Art,
I agree with you on antihistamines. One cautionary note is that once the Claritin generic is available sometime after 2004, there will certainly be some price pressure on all the non-generics. BTW, Zyrtec patent expires in 2002, so we could see some pressure earlier.
On the plus side, however, there is Nori. People seem to be assuming that no news is bad news, and in biotech land that is generally true. However, in pharma land the rules are different, and publicity about Nori is governed by J&J, not SEPR. I have no idea what the results of the studies they are running are, but even if they were spectacular we would still likely hear nothing for now. Remember this is a 50:50 deal, and so if the drug lives up to its billing from before the news blackout happened, Nori would likely be the dominant drug in SEPR's early portfolio.
From the Morgan Stanley report it seems that a Nori launch is now scheduled for the end of 2002 because SEPR is running animal carcinogenicity studies:
Additionally, Sepracor is conduction carcinogenicity studies in animals. When broken down in the body, not all Hismal is converted into the active metabolite, norastemizole. Therefore, when giving equivalent norastemizole doses directly, the body is actually exposed to increased levels of the metabolite. Because of this effect, the Hisminal carcinogenicity data cannot be bridged to the norastemizole trial. Conducting these studies will delay the launch of norastemizole to late 2001 from early 2001, by our estimates. This reduces revenues for the product in that year to approximately $20 million from $200 million. These studies do not represent a risk to the timeline of other products as the company has already identified the compounds for which the data will be required (formoterol, oxybutynin, norcisapride, etc.) and for which it will not (fluoxetine, ketoprofin, doxazosin).
I think the weakness we are encountering is partly the result of analysts catching up with SEPR's more aggressive development strategy. As the models now show bigger losses in earlier years, offset by bigger profits in later years, anyone who is skeptical or (equivalently) uses a very high discount rate will award SEPR a lower present value. Personally I have enough confidence in SEPR management to believe that they wouldn't be undertaking the new projects if they weren't very confidence they would be value-adding, and increase SEPR's PV.
Peter |
