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Biotech / Medical : Agouron Pharmaceuticals (AGPH) -- Ignore unavailable to you. Want to Upgrade?

To: per strandberg who wrote (2862)	11/17/1997 12:54:00 PM
From: Randy Schmid	Read Replies (4) \| Respond to of 6136

Hi all, back from some extended business trips. Was at a conference on Chemical Development in SF, where several Agouron scientists were in attendance, and one presented research on improvements to the synthesis of Nelfinavir. Also chatted informally about their pipeline and life at Agouron. As I find with most of my chemist colleagues, the AGPH scientists shared their perspectives on public domain info, but the perspective, as always, helps complete the picture. On the synthesis side: Nelfinavir is built using three pieces, which are assembled in the final steps of the synthesis. Assembled in a linear fashion, i.e., piece A stuck to piece B stuck to piece C, the focus of Agouron's process group has been to refine the synthesis of the B piece, which is the most challenging synthetically. A tough nut to crack, but they're making progress, and what we saw presented is undoubtedly a snapshot from about 1 yr ago, meaning there's a lot more new chemistry going on that should help lower manufacturing costs. The A and C pieces are a study in working with chemical intermediate suppliers. When it was in development with Nelfinavir, AGPH had a deuce of a time getting any vendors to synthesize A and C. Now the price per kilo of each has dropped precipitously, and everybody and their brother wants to sell A and C to them. The implications are that the vendor and synthesis improvements should be accretive to the bottom line. One of the few things a company can do to improve their margins other than raise the price and hold costs fixed, is to improve the Cost of Product Sold (COPS). Improvements (reductions) in the cost of synthesis can impact margins somewhat. Since Agouron is a "virtual" manufacturing company, those improvements and cost reductions have to be shared with their toll manufacturers, but it should still help. Recall that, with about 80 mill this past quarter, only 4 mill made it to the bottom line (5%). Thats on the low side, but there's a lot of other costs associated with joint ventures and partnerships that eat into profits for AGPH. One source assessed Thymitaq as a "good cancer drug", but was quite excited about the early indications of its synergy with radiation therapy. The source was of the opinion that the delay in filing was owing to slow patient enrollment in the trials (CTs on cancer drugs can be notoriously slow). Approval of the drug for head and neck cancer must be distinguished from the drugs approval in combination with radiation, which is much farther away. While benefits of off label use prevalent in chemotherapy may accrue, I think the drug will do modestly well, which is fine for a company AGPH's size, and may pull away if the combo therapy with radiation is clinically verified. They are targeting Rhino C inhibition for patients with significant upper respiratory tract infections. There's been a lot of excitement on the thread about the rhinovirus C protease inhibitor program. While there's a lot to be excited about, its all potential. Rhino C programs have been around in big pharma for about 15 years; many companies have passed because of the difficulties in assessing whether there really is a market for treating the common cold - people get them all the time, and they resolve fairly quickly. The same factors that lead a big pharma company to get cold feet may well be an advantage to a little pharma like AGPH, which can accept smaller markets. The compound isn't in humans yet, and that means 5-7 years until its marketed. Keep that in mind. AGPH is nimble enough to bring things to market at optimal speed, but it still takes a chunk of time and dollars to bring a drug to market. Didn't hear much about other compounds. The rate of expansion in the chem group and elsewhere is geometric, and with all the defunct biotechs in San Diego, one can rent lab space the way we rent office space elsewhere, so there's no dearth of availability. One last item that I wasn't aware of. AGPH as well as apparently many other biotech companys take a saavy approach with respect to aquisition. They look to partner with as many big pharmas as they can, and each partnership agreement inevitably contains a "no buyout or hostile takeover" clause. This helped me understand why Roche hasn't aquired them, or anyone else for that matter. The sources really had no concern about their job security from that perspective (or any other for that matter). All in all, some useful information. Regards, Randy