Drug Eluting Stents Vs. Bare Metals Stents Win Again
A new study funded by the Massachusetts Department of Public Health is showing further evidence to support the use of drug eluting stents over bare metal stents in heart attack patients. This study measured stent use specifically in diabetic patients. Drug-eluting stents showed improved outcomes as compared with bare metal stents in diabetics, and no excess adverse events were found with drug-eluting stents in diabetic patients. This data was reported by researchers at the American Heart Association’s Scientific Sessions 2008 in New Orleans. Some of the raw numbers appear marginal, but others are very impressive.
Drug-eluting stents reduced the risk of revascularization, heart attack and death in diabetics as compared with bare-metal stents in the largest observational comparison. The results were presented as a late-breaking clinical trial and is simultaneously published in circulation in the Journal of the American Heart Association.
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BioHealth Morning Daily, Wednesday, October 1, 2008
Cepheid Inc. (NASDAQ: CPHD) received FDA clearance for the first on-demand diagnostic test for life threatening MRSA and staphylococcus aureus from patient positive blood cultures. No shares have traded yet.
Emergent Biosolutions, Inc. (NYSE: EBS) announced that the U.S. government will purchase an additional 14.5 million doses of BioThrax as part of the anthrax shield under a new contract valued at up to $404 million. Its market cap is $390 million and its 2007 revenues were $182.9 million in total.
Johnson & Johnson (NYSE: JNJ) won a rather large judgment after a U.S. District Court in Delaware entered a final judgment including accrued interest, which comes to approximately $1.2 billion in favor of J&J’s Cordis unit. It won this against Medtronic (MDT) and Boston Scientific (BSX) in cases involving the original balloon expandable stent patent.
Universal Health (NYSE: UHS) is among some hospital downgrades by UBS this morning. It seems that the hospital sector is not immune from a rapidly weakening economy. Its rating was cut to Neutral from Buy. FULL HOSPITAL DOWNGRADE LIST.
Jon Ogg
October 1, 2008
SurModics: Investors Looking Under The Hood (SRDX, MRK, JNJ)
SurModics Inc. (NASDAQ: SRDX) is seeing a sharp drop after recent news. Its partner Merck & Co. (NYSE: MRK) is still under an agreement with the SurModics in Phase IIb I-vation trials, but Merck has suspended enrollment in the study as it is studies the design. This follows a recently published study comparing laser treatment and intravitreal injections of triamcinolone acetonide in patients with diabetic macular edema. The one downgrade we have seen today is from Barrington Research.
SurModics also makes the coatings for the Johnson & Johnson (NYSE: JNJ) Cypher dreg-eluting stents. As drug-eluting stents went through a two-year controversy, that part of SurModics’ business has not grown as much as some were hoping. This company still has many applications not yet on the market, so neither situation takes the “call option” out of this company as far as evaluating its potential worth which you can see on its applicable uses on its site.
The company now has a market cap of $710 million and its most recent tangible book value after backing out goodwill and other intangibles was about $108 million. The 52-week trading range is $38.17 to $56.75, and shares this morning went as low as $38.51.
This company is actually lucky that it has only traded 360,000 shares as of 12:55 PM EST, as that is still well over double an average day but is not indicative of institutional holders throwing in the towel all over again.
Jon C. Ogg
August 11, 2008
Trader Take: J&J (JNJ)
There has been some interesting pricing action of late in DJIA component Johnson & Johnson (NYSE: JNJ) as shares are right at 52-week highs after getting above a 4-year trading band. A trader we speak with frequently has keyed in on this to show where he thinks this can rise to or where it could settle in if gains aren’t sustained.
Today’s analysis is brought by Alan J. Brochstein, CFA, of AB Analytical Services which provides research and consulting to institutional investment managers and also provides services to individual investors through www.InvestByModel.com. Here’s Alan’s take below:
Johnson & Johnson (JNJ), the $194 billion market cap Healthcare giant, moved to the top of its almost 4 year trading range, setting a new 52-week high of $69.25 on Thursday and closing above 69 on Friday.
The stock has improved slightly since year-end and about 13% over the past year, in both cases substantially outperforming the market (see the relative performance in the graph above – the black line). The company also pays a dividend and yields 2.7%, which is a bit better than that of the S&P 500. As the bottom panel shows, the growth in the stock price has been due almost entirely to earnings growth, as the PE multiple has remained below 15. The chart below highlights the PE over the past decade:
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The current PE of 14.9 is about as low as it has been in the past decade (actually since 1994). Note that the stock price has been consolidating as earnings (the green line) have continued to grow. The pattern of higher lows and a constant resistance level (ascending continuation triangle) usually yields a breakout, so keep your eye on JNJ here. I don’t personally own it, but I did recently include it in my Conservative Growth/Balanced Model Portfolio that I launched in Mid-July. Besides the low valuation and the nice chart pattern, investors can take encouragement from the 35+ year history of raising dividends, the very strong balance sheet (net debt of just $300mm) and a strong business model. Many investors fail to appreciate how “unPharma” the company actually is: JNJ earns less than ½ its profits from drugs. While it is the largest segment, the medical devices segment contributes almost as much, while the Consumer Products segment kicks in about 10%. JNJ is extremely balanced. In fact, its two largest drugs account for less than 11% of sales. The company is not plagued as much as its peers by patent expiration issues.
How high can JNJ go? I believe that the company can attain a 17 PE over the next year, which would yield a price of 83 and return about 23% including dividends. Not bad for a company that dates back to the 19th century! I think that if the stock fails to break out of the range, it could test 63, perhaps 59 in a really bad market. Something tells me, though, that this is a classic consolidation of a very long-term up-trend that should yield continued gains for investors.
Alan J. Brochstein
July 27, 2008
TRADER DISCLOSURE: NO DIRECT POSITION CURRENTLY
Promising Psoriasis News at FDA, with Severe Risks
A U.S. FDA panel voted on Tuesday to recommend the FDA approval for a proposed Johnson & Johnson (NASDAQ: JNJ) drug called ustekinumab proposed to treat severe-to-moderate psoriasis. This might be good news but it is not without risks and we don’t just mean to the patients taking the drug.
While this is positive, it is far from a slam dunk. The FDA panel expressed concerns about the drug’s increased cancer risk. It also wants the longer-term data and there sounds like there is much caution out of this panel despite the nod. As a reminder, the FDA does not always vote in favor of a drug approval just because the preliminary FDA Panel recommended a drug for approval.
Psoriasis is a skin disease with dry and cracked skin with red patches that counts more than seven million Americans alone as the current patient group. It can range from mild to debilitating depending on the cases. There is still no cure for psoriasis and most treatments on the market today are mildly effective so far. For the risks of this drug being increased risks of cancer, they are going to have to only offer this up for the severe cases in patients who are willing to take the risks.
The company that can come up with an effective treatment that has few side effects has a mega-blockbuster on its hands. Unfortunately, that is a big hurdle right now.
Jon Ogg
June 17, 2008
Solid Developments for Rheumatoid Arthritis (ABT, ARRY, LLY, INCY, JNJ, SGP, RHHBY)
If you have followed the news on arthritis and rheumatoid arthritis (”RA”) for very long, this was a good week for the possible treatments of the disease. The annual congress of the European League Against Rheumatism in Paris, France took place and this was the venue for many study announcements. This is only a snippet of the data and a snippet of the companies presenting, but some of the companies were Abbott Laboratories, Array, Eli Lilly, Incyte, J&J, Schering-Plough, and Roche. This is a very debilitating condition that affects millions in the US and globally as our populations are all aging.
Abbott Laboratories (NYSE: ABT) announced that its long-term data from a study of 1,469 patients showed its drug Humira, in combination with a common treatment used to treat a type of arthritis pain, led to remission of the disease for up to seven years. After six months of therapy, patients’ symptoms improved, with additional improvements seen after two or more years.
Array BioPharma Inc. (NASDAQ: ARRY) reported on some additional positive results of its Phase I clinical trial of ARRY-162, its novel small molecule MEK inhibitor; and it reported positive results from a Phase I trial of ARRY-797, its modulator of inflammatory mediators in blood. The four-week study of ARRY-162 in patients with stable RA receiving continued doses, showed that ARRY-162 was well tolerated and with no patients that discontinued the study due to an adverse event. Its activity was predictable with no drug/drug interactions with ARRY-162 and methotrexate. ARRY-162 suppressed production of IL-1, IL-6 and TNF, suggesting that this treatment has the potential to reduce inflammation mediated by these cytokines in patients with RA.
Eli Lilly & Co. (NYSE: LLY) presented new data that suggests patients with osteoarthritis pain of the knee treated with 60 mg and 120 mg Cymbalta once daily experienced significant pain reduction. Patients taking duloxetine reported significant pain improvement compared to placebo within the first week of treatment that lasted throughout the 13-week trial. The results from a study of 231 patients were presented at the annual congress of the European League Against Rheumatism in Paris, France.
Incyte Corporation (NASDAQ: INCY) showed clinical results from a 28-day Phase IIa trial of INCB18424, its janus-associated kinase inhibitor, in patients with RA. Results from the first of four treatment groups demonstrated that the 15 mg twice-daily dose of INCB18424 was well tolerated and provided ACR20/50/70/90 response rates of 75%/50%/25%/17%, respectively, with responses seen as early as 1 week. These results suggest that INCB18424 has the potential to be more effective than currently available RA therapies.
J&J’s (NYSE: JNJ) Centocor and Schering-Plough Corporation (NYSE: SGP) showed data in their Phase III human anti-TNF-alpha monoclonal antibody study for an anti-TNF-alpha biologic therapy. Findings from two new Phase III studies showed that patients receiving every four-week injections of golimumab 50 mg and 100 mg and weekly methotrexate experienced significant improvements in the signs and symptoms of RA as well as in physical function and disease activity, with some patients achieving remission as measured by Disease Activity Score.
Roche Holding AG (OTC: RHHBY) said that it expects to increase sales of MabThera in 2008 compared to 2007 in the rheumatoid arthritis indication at the European League Against Rheumatism congress in Paris. Roche also noted that about 30% percent of rheumatoid arthritis patients who failed prior attempts to respond adequately to anti-TNF therapy saw some remission from the disease with Actemra. Rituximab results provide continued inhibition of structural damage after 2 years in patients with rheumatoid arthritis who had an inadequate response to tumor necrosis factor inhibition
And the best news is potentially for boozers. Scandinavian researchers conducted two studies, involving 2,750 people who drink alcohol regularly showing that it may reduce the risk of developing rheumatoid arthritis by up to 50%. This assessed environmental and genetic risk factors for rheumatoid arthritis; and 1,650 participants had the disease, and were questioned about their smoking and drinking habits. By the way, blowing out your liver isn’t a good substitute.
Jon Ogg
June 13, 2008