Scios (SCIO) 29.84 -1.64:
15:08 ET
Shares in this small biopharmaceutical firm are roughly 25% higher since we reviewed it in mid-March. As we pointed out at that time, Scios has been garnering attention of late as investors assess the prospects of its flagship drug Natrecor. The treatment is the company's first FDA approved drug (approval was received last August) and is designed for the intravenous treatment of patients with acutely decompensated congestive heart failure (ADCHF) who have shortness of breath at rest or with minimal activity. Among its benefits, Natrecor significantly improves blood circulation and patient symptoms compared to IV nitroglycerin, an alternative treatment, without the need for labor-intensive monitoring. In addition, its method of administration does not require frequent dosing adjustments. Natrecor is not associated with any increase in the incidence of cardiac arrhythmia and demonstrates no evidence of drug interactions with other compounds used concurrently in the treatment of acute CHF. In an effort to hit the ground running, Scios had completed the recruitment and training of 165 sales people prior to receiving FDA approval. It appears those efforts are bearing fruit as this February it signed Premier -- one of the nation's largest hospital purchasers, with over 1,600 hospitals in its network -- to a three-year contract for the treatment. In the company's first quarter, Scios recorded Natrecor sales of $15.4 million and management raised its fiscal year 2002 sales target from $55-$60 million to $75-80 million. On a longer-term basis, Natrecor is expected to generate between $200 million and $300 million in sales annually though speculation has surfaced of late that sales could be more substantial. Earlier this year, the treatment received favorable coverage in a trade publication which touted the effectiveness of Natrecor over a competitive product marketed by Eli Lilly (LLY). In addition, the applications for Natrecor as an outpatient treatment are also attracting attention. While Natrecor is already labeled for outpatient use, it has generated minimal revenues in this setting as historically outpatient management of CHF has been poorly reimbursed. Yet this dynamic has been expected to change as of April 1, 2002. Medicare has added two new reimbursement codes effective on that date for the outpatient treatment of CHF. These codes should provide financial incentives to physicians and hospitals to manage CHF on an outpatient basis, thereby keeping them away from much more expensive inpatient stays. Not surprisingly, Natrecor is believed to be one of the bigger beneficiaries of the new Medicare reimbursement codes.
-- Mike Ashbaugh, Briefing.com |
