Q4 2009 Earnings Call

March 10, 2010 8:30 am ET

But there are more companies with promising drugs under development which could attract generous valuations by other Big Pharma's. Cell Therapeutics (NASDAQ:CTIC) recently announced that the Food and Drug Administration (FDA) approved a third-party manufacturing site for the production of the company's experimental cancer drug. CTIC's drug, Pixantrone, is being reviewed by the FDA as a potential therapeutic for aggressive non-Hodgkin's lymphoma that has not responded to other approved therapies or if the lymphoma returned after initially appearing to be responding to other therapies. The FDA had expressed concerns on the efficacy and safety of Pixatrone in early February, prompting a sharp selloff in CTIC stock which is just recently rebounding from.

A brief history of the proposed merger
Briefly, II-VI (Nasdaq: IIVI) made an unsolicited offer for Zygo in January for $10 per share, well over the current $7 per share price. Hoping for a bidding war, investors were willing to pay up to $11 for the stock, but Zygo’s board threw cold water on that notion by rejecting the deal. The stock instantly shed a buck in value.

Q4 2009 Earnings Call

March 9, 2010 8:00 am ET

As ocrelizumab is a follow-on to the blockbuster Rituxan, which itself is forecast to be eclipsed by Humira this year as the best-selling RA drug worldwide if all indications are counted, one might have expected investors to react negatively to the news. However, Roche shares fell less than 0.1% yesterday and Biogen Idec shares climbed nearly 1%.

It is interesting to note that the language used in HGSI's earnings report very closely matched what was unearthed during the research (see below). This should exemplify the usefulness of doing the research!

The controversy over Sirtris drugs reached a tipping point in January with a publication by Pfizer (PFE) researchers led by Kay Ahn showing that resveratrol activates SIRT1 only when linked to a fluorophore. Although Ahn declined to be interviewed by Nature Biotechnology, a statement issued by Pfizer says the group's findings “call into question the mechanism of action of resveratrol and other reported activators of the SIRT1 enzyme.”

AstraZeneca is conducting another study with Recentin (Horizon II) in first-line mCRC. The effectiveness of the drug in combination with chemotherapy is being studied against chemotherapy alone. AstraZeneca is awaiting data from this study, which is expected shortly, before taking a final decision on its regulatory filing. In addition, results from a phase III study evaluating the effectiveness of Recentin in treating recurrent glioblastoma are expected in the first half of 2010.

Although there are concerns about the effectiveness and side effects of some of these drugs (notably Aranesp and Epogen), Amgen earned $4.6 billion on $14.6 billion in sales in 2009.

Stronger Markets

But as the relative performance of these funds so far this year has shown, the biotech ETFs available to U.S. investors are far from identical. Each of the biotech ETFs is up at least 6% so far in 2010, making this sector one of the best performers of the year. But the top-performing biotech ETF is up nearly 25% on the year, a significant return gap between funds that seem, at least on the surface, to be relatively comparable.

“It’s déjà vu all over again.” – Yogi Berra

With MLB's opening day less than a month away, it seems only fitting to reference one of the most quoted personalities of our time to describe our analysis of the biotechnology sector in 2010. In this article, we review our favorable outlook for the industry, draw comparisons with the prior year, and introduce the results of our recent “Life Sciences Industry Outlook” survey that targeted industry executives, investors, analysts, and members of the media.