I just shorted OSIP. Its been up big time past few days on news about a cancer drug, but
should selloff this afternoon and fall next few days. Its up on a press release yesterday, but
the big gains isn?t justified when one looks at the details. As always though I have a buy to
cover stop order on my position to protect myself in case it goes up anyway. Here?s the press
release:
OSI says Pfizer grants it full rights to
cancer drug
UNIONDALE, N.Y., June 19 (Reuters) - OSI
Pharmaceuticals Inc. (NasdaqNM: - ) said on Monday that
Pfizer Inc. (NYSE: - ) has granted it full rights to a
promising experimental anti-cancer drug in order to satisfy
U.S. regulators who earlier in the day approved Pfizer's
merger with Warner-Lambert Co. (NYSE: - ).
OSI discovered the compound, CP-358,774 in collaboration
with Pfizer. Pfizer is testing it in Phase II trials against
ovarian, head-and-neck and non-small cell lung cancer and
will continue to coordinate the trials for a transition period
of up to six more months, OSI said in a prepared release.
OSI said under its longterm collaboration with Pfizer, it
would have received ``mid-single-digit'' royalties from the
drug, if it wins U.S. marketing approval. But now, having
been granted full rights to the compound, OSI said it will be
entitled to all profits from its sales.
The drug is designed to inhibit the gene that makes
epithelial growth factor receptor, a protein that often seen in
excessive amounts in some types of cancer cells. OSI said
Warner-Lambert is also studying an cancer drug targeting
the protein, a reason that U.S. regulators asked Pfizer to
divest its rights to CP-358,774 -- which OSI has renamed
OSI-774.
OSI said it is not required to make any special payments to
Pfizer for obtaining rights to the experimental drug, which
OSI said some analysts have predicted could generate
annual sales of up to $1 billion if eventually approved.
****
They also filed a SEC form that goes
into much more detail about the drug.
Here?s the meat of the details. Info
from the sec filing is in quotes:
no more relationship with Pfizer means
OSIP will have to devleop the drug
itself:
?Because OSI will no longer have Pfizer as its collaborative
partner in the clinical development of CP-358,774
(OSI-774), OSI is taking appropriate steps to increase its
expertise and capacity in this area.?
OSI will have to pay for development and any future
marketing itself. Anticipates that it could cost up to $25
million and will cut deeply into its cash flows. Company
?OSI anticipates a net investment of approximately
$25,000,000 in development of CP-358,774 (OSI-774) over
the next several years. As a result of OSI's recently
concluded private placement, which raised gross proceeds
of $56,500,000, OSI's strategic plan has been focused on
increasing investment in its own drug development
programs and seeking an opportunity to license rights to a
drug candidate from another company for development by
OSI. This pre-existing plan envisioned significant increases
in OSI's cash burn rate over the next several years, with a
projected operating cash burn of approximately $20-22
million/year for fiscal years 2001 and 2002. The
CP-358,774 (OSI-774) project supercedes the preceding
goal for in-licensing a clinical development candidate from
another company. OSI has current cash reserves of over
$83 million and anticipates an operating cash burn of up to
$12,000,000 for fiscal year 2000. Although as a result of the
acquisition of CP-358,774 (OSI-774), the cash burn may
now increase to as much as $22-24 million for fiscal year
2001, OSI does not intend to cut any existing programs. ?
Trial results:
?Phase I safety studies for CP-358,774 (OSI-774) have
demonstrated that CP-358,774 (OSI-774) is well tolerated
and revealed a reversible rash and mild to moderate
diarrhea, treated effectively with Loperamide (Imodium(R)),
as side effects from a 150 mg daily dosing regimen. A
sub-set of patients in both Phase I and II studies have now
received daily doses of CP-358,774 (OSI-774) for extended
periods (from six months to over a year) and over 100
patients have now received the drug with well managed side
effects. Enrollment has been completed for a 30 patient
single agent open label salvage study in ovarian cancer and
approximately 45 patients in non-small cell lung cancer and
is ongoing for a similar study involving 100 patients in head
and neck cancer. Patients in these studies have advanced
cancer and have failed standard treatment regimens. Data
continues to indicate that this drug is well tolerated and
there have been encouraging indications of activity,
including clinical responses, consistent with expectations
based upon the experience of competitor compounds. ?
Notice there is no word at all of how effective the drug is.
Only talk about the side effects.
Competition: larger outfits have drugs in more advanced
stages which do the same thing. Competitor drugs will be
in the market before this one.:
?OSI is aware of three companies, two of whom with
resources substantially larger than OSI, who are currently
developing drugs similar to CP-358,774 (OSI-774).
AstraZeneca PLC is developing a small molecule with a
close structural relationship to CP-358,774 (OSI-774)
called Iressa(TM) that is currently in Phase III trials. The
Pfizer/Warner-Lambert compound, CI-1033, now in Phase I
trials, is an oral quinazolin like Iressa(TM) but, unlike these,
is a "suicide inhibitor" which chemically reacts with a target
protein and is less selective against other tyrosine kinases.
Imclone Systems Incorporated is developing a different kind
of product, a humanized antibody, against the EGFR target
that is also in Phase III trials. AstraZeneca and Imclone
have both indicated an expectation that they will enter the
market in early 2002, ahead of the projected date for
CP-358,774 (OSI-774). ? |
