Here's the juice
From Today's Barrons
Let's call him "doc."
That's what everybody calls him. Maybe because he is one. As it happens, he's not your ordinary sawbones. He's young, extremely bright and engaging. More to the point, he's very well versed in biotech -- what's hot, what's not. He has more than a rudimentary knowledge of the stock market; call him an interested spectator.
And, eager to keep his priorities proper and his reputation pristine, he doesn't invest. Nor, for much the same reason, is he hungry for publicity. As we say, not your ordinary sawbones or ordinary anybody else, for that matter.
Doc confesses to being an addicted consumer of medical literature, a compulsive reader of the stuff in all its splendor and, to the civilian eye, unintelligibility. Professionally, he keeps up to speed that way and, in the process, it provides him with insight into likely-looking drugs and companies, often while both are in their infancy.
We can't pretend to have known Doc very long, but after some extended chats with him, we can unhesitatingly vouch for his savvy, which is nicely edged with sincerity and modesty. In any case, in the course of conversation, he illuminated for us some of the more promising smaller biotech companies and what makes them special.
The good part is that the two companies he's most excited about haven't exactly set the world on fire, or maybe we should amend that to haven't exactly set the stock market on fire. They're both small, with capitalizations to match, have yet to earn any money, and the products they have that Doc is high on are still in the "Phases" phase. But they both enjoy sturdy financials.
Their names -- we knew you'd ask -- are BioTransplant and Corvas International, and both trade on Nasdaq.
BioTransplant has been around for a decade, still bears the "development stage" label, has fewer than 12 million shares outstanding, something under half of which trade freely, so we think it's fair to say the market for the stock is thin.
The company describes its operations this way: It's developing products designed to enable the body's immune system to better tolerate the transplantation of foreign cells, issues and organs. Among other things, its technology may prove useful in the treatment of a variety of diseases, ranging from rheumatoid arthritis to certain types of cancer.
Doc thinks BioTransplant will revolutionize the way transplantation is done. He expects great things from a product being developed in partnership with MedImmune called Medi-507, which is targeted against T-cells. With no little excitement, he notes that the drug is now in Phase II clinical testing (which is essentially to determine the effects of various dosages) for psoriasis.
In this country alone, he says, there are between 600,000 and a million people suffering from a relatively severe case of the disease and many millions more who are, to one extent or another, afflicted by it. Standard treatments, he explains, like ultra-violet light, risk subjecting the patient over the long-term to melanoma and carcinoma, while other drugs used are highly immunosuppressant and toxic. Newer entries have proved disappointing. Doc's contention is that Med-507, unburdened by most of the problems that have bedeviled past and would-be therapies, has a clear shot at becoming the leader in the field.
MedImmune is financing all of the research, but BioTransplant stands to reap effectively half the profits from Med-507. Doc expects the company to be in Phase III testing early next year -- and, if all goes well, the drug could come to market in 2004.
He's also keen on Bio's activities in xenotransplantation, which translates into the development of animal organs -- more specifically, in this case, pig organs -- for transplant in humans. This is a longer-range project, carried on via a joint venture with Novartis (the latter has a two-thirds interest in the project, BioTransplant, the rest), but the possibilities, so says Doc, are dramatic and huge.
Once again, the company's partner, Novartis, picks up the entire tab for the research and development, while Bio is in line for milestone payments and significant royalties. As a glance at the balance sheet suggests, BioTransplant is in decent financial shape. |
