All,
I follow a company named Sepracor, they IPO'd Chirex and retained a 33% stake. It involved a merger of their chiral mfg business and a drug facility in England. Sepracor is a fine company and much of Chirex future is dependent upon them succeeding.
Chirex is trying to stake a niche in drug manufacturing, specifically toward chiral compounds. In brief drug molecules today exist in racemic or random versions of two near identical isomers of a particular compound. It has been known for some time that the versions do not always work the same way, one provides the benefit while the other may cause a unwanted side effect. It is only recently that these compounds could be manufactured in a cost effective manner
The FDA has instructed drug developers to manufacture their new drugs, NCE's in a chiral version, this is very positive for Chirex.
Chirex has by far the most patents in this type of manufacturing, however they can be worked around. A key is that they are providing ingredients to a great deal of drugs in development and when these drugs eventually get approved Chirex should benefit markedly.
Only a small fraction of drugs marketed today are chiral, in the future most drugs will be chiral versions.
Chirex is also working on developing very very niche generic drugs. The first drug they have targeted is Taxol. This should be a great target for a generic. They have lined a supply of Taxol from an Indian company, the raw material comes from the bark of a Yew tree, so few generics will be able to duplicate it. This is a 50/50 JV with an Indian company called Dabul. Taxols patent runs out in about two years.
The last real key is Sepracor. As part of their spinoff, Chirex retains the rights to manufacture all Sepracor developed drugs with a set 25% MARGIN, which is healthy. Sepracor has a key drug, a chiral version of Albuterol in Phase III. An NDA is expected next year. Sepracor has a very broad pipeline of drugs that should rapidly go through clinical trials.
I own a fair amount of Sepracor and like their prospects.
I have been following Chirex closely but do not own any. I almost bit at $8. I wish I had. Chirex does look like a good company that should do well, although I think Sepracor has a much greater upside potential.
Good Luck |
