Genzyme faces more FDA scrutiny (GENZ)
Genzyme (Nasdaq: GENZ) shares are trading lower Friday afternoon after the company announced the FDA will re-inspect the company’s Allston Landing manufacturing facility.
The re-inspection is a follow-up to an inspection the agency undertook in May to verify that all corrective and preventative actions identified in a February warning letter have been implemented.
In its letter to Genzyme yesterday, the agency stated that all promised actions had not been either fully or adequately implemented at the time of the May inspection.
Genzyme will work with the FDA to schedule the re-inspection as soon as possible.
During the re-inspection, the FDA will also review Genzyme’s efforts to clean up a virus at the Allston plant.
In late June, Genzyme announced that 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 also noted in its release that the sanitation of Allston is complete and production of Fabrazyme and Cerezyme has resumed. — Mike Tarsala
Cash worries we raised about Ariad now look even worse (ARIA, MRK)
The cash situation we were worried about at Ariad Pharmaceuticals Inc. (Nasdaq: ARIA) looks even worse after its second-quarter earnings report.
Earlier this week, we raised concerns about the cash burn at Ariad that threatened to derail the optimism for early-stage candidates that were igniting a rally in the stock. We warned about the potential of a secondary stock offering, and how that might hurt the stock price.
Now, partner Merck & Co. (NYSE: MRK) does not want to proceed with a Phase III trial of Ariad’s lead candidate in combination with Herceptin in breast cancer patients. As a result, a $27 million milestone payment expected from Merck in the first half of 2010 likely will be delayed, making an already tight cash situation significantly tighter.
The company used up about $19 million in operating activities in the second quarter, more than the $11.7 million average it used in the previous five quarters. Now, the company has about $39.5 million in cash left.
Even at a conservative cash burn, it’s likely enough for only the next three quarters. A secondary offering or some type of cash-raising now appears much more likely.
The company is still moving ahead with its Phase III trial of its lead candidate ridaforolimus for the treatment of sarcoma. Data is expected in the first half of 2010. But now, it appears that Ariad will have to do something to raise cash ahead of that trial data.
Other than a secondary, the company could theoretically get funds if it were to start a partnership for its less-mature candidates such as the investigational compound that showed anti-cancer activity in drug-resistant blood cancer patients earlier this week. But that particular candidate is fairly early stage; prospective partners might want to see more data before jumping in.
Another possibility is that the company taps a credit facility from Merck that could help keep it going, although living on credit probably isn’t likely to inspire much Wall Street confidence. Also, that credit facility only applies to what they are developing in partnership, so it could not be used for other candidates or for general corporate purposes.
Then there’s always a secondary — something that would have been more appealing to the company a few days ago, when the stock was juiced. — Mike Tarsala
Fighting Swine Flu The Wal-Mart Way (WMT, AZN, GSK, NOVN, SNY)
You can just see the TV advertisements now… Wal-Mart and Uncle Sam are “rolling back” swine flu.
The retailer is in talks with federal officials about possibly putting vaccination sites in its stores this fall. It’s a smart idea that should boost Wal-Mart Stores Inc’s (NYSE: WMT) foot traffic, and give the federal government a fighting chance to reach aggressive its inoculation goals, especially in children.
The government has failed rather miserably in coaxing parents to get vaccinated against other illnesses. Only about 15 percent of kids get all their recommended shots, one of the main reasons why worries that there will not be enough swine flu vaccine to go around this fall likely are overblown.
It’s one of the reasons why companies not named AstraZeneca plc (NYSE: AZN), GlaxoSmithKline plc (NYSE: GSK), Novartis AG (Nasdaq: NOVN), Sanofi-Aventis SA (NYSE: SNY) and Australia’s CSL Ltd. might not see any business from providing swine flu vaccines this season.
About 140 million people shop at Wal-Mart each week. A deal with the retailer could certainly help the government reach its goal of getting about 159 million people the vaccination this fall, especially young children that CDC officials also want to see get a regular flu shot.
There’s been no talk of pricing yet, but count on Wal-Mart to make price a fixture of any outreach. Don’t be surprised if there are 2-for-1 specials for families, and special deals for kids that also get a regular flu shot. — Mike Tarsala
Roche passes test with Phase III Lucentis trial
Roche’s Genentech on Thursday said the approved macular degeneration drug Lucentis, which had revenue of $236 million in the most recent quarter, met its goal in a Phase III trial for patients with macular edema due to central retinal vein occlusion.
It may sound obscure. But basically, the drug was proven effective in safely improving the vision of patients that have macular edema, a common cause of blindness where the central part of the retina swells because of fluid build-up or leakage.
The drug is already approved to treat wet age-related macular degeneration, one of the most common causes of blindness.
Patients studied demonstrated statistically significant sight improvement at six months vs. placebo eye injections (yes, it’s delivered via a syringe to the eye).
Getting Lucentis eventually approved for the additional condition is somewhat expected, since the drug already is one of the most popular treatments for blindness. But it could be meaningful to the company’s earnings, especially since the company already has a dedicated sales force for eye diseases.
Macular edema may eventually become a $400 million a year market unto itself, hardly a blockbuster, but a meaningful revenue boost for Lucentis. The fact that the company can leverage its existing sales force means it also may be a very profitable one, too. – Mike Tarsala
Why there will be more than enough swine flu vaccine to go around (AZN, GSK, NOVN, SNY, NVAX, SVA, INO, HEB, CVM, BPAX)
With federal health officials now stepping up efforts to be sure there is enough swine flu vaccine in the U.S., opportunities may be slimmer than the Street expects for all but five companies taking the lead in delivering them.
Count on Congress to take swift action when problems hit close to home. This week, six Senate pages are sick with flu symptoms that could be H1N1, or swine flu. It just so happens that this is the week the government suggested 159 million Americans get vaccinated.
Five companies are busy ramping H1N1 vaccine production for the U.S. market, in hopes of making them available in October.
Those companies are AstraZeneca plc (NYSE: AZN), GlaxoSmithKline plc (NYSE: GSK), Novartis AG (Nasdaq: NOVN), Sanofi-Aventis SA (NYSE: SNY) and Australia’s CSL Ltd.
Many also-ran companies also are preparing vaccine candidates, in the event they are needed. Those companies include Novavax Inc. (Nasdaq: NVAX), Sinovac Biotech Ltd. (Amex: SVA), Inovio Biomedical Corp. (Amex: INO), Hemespherix Biopharma Inc. (Amex: HEB), Cel-Sci Corp. (Amex: CVM) and BioSante Pharmaceuticals Inc. (Nasd BPAX).
Despite the big ramp in swine flu vaccine production, shares of most also-ran swine flu vaccine makers have been running for months, partly in anticipation that they, too, will see top-line benefits from major Western governments buying product from them, perhaps as early as this flu season.
A look at the numbers suggests the swine flu revenue available to the also- rans may be slim.
Federal health officials this week said pregnant women, health care workers and children six months and older should be first to get vaccinated — a group that totals about 159 million people. Bullish traders long many of the also-rans note that there will not be enough to go around: Only 120 million doses of the vaccine will be made available by the five approved manufacturers by fall.
But that may be more than enough to cover everyone who wants one. Many Americans either do not have access to the vaccines, or are happy to go without them. The CDC would like 90 percent of seniors and 60 percent of high-risk adults to receive flu shots. But in 2006-2007, only 66 percent of seniors and 35 percent of targeted young adults ever received them, despite that year being an active flu season.
For those who think that adults will make sure their kids get the shot, the data suggest otherwise. Children may be the population that lags most when it comes to getting inoculations. According to the CDC, fewer than 15 percent of kids in the U.S. get all of their recommended vaccines. According to the most recent CDC data available, the most aggressive state when it comes to inoculations is Massachusetts, where more than a quarter of kids received all the shots they are supposed to have.
Access to vaccinations is only part of the problem. Among the wealthy, there are parents who are choosing not to give their kids their recommended shots, for fear of side effects. Plus, some parents believe their kids are safe, because all the other kids are getting their inoculations (which the data suggest is not the case).
True, the CDC will likely put out an all-out press blitz to get kids immunized against swine flu. But based on past efforts, an aggressive adoption rate may be 60 percent of the targeted population — or about 95 million.
Adoption among senators likely will be high. For everyone else who needs one and makes the effort to get one, there likely will be more than enough to go around — Mike Tarsala
Pandemic Flu and Swine Flu Study Launches Inovio (INO)
Inovio Biomedical Corporation (NYSE Amex: INO) is not just up big. It is up exponentially as traders are chasing the news reports this morning that its SynCon™ H1N1 influenza DNA vaccines achieved protection against current circulating swine origin influenza A/H1N1 viruses in animal studies. Inovio Biomedical is engaged in the design, development, and delivery of a new generation of DNA vaccines, focused on cancers and infectious diseases.
The company had previously reported some interim data from an ongoing study in a pig model where the SynCon™ based H1N1 vaccines achieved hemagglutination inhibition (HI) titers above the protection threshold in 100% of the vaccinated animals against the swine influenza virus.
Inovio investigators continued that study and tested the immune sera for responses against a virus isolated from the current circulating strain of swine origin influenza A/H1N1. All the animals immunized with the SynCon™ H1N1 vaccine developed HI titers exceeding the 1:40 level commonly associated with protective immunity.
Read more
The biotech-fueled rally could soon run out of gas (BBH, AMGN, GILD, BIIB, ACOR, VPHM, CYTK, LIFE, REGN)
Biotechnology stocks that have fueled the rally in U.S. stocks since March are showing several warning signs that the rally could tucker out soon.
In the past 90 days, the roughly 120 small and mid-cap biotech stocks that we track at BioHealthInvestor.com have risen 46.7 percent in aggregate, vs. 19.4 percent for about 2,600 similarly-sized U.S. stocks. With the exception of auto component stocks that have rallied more than 50 percent, no other group has seen larger share gains than the small-and-mid-cap biotechs.
Could the rally be coming to an end? There’s reason to believe that could happen, judging partly by the BBH. The most closely watched biotech trading instrument is the Biotech HOldrs (NYSE: BBH). Major components are Amgen Inc. (Nasdaq: AMGN), Gilead Sciences Inc. (Nasdaq: GILD) and Biogen Idec Inc. (Nasdaq: BIIB).
THE BBH has rallied in 10 of the past 12 sessions, and now is approaching resistance near last year’s index price high near 107; the index is now above 103.
An index approaching a minor resistance level is usually not a big deal. But there also is resistance just above the 110 level, dating to the 2005 high. The two resistance levels together are fairly close to a double-top — a formation that marks major resistance, and one that few indices are able to break through on their first try.
Major resistance is indeed surmountable in cases when a stock index has plenty of juice — namely catalysts like earnings, improving stock volumes, and oscillators that are not overheated.
None of that is true for the BBH. The major earnings reports are at least half-way done. Trading volumes for the BBH have been declining in recent weeks as it continues to rally. And the oscillators are very overheated, judging from both the relative strength index (RSI) and stochastics.
The market itself appears due for a breather. The S&P has not declined more than a whole point in a single trading session since July 7 — effectively marking a 15-day rally. And the McClellan Oscillator is at 220, when a reading of 150 or more is generally a sign of overheated conditions.
Institutional shareholders have purposely gravitated toward some of the riskiest stock assets over the past three months, as seen by our past analysis of balance sheet quality of the S&P 500. The worse the Z-score, or balance sheet quality, the more a stock has rallied ever since March. And with many small-cap biotechs being kept alive by milestone payments.
If the market becomes more risk-averse soon, it’s the smaller biotechs that may pay the heaviest price, simply because they benefited most from the risk-taking in the rally off the March lows.
Following are particular smaller and mid-size biotech stocks with very bullish analyst sentiment that are showing some potentially bearish signs:
Acorda Therapeutics Inc. (Nasdaq: ACOR) still has a bullish chart, but it is approaching resistance near $28, and may not have much gas left, based on a very high slow stochastic reading.
ViroPharma Inc. (Nasdaq: VPHM), has big resistance near $7.25, and is now seeing RSI and stochastics oscillators turn lower at extremes.
Cytokinetics Inc. (Nasdaq: CYTK) has marked long-wicked candles in several recent sessions. The oscillators are yet not at extremes. MACD has turned positive, which is one potentially bullish sign. But it has not broken out to new closing highs above $3.10, and it needs to do so soon, given that the sector and market rallies both are getting long in the tooth.
Life Technologies Corp. (Nasdaq: LIFE) shares are still in a strong uptrend since late 2008, and have doubled over that timeframe. But there is major resistance at last summer’s highs near $45 that looks to be all the more important amid falling stock volume and MACD.
Regeneron Pharmaceuticals Inc. (Nasdaq: REGN) is a hard stock to bet against, given the volumes that have come into the name over the past four trading sessions. Yet oscillators are at extremes, and the stock appears likely to pull back as it reaches resistance in the $23 to $25 area. — Mike Tarsala
Mylan quality control issue with FDA not necessarily over (MYL)
The FDA might not be done looking at reported quality control problems at Mylan Inc. (NYSE: MYL) after all.
Mylan came out Tuesday morning and said FDA investigators found no serious quality control violations at its Morgantown, West Virginia generic drug facility. But the FDA came out this afternoon denying the company’s statement.
“The investigation is ongoing and the agency has formed no conclusions at this time; Statements to the contrary are untrue,” the company told the Associated Press in a story that appeared at roughly 12:30 Eastern.
It remains to be seen if how deeply the FDA may look into reported quality issues at Mylan, the No. 3 U.S. drugmaker, and for how long.
The agency has taken a hard look in recent months at other generic manufacturers including India’s Ranbaxy Laboratories, in an investigation that helped that company’s stock price far lower. The FDA began putting pressure on Ranbaxy in September 2008, warning that it failed to meet U.S. manufacturing standards for 30 generic drugs at two of its plants. In February, the FDA accused the Ranbaxy of falsifying data and test results in approved and pending drug applications.
Mylan early today said in a statement that the FDA found only minor infractions of standard procedures at the plant, following an expose in the Pittsburgh Post Gazette on Sunday that appears to have launched the probe.
The Post Gazette story highlighted an internal report obtained by the newspaper that said workers were routinely overriding computer-generated warnings about potential problems with the medications produced at the plant, in violation of federal quality control procedures. The Post-Gazette cited an internal report that said the company found serious violations, involving falsifying information and altering product. The Post Gazette said the company report noted the practice was “pervasive.”
Mylan reportedly contacted the FDA over the weekend to notify the agency about the Post Gazette article, and the FDA visited the Morgantown facility on Monday.
While Mylan says that the plant visit resulted in the FDA finding only a minor deviation in standard operating procedures, the FDA is not backing up that company statement.
The truth could be somewhere in the middle: Perhaps an off-the-cuff remark by an inspector gave Mylan executives the impression that the FDA would not launch a major probe.
But based on the FDA’s apparent retort following Mylan’s statement, it appears that potentially miffed FDA inspectors are not through looking around — Mike Tarsala.
Amgen beats Q2 estimates, announces Glaxo partnership for denosumab (AMGN, NVS, GSK)
Amgen Inc. (Nasdaq: AMGN) shares are up about 3 percent to $62.66 after hours, on better-than-expected top and bottom-line result that helped to overshadow disappointing sales of its blockbuster Neulasta.
Next up for the company is an August FDA panel meeting to discuss its osteoporosis drug candidate denosumab. The candidate did so well in a head-to-head Phase III trial vs. the current standard drug, Novartis Inc.’s (NYSE: NVS) Zometa earlier this month that the Amgen’s drug may become the new standard for osteo patients with breast cancer.
“We are optimistic about our financial performance in 2009 and are focused on making denosumab a success,” said Kevin Sharer, chairman and chief executive officer.
Separately, Amgen announced it will collaborate with GlaxoSmithKline (NYSE: GSK) to commercialize denosumab in Europe, Australia, New Zealand and Mexico for postmenopausal osteoporosis.
Financial terms of the partnership include an initial payment and near-term commercial milestones to Amgen totaling $120 million, as well as ongoing royalties.
In Europe, Amgen and GlaxoSmithKline will share profits after accounting for expenses associated with the partnership.
In emerging markets, GlaxoSmithKline will be responsible for all commercialization expenses and purchase denosumab from Amgen to meet demand.
The strong trial results earlier this month appear to be raising hopes that Denosumab also will perform well in two upcoming Phase III trials. One is for solid tumor/multiple myeloma in which results could be available later this year. The other is a trial of prostate cancer patients in which the disease has spread to the bone.
Amgen posted earnings of $1.29 a share, or 13 cents better than analyst expectations. Revenue fell 1.4 percent vs. year-ago results to $3.71 billion, aove the $3.58 billion analyst consensus.
The company guided higher for fiscal 2009, and now sees per-share earnings in a range of $4.80 to $4.95 a share, above the $4.57 analyst consensus. It also sees revenue for the fiscal period trending toward the upper end of its previously provided guidance range of $14.4 billion to $14.8 billion, which is above consensus of $14.33 billion.
One of the only disappointments was with sales of Neulasta, which often is prescribed for chemotherapy patients to boost their white cell counts. Quarterly sales were $831 million, vs. $875 million analyst expectations.
Most of its other best-selling drugs, including Enbrel for rheumatoid artritis, came in with results above or near analyst estimates. — Mike Tarsala
Positive Ariad data may soon have Wall Street asking, what's next?
Ariad Pharmaceuticals Inc (Nasdaq: ARIA) shares are up more than 40 percent on on more than 10 times normal volume after it released positive Phase I trial results of an investigational compound that showed anti-cancer activity in drug-resistant blood cancer patients.
Now that the shares are up so strongly, the Street may soon be asking about the next catalyst for the stock.
The trouble is, there doesn’t appear to be one on the horizon for the rest of the calendar year. If there is one, it might be a possible secondary stock offering — something that may be all the more likely now that the shares are worth much more than they were a few hours ago.
Ariad is not in a severe cash crunch. But it has used an average of about $11.7 million a quarter over the past five quarters to fund operating activities. At the end of the first quarter, it had about $50 million in cash on hand, not counting $10 million it was expected to receive in the second quarter.
The trouble is that the company announced on its last earnings conference call that a $27 million milestone payment from partner Merck & Co. (NYSE: MRK) would be delayed until the second half of 2010. All told, the company appears to have enough to wait out its Merck milestone payment, but not very much more.
A secondary offering may help provide a cushion for development of its lead candidate.
The next big data catalyts for Ariad are not expected until 2010, when it begins to show additional data for its lead candidate, called ridaforolimus, a potent mTOR inhibitor for the treatment of solid tumors, including sarcomas.
The company is expected to release a second interim analysis in a Phase III trial in sarcoma patients in the first quarter of 2010. The interim analysis may or may not include clinical data. The company is expected to follow up with trial data later next year.
The Phase I trial Ariad announced today were promising. Of the 23 chronic myeloid leukemia (CML) patients studied, 19 of them in the four highest dosing groups, are still on the drug and are not seeing disease progression.
What is particularly attractive is that all patients were previously treated with other drugs for chronic myeloid leukemia.
With that out of the way, there now could be a data lull ahead. And with the stock more than doubling since March, the February highs near $2.86 may prove to be stubborn share resistance — Mike Tarsala.
Latest from 247Wallst.com- Latest from VSInvestor
- Exponential Volume Club (AKNS, BBI, FNM, FUQI, LSI, VIVO, PLCM, SNV, VHC, VLTR)
- Top Day Trader Alerts (ERIC, CIT, FUQI, GGP, PLCM, HOG, GE, ABK)
- Rumors Drive Volume (GGP, SPG, HOG)
- Stock/Option Explosion: The GE Breakout on 52-Week Highs (GE)
- Top Day Trader Alerts (ICGN, SQNM, MPEL, ATHN, BSX, MCHP, GE)
