Biotech Buzz: Fresh News From JPMorgan Confab
ImClone Systems ( IMCL): Last October, I wrote a Columnist Conversation post that called ImClone an intriguing and undervalued biotech asset amid rampant (at that time) M&A speculation in the sector. Since then, the stock has sunk to $38 from $45 -- either I'm stupid, or ImClone is even more undervalued today. After listening to the company's presentation on Tuesday, I'm inclined to believe the latter (although the former might also be true -- let's reserve final judgment for a later day). The way I see it, the company's position with Erbitux for colon cancer is getting better, and the opportunity in lung cancer has tremendous upside. Sure, Erbitux may not turn out to be as effective as Genentech's ( DNA) Avastin, but it really doesn't have to be; a large number of lung cancer patients cannot take Avastin. Yet these patients will likely benefit from Erbitux therapy.
The battle over the pulmonary arterial hypertension drug market must be heating up, because Swiss drug maker Actelion is using this conference to sling mud at competitor Gilead Sciences ( GILD) and its newer (and clinically superior) PAH drug Letairis. Actelion executives are telling investors in private meetings here that doctors and patients prefer its PAH drug Tracleer over Gilead's Letairis because the latter is causing abnormally high rates of leg edema, or swelling. I was at a cocktail party this week where an Actelion executive told me the same thing. Gilead executives, and many investors I spoke with, are brushing this off as a feeble attempt by Actelion to distract from the fact that physician surveys are showing a clear preference for Letairis over Tracleer. And data from clinical trials also show that rates of leg edema are comparable for both drugs.
Biogen Idec ( BIIB) may have said it is no longer for sale, but that doesn't necessarily mean a deal won't get done. That's a bit of speculation making the rounds here. The chatter is light on details, and it may just be coming from burned investors hoping to make some money back after a sale flamed out the first time around, but here's the logic: Swiss biotech firm Serono also put itself up for sale in late 2005 but didn't get any offers, just like Biogen Idec. Once the hubbub faded away, however, German drug maker Merck KGaA gobbled up Serono in September 2006. Could the same thing happen to Biogen Idec now that the media spotlight on its planned sale has dimmed? It's hard to see how an acquisition at $80 a share or more could happen -- the stock was recently at $58.10 -- but a "discounted" deal in the high $60s or $70s isn't necessarily out of the question -- or so says the chatter in the conference halls.