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

To: Biomaven who wrote (8000)	3/11/2003 7:38:33 PM
From: JMarcus	Respond to of 52153

EPIX had good volume on today's spike. In the last 52 weeks the stock has only traded above 1M shares on one occasion: 7/31/02. Today's volume, 172,575 shares, was the 5th highest volume since then, and the highest since 10/14/02, when 223,600 shares were traded. The daily average is just 24,045 shares. Dr. Ron Garren's article appeared in Biospace.com this week at biospace.com. I wasn't buying any stock today, so maybe I'm not the only one reading his stuff <g>. Regarding market potential for just the angiogram procedure (EPIX is targeting other procedures as well), EPIX's website has this to say in its FAQs: <<We believe that MS-325 has the potential to replace the over five million diagnostic angiograms were performed in the United States in 1999 at a total cost to the healthcare system of over $9 billion. The number of diagnostic angiograms performed in the U.S. has been steadily increasing over the past five years and is expected to continue the same upward trend.>> Marc

To: Biomaven who wrote (8000)	3/12/2003 1:01:18 AM
From: JMarcus	Read Replies (2) \| Respond to of 52153

There's a helpful article on EPIX's MS 225 at diagnosticimaging.com. The author quotes Robbie Stephens' Wade King at pegging <<the potential U.S. market for intravascular contrast media, including their use in coronary artery imaging, at $75 million annually. MS-325 could have that market all to itself initially, assuming it receives FDA marketing clearance for use in the aortoiliac arteries in early 2003, as the company hopes.>> Well, hope springs eternal, but EPIX still appears to have a good lead. A $75M annual market is certainly a small fraction of the $8B spent on angiogram procedures. Perhaps King is underestimating the market potential. Marc

To: Biomaven who wrote (8000)	4/8/2003 1:00:05 AM
From: JMarcus	Read Replies (1) \| Respond to of 52153

Peter, Ron Garren has just posted the following thoughts on EPIX at www.biospace.com: <<This last week I visited Epix Medical (EPIX) in Cambridge. I wrote about this company in the recent past (subscribers see archive) and think it is a buy in the $7-8 range, although it is up this am at the open. To reiterate, their product, MSR-325 is an altered form of gadolinium (the contrast agent used with MRI) that binds the serum protein albumin when injected intravenously. The concept is that the albuminated gadolinium stays within the vascular tree for an extended time because of its large size and thus allows for exquisite imaging of both arterial and venous vessels. The gold standard for visualizing arterial vessels is arterial angiography. The problems with this type of study are that the contrast agent can cause both an acute allergic reaction and renal failure in renally impaired patients (and many patients undergoing angiography have some element of diabetic nephropathy to begin with). Another problem is that angiography entails sticking a needle and catheters in the arterial system which can cause bleeding. Further the procedure is expensive probably costing the hospital on the order of $3000 per case. If a relatively non-invasive MRI procedure could give you the same information without toxicity and at a greatly reduced cost it would become the new gold standard. This is where EPIX is planning to make their mark. MSR-325 is almost as cheap to produce as plain gadolinium, it is not nephrotoxic (safety studies are planned for patients with creatinines above 2), allergic reactions are very rare (no antibodies have been observed) and the imaging appears to be as good as angiography. EPIX is reporting on the last two of three Phase III studies this summer. The first Phase III in the aortoiliac region showed the image to be as good as angiography. The last two studies will look at the smaller leg vessels and the renal vessels. An FDA filing should follow in the fall. Currently all the major MRI manufactures are working on programs to subtract out the venous phase to better show up the arterial vessels. Also work is in progress to gate for coronary vessels and EPIX expects to launch a trial sometime next year for this indication. Some beta software programs can now gate for cardiac vessels without EKG leads. Respiratory gating is also solved by a software fix. To fill in the competitive landscape I should mention that currently some vessel imaging especially in the head and neck is done by a procedure called MRA, a time of flight concept that doesn't entail any contrast agent. This technique is much less satisfactory for the rest of the arterial tree and besides with MRI using MSR-325 you see the whole arterial system from head to toe with one sitting and the radiologist will probably be able to charge for different readings on the same set of captured data. EPIX is partnered with Berlix (Schering AG) which already has 60% of the MRI contrast market (Amersham has about 25%). The current US MRI contrast market is about $270 million. There were about 3.6 million non-coronary angiograms done in '01 with about half using MRI. EPIX plans to convert a portion of these to MRI with MER-325. At peak sales if EPIX can capture 3 million procedures (the number of these procedures is increasing yearly and with the advent of potential good MRI cardiac vessel imaging the number could go up dramatically) they should be able to bring almost $150 million to the bottom line. Here is how the company figures it. Berlix would have to sell a vial of MSR-325 for $150 in order to make the same profit as their current gadolinium which sells for about $75/vial because Berlix splits the profit with EPIX. Out of the $150, $20 is cost of goods leaving a gross margin of $130. SGA accounts for another $30 leaving $100 profit to be split two ways. With these economics Berlix does just as well whether they push plan gadolinium at $75 or MSR-325 at $150. 3 million procedures at $150 would net Epix $150 million and with virtually no other costs almost all of that goes to the bottom line-not bad. I think their scenario just could fly-I've seen some of their scans and the detail is exquisite. Also another important factor is that with enough contrast you can also see the adventitia thus giving details on plaque size (similar to IVUS-intravascular ultrasound). EPIX also has another product (EP2104) in trials to image vascular clots-it binds to fibrin. For a number of reasons I don't think this will be much of a winner-I mean we already have ultrasound which is good at picking up clots in the leg veins and if we still suspect a clot and don't find it we treat anyway. However it could possibly be much more reliable than VQ scans and CT pulmonary angiography for picking up pulmonary emboli and I could see it being used for that indication. One potential problem with the Epix story is that all of the procedures require time in an MRI machine (magnet time) and this competes with other studies. However MRI sales are still strong and I think this will just force hospitals to get another scanner. The company has $28 million in the bank and had a burn rate of $20 million last year due to all the Phase III trials. The company expects it will need $30 million to get through the FDA (EPIX is responsible for clinical development and approval in the US) and will either have to sell more stock or do a deal on their next product. I like EPIX because of it has a late stage product which is way ahead of any competition, production costs are cheap, the medical imaging market is already established and they have a partnership with the main player-and virtually all sales will fall to the bottom line because there are no other research programs except for 2104, which will probably be partnered. The next data point will be the release of the last two Phase III trials and of those visualization of peripheral runoff in the lower leg will definitely be the most important. I believe it will go well. The stock has recently fluctuated between $7 and $8 but is up with the rest of the market at the open. >> Marc