J&J stopped discussing the Propulsid ICE (norcisapride) a while back, and that certainly was a red flag. SEPR has low double digit royalties on this program, so it potentially was a significant source of income to them.
It's very hard to judge from the release how serious this side effect issue is. J&J is likely to be very cautious here, given they have a number of Propulsid suits to defend. We don't even know what side effect it is they are concerned about - I'd be surprised if it is QTc prolongation, the issue that killed Propulsid. The likelihood of resumption depends also on what efficacy they were seeing - if they view the drug as promising they would be more willing to overlook some rare side effect and hope the FDA agrees with them.
I've always said that SEPR ICE's have about a 80% chance of approval. They've had one clear failure - the Prozac ICE. They've had two clear successes (Allegra, which is a billion dollar drug, and Xopenex, which is slated to do $100m this year in its limited dose form). Clarinex (Claritin ICE) is approvable, and I would say that norastemizole will almost certainly be approved as well.
Thus I would say out of six drugs so far they have four successes and one still to be determined (norcisapride).
On the stock price, SEPR is still a story stock, and they have had a number of blows to their story. The market is likely to remain quite skeptical unless they get some good news or start bringing home real revenue themselves. The company cites a $2 billion/yr revenue goal in 2005. If that is correct, the stock will prove a good investment over the next four years.
Peter |
