Exciting Week For Biotech

This
has definitely not been a boring week for biotech.
 With acquisitions,
a high-profile meeting on new drugs to treat HIV infection, quarterly earnings
reports, and management changes the sector has experienced some excitement. The
week started off with Johnson & Johnson’s
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announcement that it will purchase Scios
Corporation

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, the maker of Natrecor to treat congestive
heart failure. Johnson & Johnson feels that increasing sales of Natrecor and
Scios’ clinical pipeline will temporarily satisfy its appetite for new big
market drugs. Only time will decide whether this was a wise move or not.

In addition,
OSI Pharmaceuticals
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also made a
move by acquiring Cell Pathways
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in order to compliment its own pipeline of developing cancer drugs. I think you
will see much more merger and acquisition activity this year as many smaller
biotech companies with potentially promising drugs get gobbled up by the major
pharmaceutical companies. Many of these biotechs are hurting for needed cash to
advance new drugs into late-stage clinical trials and will succumb to big pharma
for help.

In addition, there is an
important ongoing medical meeting highlighting potential new drug treatments for
the AIDS virus. So far, the 10th Conference on Retroviruses and
Opportunistic Infections has highlighted Gilead
Sciences

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, in conjunction with
Triangle Pharmaceuticals
, its new reverse transcriptase inhibitor
(emtricitabine) for the treatment of AIDS. Gilead is also testing this drug for
the treatment of Hepatitis B in transplanted patients and is awaiting FDA
approval.


Progenics

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has also been highlighted at this important
meeting by releasing positive phase II data on its new drug (PRO542) for the
treatment of HIV infection. In sympathy with this,
Trimeris

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is currently awaiting FDA approval (by the end
of March) of its new class of drug treatment for the HIV infection. The drug
Fuzeon attacks the HIV virus in a different way then current drugs on the market
and has a very good chance of passing the FDA’s litmus test.

Other news out this week was
the stepping down of the CFO and the President of
Surmodics

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. I highlighted this company in a recent article
discussing the enormous potential of drug-coated stents to treat coronary artery
disease. Yesterday, the stock took a beating on the management change news and
declined 16%. However, this may be an excellent time to look at this company
because the FDA will soon approve Johnson & Johnson’s new drug-coated stent
system. This system uses Surmodics’ coating technology and the company will
greatly benefit from the use of these stents. The growth market for these stents
has tremendous potential because of their effectiveness in keeping open blocked
coronary arteries. As I mentioned in my piece on this topic, these stents will
“change the way cardiologist practice.”

One final note,
Emisphere Technologies
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reported
quarterly earnings yesterday. The actual earnings report was nothing to get
excited about. However, the company has a patented oral delivery drug technology
that can potentially convert an intravenously given drug to one given by
mouth. Now most patients would rather have a pill than a shot any day. The
interesting part of Emisphere’s business plan is its strategic partners. There
are some major players here, including Novartis,
Eli Lilly, and
Regeneron Pharmaceuticals

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. This last company is very
interesting and has been mentioned by me in the past. It is expected to release
phase III clinical data by the end of March on its new intravenous drug
(Axokine) to treat obesity. This is highly anticipated data and if positive,
Emisphere Technologies will greatly benefit because it is developing the
technology to allow patients to take this drug by mouth. 

Last but not least, the FDA
General and Plastic Surgery Advisory Committee is meeting on Feb. 28 to discuss
the New Drug Application of a new treatment for wrinkles, yes wrinkles. In
today’s society of growing plastic surgical procedures and attention to
appearance, this is a big market. Unfortunately, the company presenting the new
treatment is not mentioned in the FDA’s Advisory Committee agenda release ahead
of the meeting. If this new treatment gets a positive nod from the Advisory
Committee, the unnamed company should see a nice move. I like this company’s
chances. There will be more about the potential identity of this company in my
next piece.

Good luck,

Paul Ruggieri, MD, FACS       Â