Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: keokalani'nui who wrote (13271)	10/1/2004 10:18:41 AM
From: Biomaven	Respond to of 52153

The bullish for biotech view. The Oppeneimer analyst pretty much echoes my comments on DOVP yesterday: Adam Feuerstein Merck's Pain Is Biotech's Gain By Adam Feuerstein Senior Writer 9/30/2004 6:26 PM EDT URL: thestreet.com Merck's (MRK:NYSE) decision to yank its arthritis drug Vioxx from the market is yet another signal of the steady decline of Big Pharma, which bodes well long term for the biotech sector. Jim Cramer is right when he says that companies like Amgen (AMGN:Nasdaq) , Genentech (DNA:NYSE) , Biogen Idec (BIIB:Nasdaq) and Gilead Sciences (GILD:Nasdaq) stand to gain from the Merck mess. (Recently, only Amgen was down among those four, while the Amex Biotech Index was up 0.5% vs. the Amex Pharmaceutical Index's Merck-induced 2.6% decline.) No, these biotech companies don't sell pain or arthritis drugs that will benefit immediately from Vioxx's absence. But investors, if they haven't noticed already, will once again be reminded that it's the biotech sector where real breakthroughs in medicine are being developed, and where investors should be looking for long-term growth in health care-related stocks. One possible offshoot of the Merck blowup, and the rippling effect it's likely to have across the drug sector, might be that it spurs Big Pharma to ink more partnerships and/or acquisitions of smaller biotech companies. That's the view of one biotech hedge fund manager, who naturally stands to gain from any increased deal flow. "Big Pharma is in trouble. The drug sector is in the midst of a long-term decline and the situation is not turning around," he said in an impromptu interview at the UBS Life Sciences conference in New York. The Vioxx withdrawal, he adds, "is more evidence that biotech is the salvation of Big Pharma, and I think that means more deals are going to get done." Winners & Losers As noted earlier in RealMoney.com's Columnist Conversation, DOV Pharmaceuticals (DOVP:Nasdaq) and its experimental pain drug bicifadine may stand to benefit more directly from the Vioxx withdrawal. Conversely, NitroMed (NTMD:Nasdaq) , which is developing a second-generation Cox-2 inhibitor drug in a partnership with Merck, may be hit with delays. There is evidence to support and refute both these observations but DOV shares were recently up 70 cents, or 4.3%, to $17.05, while NitroMed's stock was down $1.15, or 4.7%, to $23.32. The development and marketing of non-narcotic pain drugs to treat mild to moderate pain has largely been a playground for Big Pharma, so there hasn't been much work done by biotech firms in this arena. The focus for some biotech firms has been more in the area of treating moderate to severe pain. DOV Pharmaceuticals is developing bicifadine to treat moderate to severe pain. Data released so far on the drug suggests that bicifadine, which works through a novel mechanism of action, has comparable or better pain relief than narcotics like codeine, but without the side effects, including addiction. DOV has recently started two, phase III clinical trials of bicifadine in patients undergoing bunion surgery, and patients who experience moderate to severe chronic lower back pain. Oppenheimer biotech analyst Scott Henry says that while DOV may well receive more investor interest in its bicifadine program because of Merck, he downplays making direct comparisons between bicifadine and Vioxx. "Vioxx is prescribed more in the wider general practitioner market for moderate pain, but bicifadine is targeting moderate to severe pain, which is a more isolated market and not as widespread as Vioxx," he said. Nonetheless, Henry is bullish on DOV and has a buy rating on the stock. His firm doesn't have a banking relationship with the company. NitroMed announced Thursday that along with partner Merck, it has halted phase II study of a second-generation Cox-2 inhibitor. But even with this uncertainty, NitroMed has nearer-term and more positive commercial prospects that are unaffected. UBS biotech analyst Maged Shenoudah, in a Thursday research note, said the key driver for NitroMed is BiDil, the company's drug to treat heart failure in African Americans. Shenoudah estimates BiDil will launch in the third quarter of 2005 and could hit sales of close to $300 million in 2009. Shenoudah rates NitroMed a buy and his firm doesn't have a banking relationship with the company.