Two More Promising Attacks on Flu and Swine Flu (VICL, NVAX)
Vical Inc. (NASDAQ: VICL) showed promising swine flu test data in its animal model today and was one of the top rising stocks. A pact from Novavax, Inc. (NASDAQ: NVAX) with the government of Spain and ROVI Pharmaceuticals sent its shares even higher on a percentage basis.
Vical Incorporated (NASDAQ: VICL) said tests in its vaccine against A/H1N1 pandemic influenza, the swine flu, produced robust immune responses that were “well above the accepted protection threshold in 100% of vaccinated mice and rabbits” after a standard two-dose vaccine regimen. The company said that at least 75% of vaccinated animals achieved or exceeded the protection threshold after a single dose of vaccine. Vical went so far as saying that it is ready to advance directly to large-scale cGMP manufacturing of the vaccine for human clinical trials, subject to securing external funding for this program.
Novavax, Inc. (NASDAQ: NVAX) signed a deal with Spain’s health ministry and ROVI Pharma, a specialty drug maker in Spain, to license its genetically engineered technology to produce pandemic and seasonal flu vaccines and build that country’s first vaccine-making plant.
While exact terms are outstanding, this could easily bring in tens of millions of dollars in future royalty and milestone payments if and after the vaccines are approved and marketed. The target here is to get both pandemic flu vaccines and seasonal flu vaccines by 2012.
ROVI has committed to make a $3 million equity investment in Novavax at $2.74, a 10% premium to yesterday’s close. The Spanish government is forming a foundation and will invest in a 60 million facility and a non-profit foundation will be formed will be formed and initially funded with a 25 million euro credit line from the Spanish government.
This was a huge boom for both companies today. Vical Inc. (NASDAQ: VICL) rose over 22% to $2.70, on over 8 million shares. Novavax, Inc. (NASDAQ: NVAX) shares closed up 31% at $3.28, on over 32 million shares. As far as how high that volume is, that is about 14-times average on Vical and nearly 8-times average volume on Novavax.
Jon C. Ogg
Dendreon Gets Mixed Analyst Take (DNDN)
A smaller broker dealer has come out with a positive, yet cautious, note on Dendreon Corp. (NASDAQ: DNDN) in new coverage this morning. Morgan Joseph has initiated the maker of PROVENGE for prostate cancer with a “Hold” rating in new coverage. The firm believes that Dendreon can become a leader in therapeutic vaccines for the prostate, so there is a positive nature and positive outlook. But as for the valuations, Morgan Joseph has said it would try to wait to see if you can get a better price.
Dendreon shares closed at $25.49 yesterday. So far we are seeing shares indicated firm, but the 52-week trading range is $2.55 to $27.40. Shares have had a hard time getting much higher and staying much higher than this $25.00 to $27.00 range. Most trading days over the last 75 days have seen a $20.00 to $25.00 range, yet the range has been slightly higher in the more recent days.
JOn C. Ogg
Stem cell companies get endorsement from industry heavyweight (GERN, STEM, ASTM, GE)
Geron Corp. (Nasdaq: GERN) are up more than 25% in premarket trading after announcing an exclusive global licensing agreement with General Electric Co.’s (NYSE: GE) GE Healthcare.
The announcement is seen as an endorsement of the research done over the years by small-cap stem cell research companies. Rival stem cell biotechs including Stem Cells Inc. (Nasdaq: STEM) and Aastrom Biosciences Inc. (ASTM) also are rising on the news.
The GE Healthcare announcement is likely to be seen as an endorsement of the work that Geron had done on its own in bringing human embryonic stem cell-based therapies to market. The company plans to begin a Phase I trail of a therapy called GRNOPC1 for patients with thoratic injury, potentially in coming weeks.
by YE09.
The two companies have established a multi-year alliance program under which their respective scientists will work together to develop products for drug discovery.
GE Healthcarewill fund the R&D program and will be responsible for manufacturing, sales and distribution of products developed under the agreement. — Mike Tarsala
Long-term insulin makers shares sink on possible study (SNY, NVO, MRK, LLY)
Sanofi-Aventis (NYSE: SNY) and Novo Nordisk AS (NYSE: NVO) shares are trading lower on strong volume Friday as analysts anticipate a potentially negative analysis in a major medical journal that may link Sanofi’s Lantis long-acting insulin product — the second-biggest seller in its product lineup — to cancer risk.
Novo Nordisk makes a similar long-lasting insulin product called Levemir. The fear among some traders is that the yet-to-be published study could also affect drugs in the same general class.
Facts are lacking, since the article has not been published. But the worry among some traders is that any study that may result in fewer prescriptions being written for long-lasting insulin products, until the safety data can be weighed further.
Some market participants are recalling Glaxo Smith Kline’s drug Avandia, which suffered steep sales declines two years ago after an analysis tied the drug to potential heart attack risk.
Should the study results have a major impact on sales of long-acting insulin, there are a few products that may stand to benefit. One is Byetta, made by Amylin Pharmaceuticals (Nasdaq: AMLN) and Eli Lilly & Co. (LLY). It works diffently than the long-acting insulin products, and is not a substitute for insulin.
Another may be Merck’s (NYSE: MRK) Januvia, a once-daily pill that is not an insulin product, but can can help lower blood sugar levels in patients with Type II diabetes. — Mike Tarsala
White House signals suport for biosimilars (NVS, AZN, AMGN, DNA, GENZ, GILD, CELG)
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.
Immuncor shares sink on FDA action (BLUD)
Immunocor Inc. (Nasdaq: BLUD) shares are down about 27% near $11.83 at the market’s open, after the company said the FDA plans to revoke the company’s biologics license with respect to its Reagent Red Blood Cells and Anti-E Blood Grouping Reagent product.
The company has 10 working days to respond to the FDA’s administrative action and 30 days to submit a remediation plan.
The FDA has not ordered the recall of any of the Immunocor’s products.
“We have been working diligently to improve our quality systems and processes… we are committed to completing this Project as quickly as possible,” the company said in a statement.
Immunocor in a statement says it continues to work on quality process improvements, and expects to spend between $4 million and 4.5 million on them this fiscal year. — Mike Tarsala
Feds seize drugs from Caraco Labs plants (CPD)
Few words terrify are more terrifying to drug company investors than, “federal seizure”.
Caraco Pharma Labs (AMEX: CPD) shares have been cut roughly in half on a late-session volume spike after U.S. Marshals, at the request of the FDA, seized drug products at several of its Michigan plants.
The FDA accuses Caraco for failing to meet manufacturing safety standards for generic heart, pain and psychiatric medications.
The company in January started voluntary recalls of drug products to protect the public from potentially defective medications. The company pulled from the market oversized tablets and possible formulation errors.
“The FDA is committed to taking enforcement action against firms that do not manufacture drugs in accordance with our good manufacturing practice requirements,” said Janet Woodcock, M.D., director of the FDA’s Center for Drug Evaluation and Research.
The FDA has determined that the seizure of Caraco’s drugs may create a shortage of one pain relief pill called choline magnesium trisalicylate.
Near the close of trade at 3:50 p.m. Eastern, the stock was down $1.79 to $2.39 a share, on more than 1.5 times normal volume. — Mike Tarsala.
The top catalysts pushing many biotech stocks to new highs (BVF, RDY, VRX, MDRX, ISTA, BIOS, NOVN, WPI, CELG, GILD, CEPH, BIIB, AMGN, PFE, MRK, LLY, AZN)
Big recent gainers including Biovail Corp. (NYSE: BVF), Dr. Reddy’s Laboratories Ltd. (NYSE: RDY) and Valeant Pharmaceuticals International (NYSE: VRX) are among the biotech names pushing to fresh highs.
But can the broad group continue to push higher in the face of new proposed legislation that threatens to choke profits for managed care providers and many other groups within healthcare?
The list of biotech stocks pushing to their highest levels since at least the same time a year earlier is impressive It includes Allscripts -Misys Healthcare Solution (Nasdaq: MDRX), ArQule Inc (Nasdaq: ARQL) BioScrip Inc. (Nasdaq: BIOS), Ista Pharmaceuticals Inc. (Nasdaq: ISTA), Noven Pharmaceuticals Inc. (Nasdaq: NOVN), and Watson Pharmaceuticals Inc. (NYSE: WPI).
With the exception of select financials that benefit from easy year-ago comparisons, biotech is the fastest-growing industry group. Projected earnings among profitable companies such as Celgene Corp (Nasdaq: CELG), Gilead Sciences Inc. (Nasdaq: GILD), Cephalon Inc. (Nasdaq: CEPH), Biogen Idec Inc. (Nasdaq: BIIB), Genzyme Corp (Nasdaq: GENZ) and Amgen Inc. (Nasdaq: AMGN) in aggregate are expected to rise about 10% in the next 12 months.
Many traders are looking at money-losing, high-beta biotechs, as well, that may show potential to become profitable in the coming years. Now that risk measures including the VIX and T/ED spreads have come down drastically from last year’s peaks, many are hoping to catch the next Genzyme or Celgene early.
Are traders simply paying too much?
Not necessarily. A relative comparison of biotech to other industry groups shows that despite a strong run the group still stacks up favorably based on relative valuation and growth rates. Traders are now paying a multiple of about 13.5x forward earnings for profitable biotechs, which is in line with the multiple of the S&P 500 as a whole.
The difference is that S&P 500 earnings are projected to increase only about 6% over the next 12 months, and many traders are seeking faster growth.
Catalysts for the biotech industry include potential legislation that may make it easier for companies to produce generic drugs based on live cells, called biosimilars. Part of the Obama Administration’s agenda is to promote biosimilars to bring down drug prices. That may open up a large potential market for existing generic companies, as well as companies like AstraZeneca (NYSE: AZN).
Read related story on biosimilars.
And, the ever-increasing pressure for large drug companies like Pfizer Inc. (NYSE: PFE), Merck & Co. (MRK) and Eli Lilly & Co. (NYSE: LLY) to fill their pipelines with the next big blockbuster drug opens the door to potential acquisitions, especially given improvements in market liquidity levels. – Mike Tarsala
Genzyme takes steps to get back on track after plant delay (GENZ)
Genzyme Corp. (Nasdaq: GENZ) shares are at session highs and have seen their most active trade of the day in the past 20 minutes as of about noon Eastern after the company said it’s making progress toward restoring production at its Allston Landing manufacturing facility.
At an conference yesterday, the company said the entire Allston Landing plant had to be shut down and sanitized to remove a viral contaminant. At the time, the company said the plant would be back up and running by the end of July, although management expected a 6-to 8-week sales hiccup for Cerezyme, an enzyme deficiency treatment that makes up about a quarter of the company’s revenue.
Genzyme said this morning that it has begun shipping product from finished lots of Cerezyme held in inventory, after testing detected no evidence of a virus.
“We are confident that the Allston plant will be back online later next month, that we will be able to minimize the impact of constrained supply, and that the measures we are implementing will prevent this issue from occurring again,” the company said in a statement. — Mike Tarsala
Score one for biosimilars after Novartis breaks into Japan (NVS, AZN, DNA, AMGN, GENZ, GILD, CELG)
Novartis AG (NYSE: NVS) shares will be among the health care names to watch Thursday after Japan approved one of the company’s human growth hormones, the first approval in Japan of a generic biotech drug.
Japan regulators approved the Novartis generic of Somatropin to treat growth hormone deficiency in children and growth disturbance associated with Turner’s syndrome. It’s most similar to Pfizer Inc’s (NYSE: PFE) brand-name drug Genotropin.
The announcement is a score for high-end generic drug companies that are seeking to expand the reach of biosimilars, or generic biotech drugs. The drugs made from living cells are more expensive to duplicate than traditional medicines designed from chemical compounds.
Few companies are capable of making biosimilars today, and Novartis is one of the few. Another is AstraZeneca plc (NYSE: AZN), which recently began targeting the market.
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.
But federal legislation was proposed back in March that seeks to define the length of time brand-name biotech drugs would have market exclusivity. Shortening that timeframe and promoting biosimilars is part of President Obama’s health care strategy.
. — Mike Tarsala.
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