Aspreva Readies for Prime Time
08/28/06 - 10:35 AM EDT
Marc Lichtenfeld
Finding a biotech company that makes money is rare, especially if it's not one of the established giants like Amgen (AMGN Quote - Cramer on AMGN - Stock Picks), Genentech (DNA Quote - Cramer on DNA - Stock Picks) or Gilead Sciences (GILD Quote - Cramer on GILD - Stock Picks).
Of the 227 stocks classified as biotech by Yahoo! Finance, only 28 of them have a price-to-earnings ratio. Why then, in a sector where investors are constantly panning for gold, is Aspreva Pharmaceuticals (ASPV Quote - Cramer on ASPV - Stock Picks) ignored when it appears to be on the verge of breaking through? Aspreva's strategy consists of purchasing the rights to approved drugs from large pharmaceutical companies and finding new uses for them. The company's first effort appears to be going well. In 2003, Aspreva licensed Roche's CellCept, an immunosuppressant approved to prevent the rejection of organ transplants. Since then, Aspreva has been testing the drug for use in the rare autoimmune diseases myasthenia gravis, pemphigus vulgaris and lupus nephritis, a kidney ailment afflicting lupus patients. The drug has performed well in trials and approval for all three indications is expected in 2007. Dr. Ellen Ginzler, professor of medicine and chief of rheumatology at State University of New York Downstate Medical Center in Brooklyn, ran a trial comparing CellCept to Cytoxan to treat lupus nephritis. Cytoxan is a long-time chemotherapy agent from Bristol-Myers Squibb (BMY Quote - Cramer on BMY - Stock Picks) that has been the standard for treating lupus nephritis. The goal of the study was to see if CellCept was less toxic than Cytoxan. Not only did patients in the program suffer fewer side effects, CellCept performed better than Cytoxan.
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