The crowds have finally thinned in the halls of the Westin St. Francis in San Francisco, the home of JPMorgan's annual health care conference. There is a sense of urgency at the gathering, where seemingly every health care investor and executive spends at least part of the week. Everyone is looking for an edge, and the CEOs of both publicly traded and private companies are all too eager to explain why their organization deserves investors' attention and dollars. The big-cap names mostly presented Monday and Tuesday. I
discussed my observations of that part of the show earlier in the week. The last two days concentrated on the smaller names, and here are some of the highlights of what was said -- and what wasn't. rants on the shares of Shire partner New River Pharmaceuticals ( NRPH), you know that I was chomping at the bit for Emmens to address the labeling issue of NRP104, now known as Vyvance.
Mum's the WordShire Pharmaceuticals ( SHPGY) discussed the strength of Adderall XR, which it said was the U.S. marketshare leader in Attention Deficit/Hyperactivity Disorder, or ADHD, with 26.8% of the market. Shire's new drugs include Lialda for ulcerative colitis and SPD465 for adult ADHD. The Food and Drug Administration is supposed to release its decision on Lialda by Jan. 21 and on SPD465 by May 21. CEO Matt Emmens reviewed Shire's rich product portfolio and pipeline, and the presentation and breakout session appeared well-received. However, if you've followed my
When asked if Vyvance needs to have the anti-abuse label in order to be successful, Emmens said that Vyvance simply needs to be effective and "show anti-abuse potential." He refused to comment on the label specifically. MGI Pharma ( MOGN) was more than willing to talk about 2007, which executives expect to be a big year for the company. While the company preannounced disappointing revenue for 2006, its Aloxi drug, which treats nausea caused by chemotherapy, could see improved sales this year. In a sit-down with TheStreet.com, MGI Chief Financial Officer William Spengler explained that Aloxi's flat $250 million in sales in 2006 was the result of several factors related to competition from generic versions of GlaxoSmithKline's ( GSK) Zofran. Spengler said that MGI was aggressive in offering rebates to compete with the cheaper alternatives. Some clinics held off placing orders for Aloxi, expecting MGI to continue to lower prices as the end of the quarter drew closer. While the competition was expected, the company has been hurt by clinics and physicians who can make an additional $80 to $90 per vial by prescribing the generic anti-nausea medication instead of Aloxi. However, in the third quarter this year, physicians will have to pay more for the generic, closing the price gap between MGI's drug and generic competition. The company also plans on filing a new drug application for Aquavan, a sedative for use during gastrointestinal procedures such as colonoscopies, midyear. MGI hopes to launch the product next year. Spengler believes sales for Aquavan could reach $250 million just in GI indications.
MGI has been cash flow positive for six months, is expected to earn a profit this year and "has no financing needs," according to Spengler.
New IdeasAn interesting (and very well-attended) presentation was made by CombinatoRx ( CRXX). Thirty-five-year-old CEO Alexis Borisy discussed his novel approach to finding new drugs. He noted that traditional drug discovery focuses on agents that target a single pathway. CombinatoRx combines drugs (or other agents) to attack from multiple pathways. The company tests millions of combinations to discover previously undiscovered and unusual mixtures to treat various illnesses. For example, its lead product candidate, CRx102 for rheumatoid and osteoarthritis, combines steroid prednisolone with cardiovascular drug dipyridamole. The steroid component is in doses so low that it would be ineffective if used alone. However, combined with dipyridamole, the steroid had a positive effect. The drug is currently in phase IIb trials. CombinatoRx also is in phase II trials with CRx170 for chronic pain. It currently has eight drugs in the clinic, although none expected to reach the market for several years. I had a fascinating discussion with a successful health care investor who believes a new trend may arise in biotech in the coming years. He expects some companies to be dissolved in order to form royalty trusts, similar to what you see in the energy industry or REITs. These companies are essentially shells that collect and distribute royalties.
The hedge fund manager says royalties from companies with viable products or compounds but weak management could be returned to shareholders in the near future. He named Ligand Pharmaceuticals ( LGND), MGI Pharma and SuperGen ( SUPG) as potential candidates. MGI's Spengler said the idea was interesting but was more likely to occur in earlier stage companies than in companies such as MGI that have existing products.