In October 2011, President Obama issued a directive to The FDA which in part, instructed it to get orphan designated drugs approved faster, with less stringency. I remarked in a recent article of mine that this directive could help companies like Keryx Biopharmaceuticals (KERX) and Aeterna Zentaris (AEZS), who collectively are developing a drug called Perifosine, gain approval from The FDA.
Perifosine is being researched and developed for a variety of cancer indications. In 2010, there were 178 shortages reported by the FDA with confirmed cases of patients dying, in part because of shortages of potential new and innovative life-saving drugs, also known as "orphan drugs."
Obama's order will require the FDA to expand reporting on potential drug shortages, accelerate review of new drug applications, manufacture scarce meds more efficiently, and share more information with the Justice Department to help fight price gouging, The New York Times reports. Similar provisions are part of legislation that's been lagging in Congress since February 2011.
The administration is also working to release 2 analyses of the market for injectable drugs, which dominate the list of scarce meds. With injectable drugs being scarce, and the administration working to help solve this problem, growth companies like Antares Pharma (AIS) are in strong position to reap the future benefits from this analyses report. Antares is developing VIBEX MTX, which is a patented pre biologic self-injectable system that delivers Methotrexate (MTX) in doctor prescribed doses. The VIBEX self-injector system can deliver a variety of drugs without the pain and trouble of a typical syringe, all in the comfort of a patients home, bypassing the need to receive an injection at their doctor's office.
In relation to Obama's FDA directive in his $3.73 trillion fiscal year 2012 budget announced February 14, is a proposal that seeks to reduce from 12 to seven the years of data exclusivity protection for "innovator" biologics against follow-on biologics. If passed, this will speed up the process of bringing these follow-on biologics, also called biosimilars, to market. This also should greatly benefit companies like Antares.
Drug companies are looking at the loss of about a third of their revenues due to the expiration of patents on key medicines. Of the top 20 branded drugs, 18 will lose patent protection in just a few short years.
New drugs just aren't being developed and approved fast enough to replace the drugs that are going off patent, which is why, in part, Obama has issued his directive, and will likely seek to issue more if re-elected.
This should also explain in part, why Bristol-Myers Squibb Co. (BMY) paid about $2.5 billion in cash for Inhibitex. BMY is one of the larger pharmas that will be losing patent protections soon. However, I am not so sure this was money wisely spent by BMY, as I believe there are better companies out there with better drugs in development.
Dendreon (DNDN) is one such company I believe has better drugs in development that should greatly benefit from the directive, such as D-3263 HCI;
D-3263 HCI is a small investigational molecule which activates the TRPM8 ion channel and can induce cell death (apoptosis). D-3263 HCI is in a Phase 1 trial for clinical evaluation in patients with solid tumors. Most assuredly, D-3263 HCI is an orphan designate drug candidate.
The biopharmaceutical sector is where investors should be focusing a good percentage of their portfolios this year, in my opinion. Investors should do careful and complete due diligence on any company they believe might have a drug that could benefit from the Obama directive. I have mentioned a few companies in this write up that will likely benefit from this directive in the years to come. I am sure with hard work, you can find many more companies that stand to benefit as well.
Disclaimer: This article is intended for informational and entertainment use only and should not be construed as professional investment advice. Always do you own complete due diligence before buying and selling any stock.
Disclosure: I am long AIS.