Bio-Pharma R&D Jobs At Risk, CRO’s Licking Their Chops
There have been two very interesting news bits today in research and development in drug and bio-health companies. The ramifications are also rather scary if you have been monitoring this segment over the last few years as one of the few havens in high-pay medical and bio-health jobs.
- Today the WSJ reported that GlaxoSmithkline (NYSE: GSK) informed employees that the drug giant may cut 850 jobs in R&D, or about 6% of that segment as part of its ongoing cost cutting measures.
- Pfizer (NYSE: PFE) is also cutting R&D. It is abandoning its early-stage work in heart disease, and is dropping research projects in obesity and bone density, but seeks for partners to carry on the work. The company is targeting 15-20 regulatory submissions in the period 2010-2012.
In the very recent past we have noted how Eli Lilly & CO. (NYSE: LLY) signed an agreement with contract research organization Covance Inc. (NYSE: CVD) in a transformation of Lilly’s current R&D model.
This may be bad for new-hire wages in the R&D arena in the biohealth sector. This all may bode well for all of the medical and bio-health contract research organization (CRO’s). Here are some stocks with CRO as their main operations or with significant exposure:
- Charles River Laboratories International Inc. (NYSE: CRL)
- Covance Inc. (NYSE: CVD)
- Parexel International Corp. (NASDAQ: PRXL)
- Pharmaceutical Product Development Inc. (NASDAQ: PPDI)
- PharmaNet Development Group Inc. (NASDAQ: PDGI)
Between this wave of cutting R&D personnel and the flood of biotech mergers, it looks as though things are changing wildly in R&D.
Jon C. Ogg
September 30, 2008
Biotech Mergers Continue (LGND, PCOP)
There have been many biotech merger announcements of late, and tonight there is a small deal to report. Ligand Pharmaceuticals Incorporated (NASDAQ: LGND) is acquiring Pharmacopeia (NASDAQ: PCOP) in a deal valued up to $70 million. The terms of this are tricky as it is dependent upon share prices and upon a Contingent Value Right which could yield additional rewards to holders.
You can read about the FULL DEAL DETAILS at 24/7 Wall St.
Pharmacopeia, the target, shares closed down almost 5% in regulartrading and its shares are up 33% at $1.59 in after-hours trading. Its 52-week trading range is $1.00 to $6.10.
Ligand, the acquirer, closed up less than 1% at $3.12 in regular trading and its shares are up less than 1% at $3.14 in after-hours trading. Its 52-week trading range is $2.16 to $6.21.
Jon C. Ogg
September 24, 2008
Celsion Looking To Break Liver Cancer (CLSN)
Celsion Corp. (NASDAQ: CLSN) has announced that its global Phase III Primary Liver Cancer trial is proceeding as planned. After receipt of FDA agreement in January of 2008 for its pivotal Phase III Primary Liver Cancer trial in the United States, Celsion says that it has obtained regulatory approval to conduct its Phase III safety and efficacy study of ThermoDox® in Hong Kong, Taiwan, Korea, Canada, and Italy. It also anticipates that a clinical trial agreement will be obtained in China before the end of 2008.
Celsion also noted that site initiation and patient enrollment are tracking well against its most recent projections.
Celsion also reported that Yakult Honsha is proceeding with plans to initiate a clinical program in Japan to study ThermoDox® for the treatment of primary liver cancer. As previously announced, Yakult will begin pre-clinical and clinical studies of ThermoDox® to support requirements for drug registration in Japan.
This stock made a major downside mystery move yesterday. It also doesn’t take much to move the stock as it only traded 46,000 shares yesterday. Some of the prioce moves may be exaggerated or stretched as well because of its wide bid-ask spread.
If the stock market continues in the same sort of swings it has been lately, they may have many more self-medicating via booze client down the road.
Jon C. Ogg
September 24, 2008
Sequenom Scores on Down Syndrome Detection
Sequenom, Inc. (NASDAQ: SQNM) is having a major trading response to its Down Syndrome testing news. The genetic-analysis and molecular diagnostic solutions provider gave additional positive results from screening studies on its noninvasive circulating cell-free fetal nucleic acid SEQureDx™ Technology.
This is to enable the detection of fetal aneuploidy, including Down syndrome from maternal blood. The presentation is from its Sequenom’s analyst briefing in New York City.
Sequenom’s test demonstrated no false positives and no false negatives in both first and second trimester samples. Over 200 samples were announced today and this is now in excess of 400 prospective samples to-date. Sequenom executives were joined by a panel of leading scientists and clinicians to discuss these study results and updates in the development of noninvasive prenatal diagnostics.
With the abundance of women having children later and later in life, Down Syndrome testing is going to be more important than ever. In fact, it could be front and center after the election as VP-candidate Palin’s family is affected by this.
Jon Ogg
September 24, 2008
BioHealth Upgrades & Downgrades on Wall Street (GHDX, GENZ, GSK, ISPH, LXRX, MEDX, MRK, QLTI, SHPGY)
There have been other calls in drug, biotech, and healthcare stocks today but these are the key standouts that have been seen making an impact on stocks after the open of trading:
- Genomic Health (GHDX) Cut To Hold at Canaccord.
- Genzyme (GENZ) Started as Overweight at Morgan Stanley.
- GlaxoSmithKline (GSK) Cut to Sell at Goldman Sachs.
- Inspire Pharma (ISPH) Cut To Underweight at Morgan Stanley.
- Lexicon Pharma (LXRX) Cut to Underweight at Morgan Stanley.
- Medarex (MEDX) Cut to Equalweight at Morgan Stanley.
- Merck (MRK) Raised to Buy at Goldman Sachs.
- QLT (QLTI) Cut to Underweight at Morgan Stanley.
- Shire (SHPGY) Cut to Neutral from Buy at Goldman Sachs.
Jon C. Ogg
September 8, 2008
Biodel Meets Two-Face, The Joker, & The Riddler…..
If you just read headlines, you might have thought that Biodel Inc. (Nasdaq: BIOD) was going to have a good day. But it’s the exact opposite. Biodel has released study data from its pivotal Phase III trials for VIAject which met the primary endpoint of non-inferiority and results which demonstrated statistically significant reductions in hypoglycemic events and weight gain in Type 1 and 2 diabetes.
But the problems may be around the weight gain as the Type 2 diabetes patients showed a 0.7 pound weight gain over 26 weeks and Type 1 patients lost 0.7 pounds over that period. There were also results seen India that did not coincide with results in the US and Germany, which had to be excluded from results.
In both clinical trials, swelling, itching and redness were reported in less than 5% of patients receiving VIAject or RHI. VIAject was associated with injection site pain, the prevalence of which decreased with time. A combined total of 24 VIAject patients dropped out of the two clinical trials due to injection site pain (cry-babies).
The company is pleased with the decreases seen in hypoglycemic events and over those receiving insulin alone.
Shares are down almost 70% at $5.33 as of 9:53 AM EST and we have seen more than 2.5 million shares trade hands. The 52-week trading range was $9.60 to $25.69. The company may be pleased, but Wall Street isn’t. Not at all.
With a $126 million market cap, the stock trades at about 1.25 times its last stated net tangible assets as of June 30, 2008.
Jon C. Ogg
September 8, 2008
Small Player Joins Government Anthrax Fight (EBS)
Emergent BioSolutions Inc. (NYSE:EBS) has received a contract from the Department of Health and Human Services (HHS) for over $24.3 million to fund the further development of Emergent’s anthrax monoclonal antibody AVP-21D9.
This contract will be jointly administered through the Office of the Biomedical Advanced Research and Development Authority and the National Institute of Allergy and Infectious Diseases (part of the National Institutes of Health).
The life of this contracts is four years and is to provide funding for scale-up of the manufacturing process, for non-clinical studies, and for a Phase I clinical trial.
Emergent noted in the release that it anticipates that it will receive approximately $20 million over the first two contract years in support of the scale-up of the manufacturing process and the completion of a Phase I clinical trial. The company also expects to focus on completing certain non-clinical studies during the final two years of the contract.
For a drug company or biotech stock, this one is still rather small with a $405 million market cap. At $13.60, the stock is toward the higher end of the $4.40 to $14.39 trading range of the last year.
Jon C. Ogg
September 3, 2008