ARIAD (ARIA) Up 5% On Court Ruling
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)
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)
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)
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)
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)
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)
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)
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
Public Awareness Needed Before Vaccinating Girls with Merck's Gardasil
by Mark S. Senak
EyeOnFDA.com
Last week, Governor Rick Perry (R-Texas) decided on a bold move when he announced an Executive Order mandating the vaccination of girls with Merck’s (MRK) new anti-HPV vaccine Gardasil. By itself, this news would be interesting. A governor so interested in public health, that he or she bypasses all other regulatory and legislative channels with an Executive Order would be newsworthy. But in this case, there is controversy.
Here is the background. Gardasil was approved last year in June, 2006 by the FDA as the first vaccine to prevent cervical cancer in women by building immunity to human papillomavirus – the most common sexually transmitted infection in the United States. The vaccine is given to young girls because it is most effective if administered prior to any HPV infection. Planned Parenthood has advocated for widespread vaccination. According to the Washington Post coverage – “The most effective vaccination programs are either given to young children or are mandated for attending school,” said Jeffrey Waldman, senior director for clinical affairs for Planned Parenthood Federation of America. Rarely does one expect to find Planned Parenthood and a conservative Republican governor of a southern state in bed together.
But some people disagree with them. Their logic (or lack thereof, depending on your point of view) echoing back to the needle exchange/condom availability controversy in HIV/AIDS prevention, is based on the belief that the vaccine will encourage or condone sexual activity. But some of the outrage directed at the Governor, by such organizations as The John Birch Society are based on the fact that some perceive the move by the Governor not to be out of public health concern, but due to lobbying by the drug’s manufacturer, Merck. In fact, apparently one of Merck’s Texas lobbyists is in fact Governor Perry’s former chief of staff.
Coverage of this issue in the media or the blogosphere generally takes note of the fact that Merck is actively lobbying in other states for mandatory coverage. Without getting into the merits of requiring the vaccination, the sudden emergence of this situation in Texas points to the need for a delicate balance between direct lobbying and public affairs efforts. In this case, it is important that parents have a full understanding of the complexities of the problem between HPV and cervical cancer, along with rates of sexual activity among teens. In that way, they understand the problem so that when the solution presents itself, by whatever mode, it has a higher level of acceptance.
I’m not saying that Merck has failed to consider the balance between lobbying and public affairs in advocating for immunization. I have no insight into their public education efforts in Texas and have no other facts at hand. But judging by some of the coverage, it is possible to consider that the governor of Texas provided a solution to a problem before many were even aware of the problem. Educating the public after the fact is much harder. While public health advocates may cheer, if people perceive big pharma is pushing solutions on them before they want them through intensive lobbying efforts and campaign contributions, the value of the geniuine public health contribution being made by a drug like Gardasil can be easily overshadowed by resentment. That does neither Merck or the pharma industry any good. It is essential that public relations communicate before lobbying activates.
By the way, anyone interested in contacting Governor Perry about this decision can do so through this link.
(This article was published by BioHealth Investor with permission of Mark S. Senak, author of EyeOnFDA.com)
RELATED READING:
- The New FDA Drug Safety Initiative
- Merck Wants Out of Pfizer’s Shadow
- Merck Putting Vioxx Behind It
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