Dermagraft was approved in 2001 and only generates about $100 million-plus in annual sales. Apligraf sales are about the same. If you want to be highly optimistic and generous, assume Osiris is successful in obtaining Medicare reimbursement and bring in $50 million in annual peak sales of Grafix. That would be a remarkable achievement for Osiris given the company's poor commercial track record. A miracle, even.
Unfortunately, $50 million in revenue doesn't in any way justify a market value of $650 million.
The more likely scenario: Grafix flames out commercially just like Osiris' stem-cell therapy Prochymal has flopped. Remember Prochymal? Mills barely mentions the product anymore because more than a year after approval in Canada and New Zealand, sales are zero and attempts to file for U.S. approval have gone nowhere. Soon enough, Mills will also cease his over-exuberant Grafix spiels, to be replaced by the next stock-promoting scheme.
Moving on, Pelion has more of a lengthy comment than a question regarding BioCryst Pharmaceuticals (BCRX - Get Report) and the market value ascribed to the early-stage hereditary angioedema (HAE) drug development program. I generally agree with him.His take: In this bubble environment we've seen stocks go wild on phase I data and even pre-clinical. In general I know you agree when stocks surge on phase I data it is seldom warranted but in some cases it is. Certain diseases are predictive of positive results at an early stage. Best example I can recall is Hep C when PSI-7977 phase 1 data came out and Pharmasset went thru the roof and never looked back. On the other hand, oncology companies that go up often come crashing down on phase I data. Biocryst is the latest example of a phase I trial propelling a stock and may make an interesting case study. The unrealistic positive sentiment in biotech is also a factor but Biocryst's stock price zoomed from $2 to $5 per share (July 18 - 24); its market cap increasing from $106 million to a high of $206 million based primarily on phase one pre-proof of concept data for their orphan drug indication HAE.
@PropThinker @shaneblackmon The $AMRN FDA panel run up should start soon, I imagine.— Adam Feuerstein (@adamfeuerstein) August 8, 2013The stock offering in early July, which priced at $5.60 per share, was a profitable exit point for shorts, as I mentioned in this article. I have spoken to a few Amarin shorts who cashed out soon after this deal was announced. Victory, moving on, they said. If Amarin fits the pattern of other biotech stocks, we should see a run-up into the October FDA panel. It sorta looked like Amarin was going to rally earlier this month, but the buying fizzled. Perhaps we'll see a stronger rally in September when summer vacations end. I'm still negative on the FDA panel outcome, believing experts will want to see cardiovascular outcomes data from the REDUCE-IT study before Vascepa "Anchor" is approved. -- Reported by Adam Feuerstein in Boston. Follow @AdamFeuerstein
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