There is no demand problem for Enbrel. The company can't make product fast enough to meet demand. They currently have more than 1,000 patients on a waiting list and demand is only going to go up when the supply problem is removed. Enbrel is the treatment of choice for RA because the competing products now on the market are not as effective and/or have undesirable side effects. (Obviously this is not always the case for all patients -- some patients will not respond well to Enbrel and will prefer other alternatives. But that is the minority.) Products now in development which might pose a competitive threat to Enbrel are at least two years away from approval. Enbrel is generally well-tolerated and addresses a huge market. Label expansion to Psoriatic Arthritis looks likely at this point, and it is possible that it might be effective for psoraisis as well. Enbrel is one of the most successful bioengineered drugs to date, and it is still in its early innings.
The production constraints have been well-known for a long time, and were largely predictable. The company simply couldn't spend several billion dollars to build the production facilities before FDA approval of Enbrel was assured. We will see this same issue come up again with other companies and other drugs in the future, by the way, as other companies move production volumes from trials to commercial levels.
There is very good visibility on the Enbrel issue, and I believe that Enbrel alone makes the company a worthwhile investment for the next few years. Certainly at this pricing level. But in addition to Enbrel, the company has great management, good science, and has a number of other products currently in the pipeline. Its not my style to invest in potential drugs very far in advance of the NDA's or actual approval, but the pipeline does represent real value and the market does assign a value to them. So I would not expect the P/E to be based entirely on Enbrel earnings, which by the way seem to be underrepresented by the analyst community due to the production issue.
Certainly the P/E has suffered and will suffer for some time. I can't predict what the market will do regarding the biotech sector or with IMNX, but I am quite certain that in 12 to 18 months from now,when the Rhode Island plant comes on stream with commercial production, Enbrel sales are going to increase very dramatically, and that will get the attention of the market. I'm pretty confident that the market will rush to buy, and that IMNX will see some nice P/E expansion at that point, if not before.
If the street.com implied demand problems, then they don't know what they are talking about. It wouldn't be the first time.
My plan is to sit tight with my long term position until next year. I'll sell the trading position I took last night when we get a bounce. If we're lucky maybe we'll get the bounce this morning. Its trading up from last night's lows in the pre-market.
FWIW
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