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Biotech / Medical : VD's Model Portfolio & Discussion Thread -- Ignore unavailable to you. Want to Upgrade?

To: Biomaven who wrote (4735)	4/23/1998 1:18:00 PM
From: Vector1	Read Replies (1) \| Respond to of 9719

Motley Fool on CLTR Stock of the Day (Archive) Apr 23, 1998 Coulter Pharmaceutical vaulted onto the biotech scene last year with a promising new cancer treatment, Bexxar, for non-Hodgkin's lymphoma. Its stock price has tripled in the past seven months as positive results from clinical trials keep rolling in. Despite the big move in the stock, Wall Street analysts remain enthusiastic about Coulter's upside prospects, as several potential catalysts could occur for the stock this year. Coulter Pharmaceutical (Nasdaq:CLTR - news) focuses on developing cancer treatments based on two technological platforms, conjugated monoclonal antibodies and tumor-activated peptide prodrugs. If that sounds like a whole lot of scientific mumbo-jumbo, suffice it to say analysts think Coulter is well-positioned to become a major cancer therapeutics franchise in the next few years, as these proprietary technological platforms could be the basis for a number of breakthrough drugs. Coulter's lead product is Bexxar, a monoclonal antibody which is biologically engineered to target cancer cells without harming the surrounding tissue. Bexxar is already in pivotal Phase II/III clinical testing, and so far Phase II trials have shown Bexxar to be highly effective in treating non-Hodgkin's lymphoma (NHL), a blood-borne cancer of the immune system suffered by roughly 270,000 people in the U.S. alone. About half of those are of the type (B-cell) that Bexxar treats, and the company says roughly 54,000 new cases of NHL are diagnosed each year. Preliminary results show a remarkable response rate to Bexxar even among NHL patients who have previously failed chemotherapy. In addition to its apparently superior effectiveness relative to chemotherapy, Bexxar is tolerated much better, is easier to administer and is dosed over a much shorter duration. Phase II data presented last year showed a high rate of effectiveness including in multicenter results. This is important because it shows not only that the drug is effective, but that the results can be replicated when different clinics administer it using Coulter's proprietary protocol. Last month the company achieved target enrollment for its pivotal Phase III trial, and Coulter expects to file for FDA marketing approval by the end of this year. In the meantime, another potential catalyst may come when the company reports on supplemental Phase I/II tests for Bexxar at a meeting in May. Bexxar is called a radioimmunotherapy because a radioactive isotope is linked to the antibody, which seems to spur a more effective immune system attack on the cancer cells. Analysts are particularly excited about the fact that clinical trials are showing the radiolabeled monoclonal antibody to be more effective than the unlabeled antibody. This distinction could give Bexxar a big edge over rivals such as the unlabeled antibody Rituxan, developed by IDEC Pharmaceuticals (Nasdaq:IDPH - news) . IDEC's Rituxan hit the market late last year, and Rituxan appears to be a meaningful step forward in the treatment of non-Hodgkin's lymphoma, but preliminary data suggest Coulter's Bexxar in some cases yields comparable efficacy to Rituxan and chemotherapy combined. IDEC's marketing partner on Rituxan is Genentech. Coulter has yet to establish a corporate partner for Bexxar, but that's expected some time this year and could be another catalyst for the stock. Of course, even if everything goes as planned, Bexxar is at least a year away from FDA approval and Coulter Pharmaceutical is probably three years away from turning a profit. Given the strong potential not only for FDA approval but for widespread adoption as a treatment of NHL, analyst Kevin Tang of BT Alex Brown expects Bexxar to be a $300 million+ product for Coulter. Tang has a 12-month price target of $34 (it currently trades at $27.75). It's instructive to see how Tang arrives at his price target: he applies a Price/Earnings multiple of 30 times projected earnings per share of $2.63 in 2002, discounted back at a 30% annual rate. This is a useful reminder of basic stock valuation, called the discounted present value of future earnings. A dollar earned several years from now is worth a lot less than a dollar earned today, and that's especially important to remember with development stage biotech companies which often won't turn a profit for years (if ever). Furthermore, the certainty of those earnings is a major issue which dictates the degree to which an investor must discount. It's no secret that biotech stocks carry a very high risk/reward profile. For long-term investors with a stomach for volatility and an understanding of the lengthy drug-development process, though, its an exciting time to be looking at biotech stocks. Many experts believe the "genomic revolution" that is under way puts the whole industry on the cusp of a multi-decade boom, with potential for a tidal wave of breakthrough drugs for the many diseases like cancer yet to be tackled effectively. Coulter Pharmaceuticals is still just an up-and-comer, but it may become a biotech franchise worth considering.