UPAL,
I do not work in the biotech industry.
British Biotech v Chiroscience:
British Bio has risen sharply on sky high hopes for its orally active cancer drug, Marimastat. Marimistat is extremely promising and clinical trial results so far indicate the drugs efficacy in slowing the progress of a range of different advanced cancers. It is Marimastat's potential use in treating several different cancer types which give it "blockbuster" potential. Some analyts believe that if Phase III trial results in the next 12-18 months confirm the drug's efficacy then it could achieve eventual peak sales in excess of $1.5 billion. With huge profit margins on a drug which is relatively cheap to manufacture it is not hard to see why there is great excitement.
However, some more bearish observers feel that Marimastat's potential may be overhyped, since the drug is not a cure for cancer but slows down the cancers rate of growth, thus is likely to be used not as a stand alone treatment but in conjunction with other cancer drugs - a sort of two-pronged approach. Additionally, despite encouraging results in a number of Phase II trials, Marimastat is still to prove its efficacy in more extensive Phase III trials.
BB also has a number of other drugs in various stages of development and is about to file for approval on its most advanced drug, a treatment for pancreatis (by no means a blockbuster drug but could achieve sales in the $200-400 million range). This adds some support to its current market valuation but the bulk is on expectations for Marimastat. Obviously, if Marimastat fails to live up to its promise the shares could fall sharply.
Chiro I really like. It has a broad pipeline of drugs in development
including a mix of less risky chiral versions of existing drugs (to improve the safety profile) and new chemical entities. Its lead drug
is local anaesthetic Levobupivacaine, a chiral version of bupivacaine with a much better safety profile. This drug has already had positive results in a number of Phase III trials, with other trials ongoing, and Chiro expects to file for UK and European approval at the end of 97. Analysts think Levobupivacaine could achieve peak sales in the $300-400 million range.
The most exciting part of Chiro's development programme is its NCE's.
It is developing new drugs to treat arthritis, asthma and cancer, all
very big markets. Its MMP inhibitors for arthritis and for cancer(which will be a second generation version of BB's Marimastat), and its PDE IV for asthma are particularly exciting.
The recent acquisition by Chiro of Darwin Molecular I believe adds
significant potential, albeit long-term, to develop drugs and/or diagnostics in areas such as gene therapy.
In terms of which is better BB or Chiro, I think it depends on whether you believe that Marimastat will become a blockbuster drug. If
it does than BB could rise significantly higher even than its current
$2.5 billion valuation. The jury is out on this one.
Chiro, I think, offers an interesting mix of low and high risk development projects. Levobupivacaine stands a very good chance of making it to the market and could underpin much of the current $650 million market valuation. Its other drugs in development, particularly the NCE's offer massive upside potential. The potential from the acquisition of Darwin could be enormous but is unlikely to bear fruit for several years.
I have not heard of a Glaxo deal with Catalytica - what is it all about? |
