Was asked to get opinion on Scios (SCIO).
Seems like an interesting company. Recovering from Natrecor non-approval sending shares way down. Was interested in the angiogenesis drugs in clinical trials, so picked some up near the bottom and recently added some more, but don't know how to value potential for this company since all company will say is royalty agreements are "typical", whatever that means. Here's a summary from Yahoo.
1) Scios received a $4 million milestone payment from Nova Nordisk for its work in a second generation compound for diabetes. From Nordisk's website: "NN2211, which is an analogue of GLP-1 (glucagon-like peptide No 1), went into Phase 1 in 1999. This compound is aimed at lowering blood glucose in Type 2 diabetes. Since it is a peptide hormone, it must be injected, but unlike existing insulin secretagogues, GLP-1 has the ability to only promote insulin secretion when blood glucose levels are elevated." Scios' CEO, Brewer, said that the royalties from this could be "significant."
2) Eli Lilly is going to start human testing with a Scios compound for Alzheimer's. Randal Kirk: "The <Scios> Alzheimer's program, for example, seems to be one of the best programs on Alzheimer's in the world, and it appears to be fully funded from external sources."
3) Scios has another Alzheimer's program with DuPont.
4) Chiron has begun Phase II trials for CAD and PVD with the Scios FGF compound--formerly Fiblast. Scios has a $25 million agreement with Chiron, (5 million cash, 7 million in forgivable loans up front). From Prudential's Chiron report: "... while we have not yet seen the FGF Phase II trail data (expected 1 H 2000), the trial has been completed, and we believe that management's confidence in the future of that product is demonstrated through their recent license of FGF technology from Scios....we see the license as a sign of management's confidence in the success of the program moving into Phase III trials." Scios will get royalties from both its FGF and Chiron's, where ever it has patents. AHP's Phase II/III Fiblast trials showed "robustly positive data" with <no safety concerns.> Brewer: "Chiron is currently in a Phase II trial of FGF for the treatment of coronary artery disease, which represents a significant revenue opportunity."
Prudential 2/9/00: "Recruitment for the CAD trial is complete and we anticipate 90-day follow-up data at the American College of Cardiology in March. The PAD trial is still enrolling patients, so analysis of this data will not be available until 2H 2000"
5) GenVec and Warner Lambert are going to begin using Scios' VEFG-121 in gene therapy Phase II trials. (Phase I is rumored to have been successful.)
6) Scios' p-38 kinase inhibitor will begin human trials in 2H'00. This could be a multi-billion dollar compound.
7) Phase IV Natrecor VMAC trials are on going. Brewer: "...total enrollment of approximately 500 patients is expected to be completed by the third quarter of 2000." Horton: "<Natrecor> may not have to go before the advisory committee." The FDA was "happy" with the new trial design comparing Natrecor to a placebo and to nitroglycerin. Patients on the placebo will switch to either Natrecor or NTG after three hours, if necessary. Dr. Young of the Cleveland Clinic, who is managing the trial, was set to included Natrecor in the Clinic's guidelines for aCHF patients prior to the FDA's rejection of Natrecor. Brewer: "We determined that our optimum strategy would be to seek a partner to co-promote the product <Natrecor> and discussions with several new potential partners are already underway." Revenues for the U.S. alone are predicted to be $300,000,000.
8) Biosite has filed a BNP diagnostic test for CHF with a Scios royalty product. This test is scheduled to go before the FDA, and Scios' share of revenues is stated to be in the "high single digits." Brewer: "The test will help to enhance the overall market awareness of the beneficial role of BNP in congestive heart failure, strengthening the potential for Natrecor."
Scios has a similar royalty agreement with Abbott Labs.
9) Scios' profitable "Psychiatric Sales and Marketing Division," recently renamed, may have a $1 million revenue shortfall in 2000 because of trouble that a supplier is having with the FDA. Scios is actively seeking to co-promote and/or purchase more products for this division.
10)In 1H'00 Scios may begin to get royalties from Kaken for Asian sales of Fiblast for recalcitrant dermal wounds.
11)Scios has about $100 million in cash.
12)VEGF-121's manufacturing process is complete and the drug is ready to be partnered with another company.
13)Wendy Carhart: "...we have an outstanding obligation to Genentech of approximately $36 million. This obligation can be repaid, at Scios' option, in either cash or shares of Scios common stock, at any time prior to 12/31/2002. At this time, it is premature to anticipate how the loan will be repaid, or if any other compounds will be developed by either Scios or Genentech pursuant to this agreement."
14) Scios has failed Phase III trials twice with Auriculin, and Natrecor was "non approved" by the FDA.
15) "Recently, <Scios> added capabilities in functional genomics, high-throughput screening and state-of-the-art medicinal chemistry to <its> traditional strengths in molecular biology
Sorry if message is a little long. Longterm holder of Igen, SEPR, HGSI, LGND (on dips), AVIR.
Added a few months ago more AVIR (on big dip), CLTR (big dip), CEGE, CHRX(big dip), CLTX, GZMO. |
