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Biotech / Medical : Biotech Valuation -- Ignore unavailable to you. Want to Upgrade?

To: tuck who wrote (1685)	9/18/2000 12:59:25 PM
From: keokalani'nui	Read Replies (4) \| Respond to of 52153

The end of the Signals article has a hook. (Emphasis mine.) According to Stanford Law's Barton, the patent case that could have the biggest impact on biotech in the near future doesn't concern biological molecules at all: It's about algorithms. John Barton In AT&T Corp. v. Excel Communications Inc. (1999), the Federal Circuit Court of Appeals reaffirmed the patentability of software. (The case concerned software governing long-distance telephone calls. The patented process aids long-distance carriers in providing differential billing for subscribers, depending on whether they call someone with the same or a different long-distance carrier. AT&T's process uses subscribers' primary interexchange carriers [PIC] as data.) The Supreme Court had already affirmed that "even though a mathematical algorithm is not patentable in isolation, a process that applies an equation to a new and useful end is at the very least not barred at the threshold." And the Federal Circuit supported that decision in State Street Bank & Trust Co. v. Signature Financial Group Inc. (1998): "A mathematical algorithm may be an integral part of patentable subject matter such as a machine or process if the claimed invention as a whole is applied in a useful manner." Importantly, the Court also addressed whether there need be a physical requirement for software to be patentable. "The mere fact that a claimed invention involves inputting numbers, calculating numbers, outputting numbers, and storing numbers, in and of itself, would not render it nonstatutory subject matter unless, of course, its operation does not produce a useful, concrete and tangible result." According to Barton, this ruling means that it will be possible to get a patent on an abstract procedure or an algorithm. And it will impact biotechnology. For instance, he continued, "We will quickly see patents on computational methods for calculating protein folding." According to Barton, "This case is saying that it's a lot harder to draw the line between the discovery of a scientific principle and the development of a patentable invention." (Putting aside for the moment--how about forever--whether lawyers make good investors) Is Prof. Barton giving us a peek at something here? I presume by "calculating protein folding" he means in the predictive, screening sense; and not what would be extraordinary—patents on the discovery of how and why proteins fold the way they do (this isn’t really known yet, right?). Any guesses as to who he might have in mind? Wilder post script: I see my 'emphasis' did not arrive. How do you all italicize or highlight passages?

To: tuck who wrote (1685)	9/18/2000 1:17:58 PM
From: Biomaven	Respond to of 52153

tuck, I think NEOT is definitely stretching the generally accepted terms here. I've never seen any clear distinction made between "research" and "development." However, a company's "pipeline" is not normally considered to include every last molecule and variant thereof they are looking at. Companies often do include research/preclinical compounds in their pipeline, but generally only after they've picked a lead and maybe a backup or two. Incidentally there is a great site offering a 30 day free trial: ndapipeline.com This is the "Pink Sheets" people. A search for NEOT comes up with only two distinct hits - AIT-034 and AIT-082 (Neotrofin - two indications). By contrast, VRTX has about 20 hits and SEPR about 40. Of course this site is incomplete - for example it is missing the other 3 NEOT compounds listed on their web site. However for most companies it shows more compounds than they generally talk about. Peter

To: tuck who wrote (1685)	9/19/2000 3:01:51 AM
From: tommysdad	Read Replies (2) \| Respond to of 52153

<<So is NEOT's definition of a "drug development pipeline" too broad or mine too narrow?>> Yours is good. NEOT's is somewhere beyond Pluto. The answer is found on their own website, which you linked (thanks). AIT 297 is listed as "preclinical", but when one scans down to the description of what they have actually done on AIT 297, it sounds like they tested it in a few in vitro assays and then sent it off to PanLabs for cross-reactivity profiling (maybe). AIT 202 is even worse: they make it sound like a micromolar hit on one or more 5-HTs. (This is a drug?) So those molecules make their "Product Pipeline" chart on the website, and your contact at the company claims 90 other molecules count as "drugs" when they, apparently, are not even that "advanced". This is all very silly. It is (unfortunately) not uncommon for your average discovery-stage biotech to list just about anything that pops up as a hit in a screen as a potential "drug" in the "pipeline". You must be careful of such companies -- once they name a compound, it is very difficult to kill it, lest that be viewed by the investment community as a major setback. In fact, it's a natural by-product of the drug discovery process, and the earlier one kills such molecules the better (allows one to spend valuable resources on better molecules). For an example of a "pipeline" that is well-described but not oversold, go look at the Agouron site (who knows how much longer it will be up -- the Agouron signs are being replaced with Pfizer Global Research and Development signs, so the website could be next . . .). It hasn't changed much since before the Warner-Lambert buyout. In my opinion, if a compound is not in Phase I, don't count it UNLESS the company has published (or given a detailed presentation at a respected scientific conference) full pharmacological details of its action in a relevant animal model, WITH pharmacokinetic results relevant to the anticipated dosing regimen. And even then only count it as half, unless they also publish something about safety and/or dose-tolerance over an extended period of time. In addition, a colleague of mine once clued me in to how much a company really believes in their Phase II compounds: if the cohort is less than 20, it's a smokescreen. If it's 21-50, they're guessing at the indication. If it's 51+, they really believe. Best of luck.