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Biotech Stock Mailbag: NuPathe

The more relevant question to ask about Zelrix is who's going to use it, if approved? Nupathe acknowledges that Zelrix is niche product aimed at migraine sufferers who also suffer from debilitating nausea and vomiting. Nupathe estimates this segment of the migraine market at 8 million patients.

An addressable commercial opportunity of 8 million patients seems large, but for perspective, these are the same patients targeted by nasal and injectable formulations of sumatriptan, yet they only achieve about 4%-5% market share.

In terms of Zelrix peak sales estimates, I've seen analysts forecast $100 million to $200 million, but I've also spoken with more skeptical investors who believe Nupathe will struggle to achieve $15 million in sales and because of that will never achieve profitability.

By this point, we should all be aware of how warily investors view new drug launches, particularly launches where the new drug must compete with generics. I don't want to saddle Nupathe with the Somaxon Pharmaceuticals (SOMX) albatross but you get my drift. Working in Nupathe's favor is the company's $70 million enterprise value. This isn't an expensive stock and Nupathe management is doing the right thing by keeping Zelrix launch expectations low.

A.P. Smyth asks, "What's your take on Talon Therapeutics(TLON)? It's about to file their New Drug Application for Marqibo and carries a $22 million market cap despite what some call a blockbuster opportunity for the drug in acute lymphoblastic leukemia (ALL). Shouldn't it be trading a lot higher?"

Marqibo is a reformulation of the generic chemotherapy drug vincristine, with a history of regulatory failure. Enzon Pharmaceuticals (ENZN) and partner Inex Pharmaceuticals were the first companies to develop Marqibo in the mid-2000s for non-Hodgkin's lymphoma. FDA rejected the drug in January 2005, prompting Enzon to return Marqibo's development rights to Inex (now known as Tekmira (TKMR)).

In March 2006, Hana BioSciences licensed rights to Marqibo from Inex, choosing to focus development on acute lymphoblastic leukemia (ALL). Underwhelming data from what was reportedly a pivotal study were released in 2009, sinking Hana shares. In late 2010, Hana changed its name to Talon Therapeutics. [Name changes are never a good sign.] At one time, Hana/Talon said it was going to file Marqibo for approval in 2010. Now, the company says to expect an FDA filing by the end of June.

I find it hard to envision any scenario by which Marqibo becomes a blockbuster ALL drug.
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