-Anybody else surprised that Iressa racked up nearly a quarter billion in revenue? I thought AZ was just maintaining Iressa in the hopes that biomarker/personalized medicine research would fully characterize responders with significant sales to come only after conclusive studies, but Iressa is still achieving good levels of revenue.
-it's early, but it doesn't look like Vectibix negatively affected Erbitux.
-For an eight year old drug, Herceptin's nearly half-billion dollar revenue gain is very impressive. (Uh, actually, a half-billion dollar revenue gain is great for anyone, anytime.)
-Earning honors as "First KD to drop off the list," Macugen probably will come very close to zeroing out in 2007, as OSI is exiting the business, as detailed today....
-.....because of Lucentis, which had an amazing introduction in 2006.
Thursday, February 22, 2007
Wednesday, February 21, 2007
Wanna scare a CEO?
Just say these 7 scary words: "Mr. Icahn is holding on line 2"
To a CEO, there's probably few things messages more dreaded than a call from Carl Icahn. (With the possible exception of the classic "I saw your daughter on Springer last night.")
King Carl apparently has developed a taste for biotech, following his experience with ImClone.
This month's lucky recipient of a call from Icahn is David Mott, CEO of Medimmune. Congrats, Dave!
I don't know Medimmune's story well enough to comment on what Icahn's interest in MEDI means and what actions might follow, but it's a good opportunity to see what this means for the industry.
One view might be that Icahn's involvement is likely to hurt the biotech industry as his activities might scuttle 2 viable biotech companies (IMCL and MEDI), either thru their outright sale, or by sacrificing R&D in order to increase short term earnings.
I tend to think, though, that Icahn's involvement is very positive, at least for the industry, if not for IMCL or MEDI. Here's 10 reasons why:
1. Interest by corporate raiders validates the biotech industry as viable businesses, rather than a collection of high-risk experiments.
2. Raider interest will attract other sources (non-alternative investments) of capital sends the message that biotech may be volatile, but not necessarily risky. (As opposed to the current notion that biotech is risky, but not necessarily volatile.)
3. Corporate raiders will keep biotech more slim and agile versus big pharma. (Though I've heard rumblings that some hedge fund could take down a pharma one of these days, so maybe this edge won't hold for long.)
4. Raiders force target companies to focus on "what's next," rather than complacently focusing on the sales and marketing of existing products.
5. Raiding will bring about needed consolidation among mid-sized biotechs, as the raiders view the overhead for companies at this size as a bad investment.
6. Raiders will increase the amount of business discipline within the industry. (And likely instigate management turnover, which could also be management evolution.)
7. Raiders will increase attention on the biotech industry.
8. Biotech has (and probably will always be) a game of capital raising. Raiders will bring more capital to the biotech industry, though the capital will tend to be higher-velocity.
9. Attention to financial returns by biotechs will increase among industry folks, as raider interest is in part related to the very high margins earned by biotechs. The high margins decrease risk for raiders, and can generate large amounts of incremental cash to justify raider transactions, if the margins are believed to be improvable.
10. Raiders (and other private equity types) may innovate new vehicles to finance biotech. One of these 'innovations' is quite old, but new to the biotech industry: dividends. (Icahn, in particular, often presses target boards to increase their dividend to drive stock prices.)
One other wildcard thought: there could be other angles to Icahn's involvement. What if Icahn were to instigate the combination of IMCL and MEDI (and perhaps others)? Ignoring the specific stories of IMCL and MEDI, there could be a nice cash flow generated from combining any mid-sized biotechs, with the surviving entity succeeding much like BiogenIdec. Hmmmm.
Note: these comments come from an N=2, but I tend to think that Icahn's pursuit of biotechs is representative of what's to come for the industry.
To a CEO, there's probably few things messages more dreaded than a call from Carl Icahn. (With the possible exception of the classic "I saw your daughter on Springer last night.")
King Carl apparently has developed a taste for biotech, following his experience with ImClone.
This month's lucky recipient of a call from Icahn is David Mott, CEO of Medimmune. Congrats, Dave!
I don't know Medimmune's story well enough to comment on what Icahn's interest in MEDI means and what actions might follow, but it's a good opportunity to see what this means for the industry.
One view might be that Icahn's involvement is likely to hurt the biotech industry as his activities might scuttle 2 viable biotech companies (IMCL and MEDI), either thru their outright sale, or by sacrificing R&D in order to increase short term earnings.
I tend to think, though, that Icahn's involvement is very positive, at least for the industry, if not for IMCL or MEDI. Here's 10 reasons why:
1. Interest by corporate raiders validates the biotech industry as viable businesses, rather than a collection of high-risk experiments.
2. Raider interest will attract other sources (non-alternative investments) of capital sends the message that biotech may be volatile, but not necessarily risky. (As opposed to the current notion that biotech is risky, but not necessarily volatile.)
3. Corporate raiders will keep biotech more slim and agile versus big pharma. (Though I've heard rumblings that some hedge fund could take down a pharma one of these days, so maybe this edge won't hold for long.)
4. Raiders force target companies to focus on "what's next," rather than complacently focusing on the sales and marketing of existing products.
5. Raiding will bring about needed consolidation among mid-sized biotechs, as the raiders view the overhead for companies at this size as a bad investment.
6. Raiders will increase the amount of business discipline within the industry. (And likely instigate management turnover, which could also be management evolution.)
7. Raiders will increase attention on the biotech industry.
8. Biotech has (and probably will always be) a game of capital raising. Raiders will bring more capital to the biotech industry, though the capital will tend to be higher-velocity.
9. Attention to financial returns by biotechs will increase among industry folks, as raider interest is in part related to the very high margins earned by biotechs. The high margins decrease risk for raiders, and can generate large amounts of incremental cash to justify raider transactions, if the margins are believed to be improvable.
10. Raiders (and other private equity types) may innovate new vehicles to finance biotech. One of these 'innovations' is quite old, but new to the biotech industry: dividends. (Icahn, in particular, often presses target boards to increase their dividend to drive stock prices.)
One other wildcard thought: there could be other angles to Icahn's involvement. What if Icahn were to instigate the combination of IMCL and MEDI (and perhaps others)? Ignoring the specific stories of IMCL and MEDI, there could be a nice cash flow generated from combining any mid-sized biotechs, with the surviving entity succeeding much like BiogenIdec. Hmmmm.
Note: these comments come from an N=2, but I tend to think that Icahn's pursuit of biotechs is representative of what's to come for the industry.
2006 kinase drug performance
With the release of OSI's 4Q and year-end financial statements, the sales results for all 12 kinase-targeting drugs are finally available for the year 2006.
And what a year it was.
Kinase-modulating therapies (KDs, or kinase drugs) generated $8.5B in revenue in 2006, with 53% growth over 2005. Both figures are especially impressive given the fact that five of the drugs have been on the market only since December, 2005, with ex-US approvals for these and others still growing.
A subset of these drugs with anti-angiogenesis effects totaled $4.6B, with 80% year over year growth. Drugs specifically targeting VEGF as cancer therapies totaled $2.1B, representing an 88% growth rate.
A quick glance at the 4th quarter indicates $2.5B in KD sales, equating to an annualized $10B. Assuming a simple organic growth rate of 20%, we're looking at $12B in sales, prior to expanded approvals and new product introductions.
New KD introductions could include, at a minimum, Tykerb (GSK), Torisel (WYE), Arxxant (Lilly), and potentially Tasignia (NVS). (Tykerb and Tasignia could cannibalize some existing sales.)
All told, we might see KDs contributing nearing $15B in annual sales in '07, with greater growth still to come.
Thursday, February 15, 2007
Interesting reads
PWC: 7 health care trends for 2007.
"Forty-two blockbuster drugs will lose their patents in 2007." - Wow, I didn't realize it was that many.
Biotech industry thoughts from Gary Pisano as he plugs his very excellent new book.
Science Business: What Happened to Biotech?
Speaking about the fundamental business flaws of the biotech industry: "biotech suffered from a basic mismatch between the objectives and requirements of science and those of business. Specifically, Pisano argues, the business side of the industry was continually challenged by three characteristics of science: profound and persistent uncertainty, the complex and heterogeneous nature of the scientific knowledge base, and the rapid pace of scientific progress. "The health of the sector depends on how well it can cope with all three of these challenges," writes Pisano."
Making Biotech Work as a Business:
"R&D lead times—the time from clinical development to trials—increased from slightly less than thirty months in 1989 to around seventy months in 2002."
Update: Milkshake chips in his related thoughts here.
"Forty-two blockbuster drugs will lose their patents in 2007." - Wow, I didn't realize it was that many.
Biotech industry thoughts from Gary Pisano as he plugs his very excellent new book.
Science Business: What Happened to Biotech?
Speaking about the fundamental business flaws of the biotech industry: "biotech suffered from a basic mismatch between the objectives and requirements of science and those of business. Specifically, Pisano argues, the business side of the industry was continually challenged by three characteristics of science: profound and persistent uncertainty, the complex and heterogeneous nature of the scientific knowledge base, and the rapid pace of scientific progress. "The health of the sector depends on how well it can cope with all three of these challenges," writes Pisano."
Making Biotech Work as a Business:
"R&D lead times—the time from clinical development to trials—increased from slightly less than thirty months in 1989 to around seventy months in 2002."
Update: Milkshake chips in his related thoughts here.
Wednesday, February 14, 2007
How do you make $210M in 3 years?
Easy, if you're Invitrogen: start with $500M and buy a drug discovery services company (BioReliance).
Guh!
Based on public info, IVGN bought BREL for about 6X sales, and sold them 3 years later for 1.9X sales.
This news makes it onto this blog 'cuz:
1) IVGN, thru the former Panvera is the second best provider of kinase specificity testing,
2) the GM of BioReliance is an Upstate alum. (Good luck, Ted.)
3) This allows me to yet again tweak my friends at IVGN, Sue and Chris. Sue, still using that snorkel I sent you to find your IVGN stock options?
Guh!
Based on public info, IVGN bought BREL for about 6X sales, and sold them 3 years later for 1.9X sales.
This news makes it onto this blog 'cuz:
1) IVGN, thru the former Panvera is the second best provider of kinase specificity testing,
2) the GM of BioReliance is an Upstate alum. (Good luck, Ted.)
3) This allows me to yet again tweak my friends at IVGN, Sue and Chris. Sue, still using that snorkel I sent you to find your IVGN stock options?
Monday, February 12, 2007
Nexavar vs. liver cancer: the winner is......
Frankly, me, and every other ONXX shareholder, as data strong enough to stop the trial has boosted ONXX by 95% so far today.
Read the linked article for something to ponder, though. ONXX partner Bayer projects PEAK Nexavar sales at ~$650M even WITH a liver cancer (5th most common cancer) approval, even with ~$130M in sales in the less than a year that Nexavar has been on the market. (And selling at a current annual run rate in excess of $150M.)
Is this yet another example of underestimating the market potential of targeted drugs? (Remember how Daniel Vasella said at introduction that NVS expects Gleevec sales of a few hundred million dollars a year? (vs. $2.6B in 2006.))
Read the linked article for something to ponder, though. ONXX partner Bayer projects PEAK Nexavar sales at ~$650M even WITH a liver cancer (5th most common cancer) approval, even with ~$130M in sales in the less than a year that Nexavar has been on the market. (And selling at a current annual run rate in excess of $150M.)
Is this yet another example of underestimating the market potential of targeted drugs? (Remember how Daniel Vasella said at introduction that NVS expects Gleevec sales of a few hundred million dollars a year? (vs. $2.6B in 2006.))
Thursday, February 08, 2007
Pre-IND= ~$750,000
SGX announced that they've selected a Met inhibitor for pre-clinical development - SGX-523, which apparently is worth $750k, as SGX stock rose $.05 on the news.
SGX - with ~$37M in cash on hand, is valued at ~$61M (incl. cash), valuing their entire platform and pipeline (the Met program and a pre-clinical bcr-abl program) at $24M. Sadly, this values a pre-clinical lead at around $10M.
This makes SGX either a zombie, or prone for a big upward explosion sooner or later, as it wouldn't be hard to imagine SGX being scooped up by a bigger fish, given interesting data. Strictly speaking, SGX intends to file 2 INDs in the next 12 months, each worth ~$100M each (= a gain of $180M above the value already built), meaning that if SGX delivers and the industry norms hold, SGX stock would quadruple (though some cash and value would be burned over period leading up to the filings.)
Of course, this all depends on the math holding, and there's a significant downside, as with any drug development.
But the SGX story is more interesting than that - SGX has a service business (contract structural genomic analysis) where SGX resells access to their beamline facility. In the first 9 months of '06, SGX earned $13M in service revenue.
The same 9 month income statement shows a loss of $23M on that $13M revenue, but a large part of the loss is due to spending on a now canceled late stage clinical program. A naive guess says that of SGX's $35M in R&D YTD, $25M or more related to the canceled program, meaning that SGX COULD be at least breakeven on an ongoing basis, which is a good thing, since I don't think they're going to raise any cash soon.
SGX - with ~$37M in cash on hand, is valued at ~$61M (incl. cash), valuing their entire platform and pipeline (the Met program and a pre-clinical bcr-abl program) at $24M. Sadly, this values a pre-clinical lead at around $10M.
This makes SGX either a zombie, or prone for a big upward explosion sooner or later, as it wouldn't be hard to imagine SGX being scooped up by a bigger fish, given interesting data. Strictly speaking, SGX intends to file 2 INDs in the next 12 months, each worth ~$100M each (= a gain of $180M above the value already built), meaning that if SGX delivers and the industry norms hold, SGX stock would quadruple (though some cash and value would be burned over period leading up to the filings.)
Of course, this all depends on the math holding, and there's a significant downside, as with any drug development.
But the SGX story is more interesting than that - SGX has a service business (contract structural genomic analysis) where SGX resells access to their beamline facility. In the first 9 months of '06, SGX earned $13M in service revenue.
The same 9 month income statement shows a loss of $23M on that $13M revenue, but a large part of the loss is due to spending on a now canceled late stage clinical program. A naive guess says that of SGX's $35M in R&D YTD, $25M or more related to the canceled program, meaning that SGX COULD be at least breakeven on an ongoing basis, which is a good thing, since I don't think they're going to raise any cash soon.
Saturday, February 03, 2007
Miscellany
Forbes, with an assist from In the Pipeline thinks BMS and Sanofi shouldn't pair up. I'm really surprised that more people haven't looked at the historical performance of pharma M & A - it's overwhelmingly not pretty.
Somewhat related, Forbes comments on IMCL - "Nowhere to go but up." Gotta think that IMCL's future hinges on what happens with BMS. Another point: this article reflects thinking that IMCL's valuation is solely based on financial performance, meaning no one really is putting any value on the pipeline.
Research and Markets says Discovery to IND takes 6.5 years and 40% of the total R & D budget for a program. Gotta think these numbers reflect the requirement to discovery a target, as well as a compound.
Somewhat related, Forbes comments on IMCL - "Nowhere to go but up." Gotta think that IMCL's future hinges on what happens with BMS. Another point: this article reflects thinking that IMCL's valuation is solely based on financial performance, meaning no one really is putting any value on the pipeline.
Research and Markets says Discovery to IND takes 6.5 years and 40% of the total R & D budget for a program. Gotta think these numbers reflect the requirement to discovery a target, as well as a compound.
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