Here are a few useful links, and a summary of the investment case as I see it for TTP. I wanted to gather this material in one place for the use of anyone who wanted to look in detail at TTP as the period of volatility triggered by the warrant call comes to an end this week.
The big story (possibly the only story) is TTP's lead product, Zomaril (iloperidone), an "atypical antipsychotic", i.e., a latest-generation product being "developed for the treatment of schizophrenia and related psychotic disorders-a market expected to exceed $4 billion within one year" (quoting TTP's 10-K). TTP licensed Zomaril from Hoechst, and later sublicensed it to Novartis. Novartis will pay all development costs, pay TTP a royalty of 10% on sales, and pay Hoechst separately another 15%. (Royalty numbers not formally released, but these numbers are pretty surely accurate.) Zomaril is in Phase III trials, expected to be completed in 2000, with product launch in 2001 or early 2002.
Schizophrenia is a significantly underserved indication. Although new medications introduced in the last decade or so have been immensely helpful to those suffering from schizophrenia, they have a fairly severe side effect profile, limiting their use and leading many patients to stop their medication. TTP has been saying that about 30% of schizophrenia patients are either not helped by approved medications or stop taking them because of the side effects.
Zomaril, if approved, will compete with two atypical antipsychotics already on the market, LLY's Zyprexa and JNJ's Risperdal, both of which, although considerably better than prior antipsychotics, still have significant side effects. If Zomaril's efficacy is comparable to or better than Zyprexa and Risperdal, with a superior side effect profile (as the clinical trial results suggest so far), Zomaril could be a very large-selling drug indeed. (Zyprexa sales were above $700 million in its first year, 1997, about $1.4 billion in 1998, and will be perhaps $2 billion this year.)
I first got interested in TTP (thanks to MZ, Rick Harmon, Neuroinvestment, John Metcalf, TexasDude, et al on the TTP and "Paranoid . . . TTP" threads on SI) when Novartis announced in January that it would expand the previously announced Phase III trials for Zomaril from 2600 patients to 3300 patients at 206 centers in 24 countries Message 7313972 (Useful discussion in the couple of dozen posts after this one, see esp. ## 244-247, 257-58.)
The investment point, IMO, is that if Novartis -- with access to information and scientific judgment both vastly superior to mine -- thinks enough of Zomaril's prospects to invest something like $100-125 million in its development (even though Novartis will keep only 75% of the sales proceeds while doing 100% of the work from here) it may be a good bet for me to follow along.
(continued next post) |
