NPS, Cerus Lighting a New Fire for Biotech Believers

At the Prudential Vector Healthcare conference, there's no shortage of optimism.
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It's not hard to find rosy talk of billion-dollar products these days in biotech.

And while investors have been badly burned in the past, they're still gobbling up the talk and buying shares in dozens of speculative drug and medical products companies. That's keeping biotech indices high, albeit down from last spring's height of hype.

Judging from presenters at this week's

Prudential Vector Healthcare

conference, it's not hard to see why. Top companies in the industry, it seems, are preparing to unleash a horde of new drugs onto the market. Who knows? Some could be really profitable. The way some of these smaller biotech stocks have been moving, there's clearly no shortage of believers.

Big, Big Plans

On the Rise
NPS rallies

Take

NPS Pharmaceuticals

(NPSP)

. Hunter Jackson, the CEO of this midsize Salt Lake City biotech, could be arrested by the hype police except for the fact that he obviously believes the NPS story.

And apparently, so does

Amgen

(AMGN) - Get Report

, which licensed NPS' hormone treatment for overactive thyroid glands, a condition that depletes calcium and bones in a half-million U.S. patients. Importantly for the companies, there isn't any drug treatment on the market for the condition.

"We believe there is a very high probability of clinical and commercial success" for the drug, called AMG073, Jackson told a packed room of investors at PruVest's New York conference Wednesday. "It's a drug of tremendous medical importance."

Asked later if statements like that aren't a bit brazen, considering today's litigious society and the challenges of gaining

Food and Drug Administration

approval, Jackson is unfazed. "It's hard to imagine that the FDA would scuttle this," he says flatly. Good thing for safe harbor statements.

Hopefully for investors, the FDA will cooperate, since NPS wants to sell another 3 million shares in a follow-on offering to boost its cash balance to a healthy $190 million. And the stock has been rewarding investors: It jumped from just over $3 a year ago to close just shy of $50 Wednesday.

Be Prepared

But if AMG073 bites the dust for some reason, NPS has ALX1-11, an osteoporosis drug in late-stage development that NPS claims could reverse the course of the bone-thinning disease afflicting millions of elderly people. Currently, treatments like hormone replacement therapy and

Merck's

(MRK) - Get Report

Fosamax mostly keep the disease in check, not reverse it.

Comeback?
Nasdaq biotech index rebounds

But NPS and others like

Eli Lilly

(LLY) - Get Report

say parathyroid hormones are the future, if they can get them to work right.

"We expect this product to completely change the standard for care for osteoporosis," says Jackson.

Talk Talk

A tall order, perhaps. But NPS isn't alone.

Scios

(SCIO)

, of Sunnyvale, Calif., is brimming with similar confidence over Natrecor, a new treatment for congestive heart failure, a weakened heart condition afflicting some 5 million people in the U.S.

Riding High
Tracking Scios

Scios will present final-stage clinical trial data on Natrecor next week at the

American Heart Association

meeting, a major medical conference, and plans to seek FDA approval by the end of the year.

But Scios is already laying plans for marketing the drug through soon-to-be-announced partnerships, a mark of confidence for a product that could yet face setbacks, particularly before the FDA. No matter, says Scios CEO Richard Brewer: "There's big room for a new therapy."

It's always good to have a backup, and Brewer talked up some juicy tidbits about a new rheumatoid arthritis drug that it hopes will be a cornerstone in a next generation of drugs to feed a growing $6 billion market for the debilitating bone disease.

The drug, called SCIO-469, is aimed at being a combination COX-2/Anti-TNF compound, covering two big bases that have proved successful in the last year for treating the disease. They are the hugely successful COX-2s, which include Merck's Vioxx and

Pharmacia's

(PHA)

Celebrex, and the other major successes, anti-TNF drugs like Enbrel from

Immunex

(IMNX)

and

American Home

(AHP)

.

Trust Me

Frothy?
Cerus, InterMune jumping

Nor was confidence lacking at PruVest presentations from

Cerus

(CERS) - Get Report

, which makes a blood purification system backed by health care giant

Baxter

(BAX) - Get Report

, or

InterMune

(ITMN)

, which markets Actimmune, a treatment for a variety of pulmonary and infectious diseases. Both companies say their products could generate billions of dollars in sales, helping to feed investors' insatiable appetite for that chimeric mix of high growth and low risk.

Still, some investors say they aren't seeing as much of the hype that preceded earlier biotech bubbles, such as when many stocks hit a peak earlier this year, backed by momentum traders with a slavish and unqualified love of anything to do with tech, bio or otherwise.

"Companies have learned from the past that they have to have a good business model," says David Blaustein, a fund manager with

Oracle Partners

, a Connecticut hedge fund with holdings in biotech. "All that makes this time a little different."