This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Biotech Stock Mailbag: Exelixis

It's not like Novartis is making any money selling the schizophrenia drug. Fanapt sales during the third quarter were so inconsequential that Novartis didn't even disclose a specific revenue figure. Instead, Fanapt was thrown into a catch-all "other" bucket.

In the second quarter, Novartis reported $7.4 million in Fanapt sales. If Novartis' disclosure policies remained consistent, it's reasonable to assume third-quarter Fanapt sales fell meaningfully below $7.4 million. If not, Novartis probably would have released the actual sales amount this week.

Novartis began selling Fanapt in January 2010 after paying Vanda $200 million upfront to license the drug for the U.S. schizophrenia market. Seven quarters of dismal sales later, it's probably dawning on Novartis that recouping its Fanapt investment won't happen any time soon, if ever. The drug is a money-loser at a time when Novartis is laying off employees and cutting costs.

A Vanda spokesperson told me its new chief commercial officer Bob Repella was hired to oversee launch preparation for tasimelton, an experimental sleep drug currently in phase III for patients with non-24-hour sleep wake disorder. Repella will also work to market Fanapt globally. The drug is currently under approval review by European regulators.

Working on the launch of tasimelton, an old drug with a checkered past of disappointing clinical trial results, seems a bit optimistic given the risk involved with the ongoing phase III study. More likely, Repella was brought on to figure out how Vanda can best salvage Fanapt in the U.S. when Novartis bails.

If Vanda chooses to sell Fanapt on its own, the company will receive 100% of the revenue (minus a small royalty paid to Titan Pharmaceuticals (TTNP).) Vanda's operating expenses will increase drastically, however, because the company will need to hire and maintain a sales force, something it doesn't do now. Add in marketing costs tied to selling a drug, too.

Maybe Vanda will try to find a new marketing partner for Fanapta. Given Novartis' experience, that's going to be a tough job (made tougher by the U.S. approval this week of a generic version of the top-seling schizophrenia drug Zyprexa.)

-- Written by Adam Feuerstein in Boston

>To contact the writer of this article, click here: Adam Feuerstein.

>To follow the writer on Twitter, go to http://twitter.com/adamfeuerstein.

>To submit a news tip, send an email to: tips@thestreet.com.

Follow TheStreet on Twitter and become a fan on Facebook.
Adam Feuerstein writes regularly for TheStreet. In keeping with company editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback; click here to send him an email.
5 of 5

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
CTIC $1.59 -0.63%
EXEL $6.07 0.33%
JNJ $93.81 -1.40%
MDVN $89.74 -2.90%
NVS $97.29 -1.10%

Markets

Chart of I:DJI
DOW 16,521.25 -121.76 -0.73%
S&P 500 1,973.89 -14.98 -0.75%
NASDAQ 4,784.9430 -43.3820 -0.90%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs