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Published today at westergaard.com
...Protein Design Labs (Nsdq:PDLI), and Neurogen (Nsdq: NRGN). For PDLI, its drop 7.375 points to 39.375 was in reaction to news that its development partner, Boehringer Mannheim GmbH had exited its hepatitis and CMV retinitis collaborations. Dropping a CMV retinitis drug, to us is a positive for PDLI, after seeing that GILD's Vistide for the same disease has only realized about $15mm in total sales since mid 1996.
As for Neurogen, its shares fell on Tuesday after the company said patients in an early-stage test of its obesity drug NGD 95-1 experienced unexpected, but "significant (severe?) elevation of certain liver enzymes." This news resulted in a loss of $96.5mm of market cap for NRGN, 1/3 its former value.
We see this as yet another example of why SuperGen (Nsdq:SUPG) is the model of downside risk management in biotech. From investor reaction to the NRGN news, we see that the present contribution to market cap of early stage obesity drugs is $100mm. We ask if investors have built $100mm of value into the shares of SuperGen for their obesity drug, now in Phase II trials? If so, that only leaves $180mm in value for its entire generics line, supergenerics, and proprietary compounds - products from which the company has been put on all the major HMO formularies and will garner profitability by end 1998. $180mm for a profitable company in biotech? No such thing. Comments? |
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