Conference call--for all who didn't get a chance to listen in, here are some highlights:
Propulsid deal terms -- J&J bears all development costs, SEPR to receive royalties starting around 10% and climbing to 15% as J&J's patents expire and as sales increase. These terms also apply to the other 3 indications for SEPR's Propulsid ICE (see next).
Propulsid is a 5-HT4 agonist; SEPR's ICE is also a 5-HT3 antagonist. Someone with a biochemical background might want to follow up the implications of this in more detail than I can. Basically, besides avoiding the drug-drug interactions that have limited Propulsid's market, the different "receptor binding profile" of SEPR's ICE opens up quite new therapeutic areas for the drug, including emesis, bulimia and irritable bowel. As one analyst said, the J&J deal is really 4X. So the $1 bn in Propulsid sales should increase because the new version is safer and more effective, as it also combats emesis, which frequently accompanies GERD. AND it opens up the emesis market itself where Zofran is a $1.5 bn drug, AND two currently very large but unserved markets for bulimia (3% of US women) and irritable bowel (10% of US population). Again, J&J has committed to do proof of concept in man studies for all these areas, plus pay SEPR royalties according to schedule noted above.
Cost of development -- this is much more significant than I realized. If they go ahead with all four indications, J&J's development costs for noracisapride (SEPR's ICE) would be "in excess of a couple of hundred million to the year 2000" TB said. He pointed out that DCL development currently underway by SGP (see below) will cost a similar amount. Cp SEPR's $250 million in cash. He figures SEPR is in the top 20 in terms of money spent on development among all pharma cos.
DCL status -- there's been some concern voiced here that Schering bought the rights to DCL just to bury them. TB says DCL is a "very large internal development program within Schering and remains on schedule."
Xopenex pricing -- They won't decide until the very last moment (based on physician interest, I guess, and reimbursement discussions) but they will set "certainly a premium price". They don't feel pricing will be much of an issue since currently generic albuterol is about $200-300/ patient/ year, ie not that much so a premium to that would "not be a budget buster". They say they are getting a good reception from doctors who are quite sensitive to the beta-mediated side effects and the argument that racemic albuterol is two drugs, one of which is unnecessary and possibly harmful. Study underway to prove later point.
Prozac ICE -- My interpretation was that negotiations with Lilly on the Prozac ICE are not going well. First TB pointed out that they are aggressively developing the drug on their own and are very excited about its profile, which, besides the faster washout also seems to avoid the anxiety-producing effects of early Prozac dosing. He said they are interested in working with Lilly, but there is a lot of value to SEPR or other third parties. Verbatim: "We are making good progress in our discussions on multiple fronts. The issue is to maximize strategic value to SEPR. We are intent on getting the right kind of terms out of the deal we cut eventually." He pointed out that Lilly's patents expire in 2001-3 and that thereafter SEPR or a third party could market the ICE. But I think they'd like to go with Lilly and bring the thing to market before there's generic competition, "in terms of value-sharing that would make a lot of sense for us." One last thing, he notes that the fastest growing drug in the depression market (what a phrase!) is Paxil, which has a profile much like the SEPR ICE.
Odds and Ends -- They looked at Viagra's side effect profile already to see if they could clean it up. They don't think so but I like the fact that they are on the ball, so to speak.
-- Our own Frank Haims, the riddler, asked about the incontinence product Oxybutidimine (?) which is in a proof of principle study that is fully enrolled and seems promising since no one has dropped out complaining of dry-mouth, the principal side effect they hope to eliminate, though the study remains blinded.
-- There seems to be a good chance Peter Suzman goes 2 for 2, as the Sporinox ICE seems quite promising and J&J has been so forthcoming. The parent drug is an antifungal which cannot be used in a prime indication, namely IV in hospital against systemic infections, since it is not water-soluble. The isomer of the metabolite is soluble and also avoids the drug-drug interaction problems of the parent.
-- Finally, TB spoke about the risk of takeover, which as far as I'm concerned would be a disaster, at any realistically conceivable premium. Basically, he's not adverse to the idea, but would like to see it later than sooner, since he feels short-term they will be building value rapidly through the licencing process.
All in all, very positive call, and no wonder the stocks acting so well.
Bruce
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