Biotech Notebook: Pipex, Gilead, Biogen Idec.

Steve Kanzer strikes again.

Pipex Pharmaceuticals(PP Quote - Cramer on PP - Stock Picks), the small drug company where Kanzer is CEO, has run into big trouble with the Food and Drug Administration.

Sadly, that's a recurring theme for companies associated with Kanzer.

On Tuesday, Pipex announced that the FDA refused to accept an approval application for the company's drug Coprexa, which is intended to treat Wilson's disease, a rare, genetic ailment. The "refuse to file" letter issued by the FDA to Pipex raises eight issues or problems with the Coprexa application, including "two preliminary assessments concerning the adequacy of the clinical evidence of safety and efficacy of Coprexa," according to Pipex.

Pipex shares fell a whopping 52% Tuesday and were down another 3% on Wednesday to $1.88.

I warned investors away from Pipex in a Nov. 24 Biotech Mailbag column because Kanzer, based on his abysmal track record, isn't qualified to run a drug company. As I pointed out then, a run-in with FDA officials at an advisory meeting last year which resulted in Kanzer being physically escorted out by security guards.

Kanzer has a way of blaming everyone else but himself for the misfortunes that seem to afflict his companies on a regular basis. Tuesday was no exception. Pipex claims that the FDA signed off on all outstanding questions regarding Coprexa during a couple of meetings held last year. The refuse-to-file letter is therefore a complete surprise -- and may be the fault of the FDA which apparently transferred review of the Coprexa application from one division to another.

Funny, but these sorts of things don't happen to quality biotech companies.

---

Were you quick enough to get that fleeting discount on Gilead Sciences (GILD Quote - Cramer on GILD - Stock Picks) on Wednesday morning?

Shares of the Foster City, Calif.-based biotech firm dipped briefly in premarket trading Wednesday, reacting to Roche's drastic cutback in guidance for 2008 Tamiflu pandemic flu sales. But just as fast, investors bought the Gilead dip, and rightly so, because high-quality and profitable biotechs don't go on sale often.

Gilead shares closed Tuesday at 43.15. After Roche reported in the early morning hours stateside, Gilead dipped very briefly to $42, but quickly rallied. The stock was recently up more than 3% to $44.55 in Wednesday trading.

Roche guided to Tamiflu pandemic sales of CHF100-150 million in 2008, a dramatic 90%-plus reduction from 2007 pandemic sales of CHF1.5 billion, due primarily to the fact that government stockpiling of Tamiflu against bird flu is wrapping up.

Roche pays royalties to Gilead based on Tamiflu sales. Those royalties flow directly to Gilead's bottom line, which is why some Gilead investors (and just about every analyst who follows the company) went into Roche's earnings report Wednesday with a great deal of trepidation.

But as I wrote on RealMoney Tuesday, "I'm not one of the worry warts. I don't think you need Tamiflu royalties to like the Gilead story. Sure, the money helps because it goes right to the bottom line, but it's like the maraschino cherry on a hot fudge sundae -- still delicious without."

There's a whole lot to like about Gilead without big Tamiflu royalty revenue -- strong fourth-quarter earnings and above-consensus revenue forecasts for 2008, the launch of the HIV drug Atripla in Europe, continued growth in the pulmonary drug Letairis and two new likely drug approvals and launches this year.

And with this Tamiflu overhang removed, the stock should head higher.

---

KRAS is hot.

No, KRAS isn't a hipster San Francisco radio station, it's a human gene that may help doctors determine in advance which colon cancer patients respond best to targeted therapies.

« Previous Page

1 2

Next Page »