-times a blended 2010 to 2011 earnings estimate.

The most recent balance sheet as of 9/30/2010 showed more than $300 million in cash and long-term investments combined but it also comes with long-term debt of $1.33 billion and other liabilities of $533 million.  The WSJ noted that this could fetch more than $5 billion in a buyout.  We would caution that leaked rumors and leaked news is often a value of the enterprise with all equity AND debt rater than just equity as it is being treated today.

Analysts are cautious here on this one.  Before the effects of this news, the consensus analyst target was just above $55.00 per share.  The highest target was said to be $66.00 and the lowest target was $47.00.

For a company that has had problems and that has been volatile, this may be a gift at the current share price.  Many investors will likely determine that today’s gains represent enough of a buyout premium to take the money and run.  That may be even more so while we know 100% that the capital gains taxes are only 15% through December 31, 2010.  A tax cut compromise was reached, but it is not signed and many key figures are fighting it.

Beckman Coulter could fetch a higher price depending upon who is the acquirer.  Logic and common sense seems to lead to the conclusion that this big gain seen on Friday is a high enough premium already.

JON C. OGG

Geron Takes Breast Cancer Stem Cell Study to Phase II (GERN)

December 2, 2010 · Filed Under Cancer, R&D, Research, stem cells · Comment 

Geron Corporation (NASDAQ: GERN) is taking its breast cancer study with stem cells to Phase II.  The company announced this morning the enrollment of the first patient in a randomized Phase 2 clinical trial of its telomerase inhibitor drug, imetelstat (GRN163L), in combination with paclitaxel (with or without bevacizumab) in patients with locally recurrent or metastatic breast cancer.

The Phase I program and preclinical data that showed imetelstat’s activity against cancer stem cells from a broad range of tumor types, including breast cancer.  The Phase I trial of imetelstat combined with paclitaxel and bevacizumab showed an encouraging preliminary response rate.

The Phase II trial is an open label, multi-center, randomized study to measure safety and efficacy.  The primary efficacy endpoint is to estimate progression-free survival (PFS) for patients receiving imetelstat in addition to paclitaxel with or without bevacizumab. Secondary efficacy endpoints are objective response rate and clinical benefit of imetelstat when added to paclitaxel with or without bevacizumab. Safety and tolerability will also be assessed.

Enrollment is estimated at 150 patients at approximately 80 clinical sites across the U.S. and Canada.

It was back on November 11, 2010 when Geron relreased data showing that two publications demonstrating results of its telomerase inhibitor and shares rose to $6.08 from $5.80 the prior day.

Geron closed Wednesday at $5.96 and its 52-week trading range is $4.37 to $6.67.

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

Regeneron’s Long-Term Prospects Become Much More Positive (REGN, BAY)

November 22, 2010 · Filed Under R&D · Comment 

Regeneron Pharmaceuticals Inc. (NASDAQ: REGN) is a big winner today on news of its Wet Age-related Macular Degeneration drug.  Bayer AG (NYSE: BAY) and Regeneron gave a report that top-line results of two Phase III studies with VEGF trap-eye in Wet Age-related Macular Degeneration were very positive.  The reports showed that in both studies all regimens of VEGF Trap-Eye achieved primary endpoint compared to ranibizumab dosed every month.  The companies noted that regulatory applications are planned in the first half of 2011 for marketing approval.

Regeneron shares are running up on news that its experimental eye drug worked better than Roche’s Lucentis with fewer doses.  Today’s results are from the third and final stage of tests generally needed for U.S. approval.  If results hold up as the company showed, it seems that doctors may want to switch to the less frequent treatment every other month rather than Lucentis each month.

Lucentis generated more than $1 billion in 2009 sales, making this a blockbuster potential as it could easily be a first-line treatment.  There is a huge need here as this is the leading cause of blindness in the elderly and there are in the vicinity of 200,000 diagnosed each year.

Lucentis and Regeneron’s medicine aim to inhibit VEGF, which is blood vessel growth in the eyes.  The VEGF Trap-Eye maintained the vision of 95% percent of patients on only 2MG every other month.  Bayer’s trial had similar results in a second trial in Asia, Europe, and Latin America.  The VEGF Trap-Eye studies improved patient vision at a higher rate than Lucentis, and thoise who took 2MG of VEGF Trap-Eye once a month were able to read 11 more letters on a vision chart over an extra 8 letters for those taking 0.5 milligrams of Lucentis each month.

There are some risks that are in-line with other eye injections, most frequently being retinal hemorrhage and eye pain, and there were also ‘floaters’ that are dark spots in patient fields of vision.

Lucentis costs a bit under $2,000.  AgingEye.net noted a cost of $1,950 per dose. Roche’s Avastin is often off-labeled and its cost is down closer to $50 per dose.  The cost of the drug is not yet being discussed, and it is a 2011 approval story.

Regenron shares are responding very favorably here today, as you would expect for a 52-week high.  Shares are up 12.7% at $27.82 on nearly 3 million shares and the 52-week trading range is $18.04 to $30.58.  Thomson Reuters shows a consensus analyst price target of $33.89 but many of the calls are stale and are being updated today.

Regeneron now has a market cap of $2.3 billion versus sales of $379.268 million in 2009 and versus Thomson Reuters estimates of $442.08 million in 2010 and $484.27 million in 2011.

Regeneron has been public since the early 1990′s and shares went above $30 in 2000 and 2001.  The company is adequately capitalized as well as the September 30, 2010 balance sheet showed over $325 million in cash, over $153 million in short-term investments, and almost $38 million in long-term investments.

JON C. OGG

Immunogen Continues Cancer Surge (IMGN, NVS)

October 11, 2010 · Filed Under Cancer, R&D · Comment 

Immunogen Inc. (NASDAQ: IMGN) reported its positive study data this morning.  It also gave updated guidance where it sees a loss of $60 to $64 million for Fical-2011.  The company will co-produce cancer drugs with Novartis (NYSE: NVS).

On the guidance: ” Net cash used in operations is expected to be between $0 and $4 million, with a net loss expected to total between $60 and $64 million. Cash and marketable securities at its fiscal year end of June 30, 2011 are expected to total between $106 and $110 million, which should be sufficient to fund operations through the Company’s 2013 fiscal year.”

The early-stage data evaluating lorvotuzumab mertansine in CD56+ solid tumors showed patients with any type of CD56+ solid tumor were eligible for enrollment. In the ongoing expansion phase of the trial, enrollment is limited to patients with MCC, SCLC, or ovarian cancer. A total of 64 patients with CD56+ solid tumors had been enrolled and 45 patients could be quantitatively assessed for changes in overall tumor burden. Thirteen (29%) of these 45 patients had a reduction in tumor volume ranging from 1.3 – 100%, and another 10 patients (22%) had no discernable increase in tumor burden.

Findings in Merkel Cell Carcinoma… Patients with Merkel cell carcinoma are being enrolled in the expansion phase of this trial as promising activity has been reported with lorvotuzumab mertansine for MCC, and the Company is assessing whether to initiate a pivotal trial with the compound for this use. Thirteen patients with metastatic MCC had been enrolled in the study at the time of data cut off. Five (38%) of these patients had notable clinical benefit.  1 patient had a complete response and has remained disease free for more than 5 years. 1 patient had a partial response that evolved to a complete response, and has been disease free for at least 17 months.  3 patients had clinically relevant stable disease for this patient population, remaining on lorvotuzumab mertansine for at least three months.

In Small-Cell Lung Cancer, Twenty-six patients were enrolled with SCLC, which has commonalities with MCC in biological characteristics, clinical course and response to treatments. SCLC tumors generally respond to first-line treatment but then recur. Survival at that stage is usually less than 6 months.  While all of the SCLC patients enrolled in this trial had cancer that had recurred following treatment with other therapies, three patients had clinically meaningful stable disease and another patient with refractory disease achieved an unconfirmed PR.

JON C. OGG

Promising Data In New Breast Cancer Treatment Candidate (IMGN)

October 8, 2010 · Filed Under Cancer, Financial, Options, R&D · Comment 

Immunogen Inc. (NASDAQ: IMGN) is seeing a substantial move today on word of TDM-1 under development by Roche and ImmunoGen posted higher response rates and also showed lower toxicity than the blockbuster breast cancer drug Herceptin.

The study is in 137 women with metastatic breast cancer who had no prior chemotherapy.  The study was also randomized to treatment with TDM-1 or Herceptin plus the chemotherapy drug Taxotere.  Also noted was that the response rate in patients treated with TDM-1 was 48% compared to a 41% response rate in patients that were treated with Herceptin and Taxotere.

This is from results from the first head-to-head study of these two drugs that will be presented at a cancer meeting in Europe on Monday.  The data in breast cancer patients is still very early and very preliminary but also suggests that TDM-1 could be the next blockbuster drug and a replacement of Herceptin.

Immunogen shares are up 5.8% as it is Roche’s partner and the $7.09 price compares to a 52-week trading range of $4.96 to $10.90.

Elsewhere, there have been a whopping 5,500 of the OCT-2010 $7.50 CALLS versus a prior open interest of only 1,199 contracts.  the NOV-2010 CALLS have also seen more than 1,000 contracts in each the $7 and $8 strike prices and that is far higher than the open interest in each.

JON C. OGG

More Big Problems For Obesity Drugs (ABT, VVUS, ARNA, OREX)

October 8, 2010 · Filed Under fda, obesity, R&D · 2 Comments 

Abbott Laboratories (NYSE: ABT) is the latest casualty in the war on obesity.  The company agreed this afternoon to voluntarily withdraw its obesity drug Meridia from the U.S. market.  Obesity drugs are just scorned by the FDA as side effects are being put ahead of the key benefits.  We are watching shares of VIVUS, Inc. (NASDAQ: VVUS), Arena Pharmaceuticals, Inc. (NASDAQ: ARNA), and Orexigen Therapeutics, Inc. (NASDAQ: OREX) as obesity-related secondary names.

The reason: clinical trial data indicated an increased risk of heart attack and stroke, according to the FDA.  Here is the problem though.  The FDA approved Meridia all the way back in November 1997.  The approval was given for weight loss and maintenance of weight loss in obese people.  The problem is that the FDA also approved this for use in certain overweight people with other risks for heart disease.

The FDA was quoted as saying, “Meridia’s continued availability is not justified when you compare the very modest weight loss that people achieve on this drug to their risk of heart attack or stroke.  Physicians are advised to stop prescribing Meridia to their patients and patients should stop taking this medication. Patients should talk to their health care provider about alternative weight loss and weight loss maintenance programs.”

Obesity drugs are a huge unmet and under-served sector of biohealth by pharmaceutical companies and biotech companies alike.  The FDA is VERY hard on these drug candidates, and sometimes the side effects are about all that is ever discussed despite how well some tests have been.  Despite the issues and a lack of interest for the drug, Meridia sales hit $340 million globally in 2008 but fell to $311 million in 2009.

VIVUS, Inc. (NASDAQ: VVUS) has Qnexa, which the FDA has been hard on, under development and more data is expected on the results of its ongoing studies.  VIVIS shares are up 1.9% at $6.99 and the 52-week range is $4.69 to $13.68.  When the company just this week sold off its MUSE for erectile dysfunction the company said that Qnexa’s commercialization was one of its two top priorities going forward.

Arena Pharmaceuticals, Inc. (NASDAQ: ARNA) and Eisai Inc. have upcoming lorcaserin presentations at Obesity 2010, the 28th Annual Scientific Meeting of The Obesity Society, in San Diego, California. Lorcaserin is intended for weight management, including weight loss and maintenance of weight loss, in patients who are obese with a Body Mass Index of 30 or greater AND in patients who are overweight  with a Body Mass Index of 27 or higher and which have at least one weight-related co-morbid condition.  Lorcaserin’s has an October 22 PDUFA date at the FDA.  Its shares are up 3% at $1.69 and the 52-week trading range is $1.51 to $8.00.

Orexigen Therapeutics, Inc. (NASDAQ: OREX) has Contrave in development and has presentations taking place at the 28th Annual Scientific Meeting of The Obesity Society at the San Diego Convention Center from October 8 to October 12.  Its shares are up 15 at $6.32 and the 52-week range is $3.81 to $9.50.

Abbott shares are still up 0.35% at $52.77 versus a 52-week range of $44.59 to $56.79.  With an $81+ billion market cap, Abbott does not have any related drug woes where one product wrecks the company.

The big question is whether a pill is the answer.  Sustained weight loss will probably never come from a pill or an injection alone.  Chances are, even in a hundred years that the answer is going to come down to low fats and low sugars, lots of fiber and vegetables, portion control, less processed foods, and a strict exercise regimen.

JON C. OGG

Onyx Faces FDA Delay Music (ONXX)

October 7, 2010 · Filed Under Cancer, fda, R&D · Comment 

Onyx Pharmaceuticals, Inc. (NASDAQ: ONXX) is delaying its New Drug Application filing with the FDA for carfilzomib.  The delay is based on a recent meeting with the FDA’s Chemistry, Manufacturing and Controls review division where it requested additional information related to commercial-scale manufacturing of carfilzomib.

The company had previously expected to make its application by the end of this year for accelerated approval of carfilzomib.  The new target date for its NDA filing for accelerated FDA approval “could occur as early as mid-year 2011.”  In short, this is a half-year delay by the sound of it.  Maybe more.

While trying to lessen fears, Onyx noted that the clinical profile of carfilzomib has not changed and it further noted that no new safety signals have been observed.  It further stated, “The Phase 3 trials are on schedule and actively enrolling patients, and this change is not expected to impact any of the carfilzomib trials or other development plans.”

The company “observed minor variations that are believed to be primarily related to equipment temperature variances.”  The complete data set from the Phase 2b 003-A1 clinical trial of carfilzomib in patients with relapsed and refractory multiple myeloma, along with new data on carfilzomib from additional studies, will be presented at the American Society of Hematology Annual Meeting in December 2010.

Delays are rarely a good thing.  That is being confirmed in the after-hours session of trading.  While the stock rose 4.25 to $27.50 today, the after-hours session right after 5:00 PM EST has shares trading down 7.1% at $25.55.  The 52-week trading range is $19.54 to $33.48.

JON C. OGG

FDA Warning Letter Heads to Gilead (GENZ, GILD)

October 5, 2010 · Filed Under fda, R&D · Comment 

Everyone is familiar with the manufacturing woes of Genzyme Corporation (NASDAQ: GENZ) that helped lead to its poor share performance before Sanofi-Aventis decided to make an acquisition offer for the company.  There is a new FDA warning, this heading to Gilead Sciences Inc. (NASDAQ: GILD).

The FDA has warned Gilead about quality control violations at one of the company facilities that is located out in California.  While Gilead had disclosed this, a FDA warning letter was posted with several problems discovered by regulators and inspectors at the San Dimas facility.

Gilead was flagged for not having written procedures to help prevent bacterial contamination and it was also noted that Gilead failed on multiple occasions to investigate when batches of its pills failed on visual inspections. Another flag was  a failure to properly clean and maintain equipment in the facility.

Gilead had responded to earlier FDA criticism back in March, but the FDA report shows that the response failed to take proper actions to correct the issues.  The FDA has asked for a complete response within 15 days of the letter.

The prior filing noted that the letter could impact Gilead’s shipments of AmBisome to fungal infections, but this shoould not impact HIV drugs of Atripla and Truvada shipments.

This is not expected to turn into a Genzyme-like scenario.  Otherwise the stock would be lower rather than higher on the day.  Late in the session, Gilead is up almost 2% at $36.04 versus a 52-week trading range of $31.73 to $49.50.

JON C. OGG

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