Regarding your earnings model long-term:
Have you factored in the competition from ANIK? I am sure you have considered this, but in particular what is your view of the competetion in light of the information provided by Mr. Canto that BIOX's product causes an alergic reaction in some patients, while it is implied that ANIK's product does not.
While the figure with reactions given is low (1 - 3%), it would seem to be a significant negative factor.
Any thoughts on this? Have you taken positions in both, or are you still just holding BIOX?
It looks like the DEPO train is about to leave station. I know you are already aboard, so here'ss looking forward to a nice trip!
Courtesy of Mr. E. Canto:
Biox's Synvisc is composed of aldehyde-crosslinked hyaluronic acid (HA) with a
viscocity of 45,000 centistokes, an HA concentration of 8mg/ml and a protein
concentration of 28ppm (weight/volume). Anika's Orthovisc is noncrosslinked HA with
a viscocity of 35,000 centistokes, an HA concetration of 14.7mg/ml and a protein
concetration of only 2ppm (w/v). There are two other HA products out there: Hyalgan
(Fidia, an Italian company), and Artz (Seikagaku). Hyalgan has been recommended
for approval by the FDA, Artz is still trying to show efficacy in the clinic. Most studies
show that efficacy of HA for Osteoarthritis (OA) is dependent on viscocity. Hyalgan
and Artz are out of the competition with respective viscocities of only 185 and 1947
centistokes giving their products only some short term efficacy. As you can see Anika's
and Biox's products have similar viscocities and as expected, similar clinical efficacy.
Both Anika's and Biox's products are derived from animal tissues. The only difference
between them in terms of clinical use is that Synvisc produces allergic reactions in
apprx 1-3% of treated patients. The allergic reactions are though to be caused by the
crosslinking although it could also be due to the increased protein concentration (the
immune system usually reacts to proteins). The fact that Orthovisc contains a higher
HA concentration will probably work in its favor and is the likely reason for it working
just as well as Synvisc despite the 20% decrease in viscocity.
The bottom line is that both Anik and Biox will share the $1Billion OA market. There
should be no doubt that Orthovisc will be approved, BMY liked the ph III data
enought to pay $23M for US & Canada (while AHP payed the same ammount for
right to sell in: United States, Germany, Austria, Spain, Portugal, Greece and certain
countries
in the Middle East and Central Europe; Anik still has licnesing agreements for UK,
Germany, and France pending). There are no safety or allergic reaction concerns since
Anika has been selling Amvisc also made from their HA preparation for ophthalmic use
for years in the US.
Biox had a market cap of about $180M prior to FDA approval and I think Anika is on
its way there (hence my short term target of $20), the only thing slowing it down now is
the secondary offering. I'm not too concerned about the lead time that AHP will have
for introduction of Synvisc since the first 6-12 months after FDA approval are usually
spent arranging for insurance reimbursement and the like. Anika & BMY will find it
much easier to sell their product after insurance agencies are confortable with
reimbursing MDs for injecitons of HA to treat OA.
Hope that helps,
E.C. |
