Signs emerged in March that the retinal imaging specialist Optos (OPOSF.PK) might be approaching a pothole in the road. The 90% drop in profits announced by the company this morning, however, was rather a larger pothole than anyone had foreseen.

The resulting fall in the company’s share price – 16% to a two-and-a-half year low of 134.75p on the London stock exchange – attests to the unexpected nature of this news. Things might not be as dismal as they first appear; outright device sales are strong and the firm’s own accounting practices make its financial situation look worse than it is. But competition is growing and it could take time for confidence in the company to recover.

Optical Illusion

The six months to March 31st saw Optos score profits of just $700,000, compared with $6.9m in the same period in 2012. This was in spite of a strong sales result

Biosensors International (BSNRF.PK) is not one of the biggest manufacturers of drug-eluting stents (DES), and though it has some innovative technology, it appears to have largely abandoned plans to contest the U.S. market. Instead it has turned eastwards, making inroads with its DES brands in China and Japan.

Its decision to acquire the California imaging company Spectrum Dynamics might herald a change of strategy. The $51m transaction will allow Biosensors to expand its product offering with devices that complement its stent business. And most importantly, Spectrum’s products are already on sale in the U.S.

As well as giving Biosensors a foothold in the U.S., Spectrum’s technology could be an asset in helping it get more traction in Europe and beyond.

Stent And Deliver

Only four companies have ever managed to get DES systems approved in the U.S.: Abbott (ABB), Medtronic (MDT), Boston Scientific (BSX) and Johnson & Johnson (JNJ). Biosensors

After years of safety worries about heart pacing leads, the sun could be appearing through the clouds for St. Jude Medical (STJ), with a large trial indicating that the wires it currently sells might be safe after all. An independent analysis of registry data on 11,000 leads has backed the Durata wires. Separately, a much smaller study on the now withdrawn QuickSite and QuickFlex wires has suggested that lead failures appear not to harm patients.

St. Jude, though, appears to have had enough of wires altogether. A private company called Nanostim has just seen a minor success in initial human trials of a pacemaker that is entirely free of leads – and St Jude looks set to acquire the firm next year.

Leadless Leader

Nanostim’s pacemaker is still at an early stage, and the results reported this week come from just three of the 11 patients enrolled in a prospective,

Give the people what they want. This old saw is applicable to more than just showbiz, it seems, and increasingly conglomerates are seeking to divide their pharmaceutical and medical device operations into separate businesses to appeal to ever more specific groups of investors.

Covidien (COV) is the latest company to follow Abbott’s lead in bisecting itself into a device developer and a pharma company, by planning to split off its drug business, Mallinckrodt, in late June. AbbVie’s shares have risen 30% since its divestment and, if Mallinckrodt can echo this, other small to mid-size conglomerates such as Baxter and Hospira could be tempted down the same path.

Congratulations on your divorce

The parallels between Abbott and Covidien are far from exact. Apart from the difference in size – the combined Abbott had a market cap of over $100bn whereas Covidien

Imagine that, like Merck & Co’s (MRK) Kenneth Frazier, you are a big pharma chief executive with $15bn knocking around. Do you acquire some red-hot biotech assets or simply buy back your own company’s stock in a bid to pre-empt a hemorrhaging share price?

This is, of course, a light-hearted question. But there is a very serious lesson in Merck opting for the latter option. The malaise that has swept through big healthcare stocks in the past week will trickle down to smaller players soon, and Merck’s caution shows that biotech valuations have departed from reality, throwing up red flags to those who think the junior sector can only keep on going up.

Make no mistake: big-cap stocks had a horrible first quarter. Amgen’s (AMGN) disappointing earnings caused a 7% share price fall, and were closely followed by poor performances at Pfizer (PFE), Bristol-Myers Squibb (BMY), Merck, and today

Yesterday’s diabetes alliance between two big pharma rivals, Pfizer (PFE) and Merck & Co (MRK), is driven by a familiar desire to share the risk of developing drug classes facing increasing regulatory scrutiny that nevertheless target huge potential markets.

The deal gives Merck access to Pfizer’s SGLT2 inhibitor ertugliflozin, as well as putting in play its combination with Merck’s $4bn DPP-IV inhibitor, Januvia, and it will be interesting to see how other diabetes players respond. The deal is of immediate relevance to Boehringer Ingelheim’s alliance with Lilly (LLY), and to the US biotech group Lexicon Pharmaceuticals (LXRX).

Obviously, securing the necessary cash to develop ertugliflozin cannot be the collaboration’s driver, and indeed the financial metrics are nothing to write home about. Signing fees and initial milestones amount to just $60m payable by Merck, and revenue and cost sharing

Compared with the behemoths of chemo and radiotherapy, anticancer embolisation technologies are small fry, used as salvage therapy in patients who otherwise have little hope. But this could be changing. The Australian group Sirtex Medical (SXMDF.PK) has started a raft of trials with the ambitious goal of moving its SIR-Spheres product from last place in the treatment sequence to first.

Sirtex is already outpacing Nordion (NDZ), the only company marketing a rival technology, and if the trials succeed it will lengthen its lead. But Sirtex’s real challenge will be convincing oncologists to abandon long-trusted treatments in favor of something newer and stranger.

Yes SIR

SIR-Spheres are resin microspheres around 30 microns in diameter, containing the radioisotope yttrium-90. In a minimally invasive procedure, millions of SIR-Spheres are infused via a catheter into the liver where they emit a dose of radiation that Sirtex says is 40 times higher than conventional radiotherapy.

Eli Lilly (LLY) has made it five out of five for positive pivotal data for its brightest pipeline hope, dulaglutide, setting the stage for an end of year filing for the GLP-1 agonist and the company's planned fightback against the dominance of Novo Nordisk (NVO) and Sanofi (SNY) in the diabetes space.

Yesterday Lilly reported results from the Award-2 and Award-4 trials, which put dulaglutide up against the long-acting insulin Lantus. In this test, the project again showed superiority when used as a monotherapy against Lantus, and when both it and Lantus were combined with Humalog. This rare feat for a GLP-1 agonist, repeating the results of previous trials where dulaglutide had shown superiority against Byetta, metformin and Januvia, could mean that despite its late entry to the market, dulaglutide could be a credible threat.

Safety First

Many had expected the data to be positive so there was little

The long-swirling rumors have at last coalesced into fact: Thermo Fisher Scientific (TMO) is to acquire the gene sequencing company Life Technologies. The deal will clock in at $13.6bn, making it comfortably the most expensive this year so far, and almost certainly 2013’s largest overall.

The buyout had been so widely expected – despite competing bids from Sigma-Aldrich and a private consortium – that definitive news of the agreement came almost as an anticlimax. The price, however, did come as a bit of a shock: analysts had been expecting bids in the range of $11bn. Thermo Fisher has spent top dollar to get a foothold in the genetic analysis sector. With genomic sequencing getting faster and cheaper all the time, it might have picked its moment wisely.

Thermo Fisher’s $76-per-share bid, a 12% premium over Life’s closing price of $68 on Friday, beat an offer from Sigma-Aldrich and

Bausch & Lomb is close to launching the first surgically implanted lens of its kind in the U.S. An FDA advisory panel has thrown its weight behind the Trulign Toric device, designed to replace the native lens in patients who have undergone cataract removal surgery, and so emphatic were its votes that approval looks likely.

The device is the first intraocular lens to correct astigmatism, as well as allowing patients to vary their focus – a property called accommodation – according to the FDA. The drive to get the lens approved is further evidence of Bausch & Lomb’s commitment to medical devices and, by extension, a diversified product offering. In a company believed to have been angling for a buyout this would perhaps be risky, although the latest plan seems to be to float a minority stake in Bausch & Lomb (Bausch & Lomb rumoured

With two major collaborations struck in the first 14 weeks of the year, the nanomedicine company Bind Therapeutics might figure prominently in 2013 deal-making reviews. Following a January deal with Amgen (AMGN), this week the private Massachusetts group signed an option deal with Pfizer (PFE) to develop multiple small molecule-based candidates that could see the smaller partner receive up to $210m for each product that makes it to the market.

Bind's chief executive, Scott Minick, tells EP Vantage he believes that the field of nanoengineered medicine has hit an “inflection point” after the analysis of early clinical data on Bind’s in-house docetaxel-based product, BIND-014. “The fact that these two deals happened in rapid succession tells you that very smart people who have a very sophisticated understanding of both the technology as well as the clinical need understand that nanomedicine is a strategic technology

William Demant's (WILLF.PK) $74m acquisition of Neurelec, a French cochlear implant specialist, has shown the hearing aid developer's faith in diversification as a business strategy. Added to the traditional hearing aids and bone-anchored hearing devices it already sells, the Danish group will benefit from Neurelec’s technology to become the only company in the world that covers all three product categories.

Neurelec is a relatively small player as cochlear implant developers go, but with the heft of William Demant behind it its technology could expand greatly. William Demant stole a quarter of the global bone-anchored hearing aid market from Cochlear in just two and a half years, UBS analysts say; if it can even come close to repeating the trick with the much larger cochlear implant market – $960m worldwide – the Neurelec buy will have been a wise one indeed.

Number four

The key to expansion is, as ever, U.S.

Thanks to a European regulatory verdict, the golden age of oral multiple sclerosis medications might be short-lived in the region. The European Medicines Agency's vote in support of Aubagio came with a surprise judgement that the Sanofi (SNY) pill does not merit a new active substance designation, a decision that could see it subject to generic competition as soon as 2016.

This will come as little comfort to Biogen Idec (BIIB) or Novartis (NVS), whose respective MS pills are forecast to earn about two out of every five dollars of sales from non-US markets. With European governments less lavish by default and no end of austerity in sight, generic forms of Aubagio have the potential to become the first choice for doctors who want a cheap oral alternative.

Disappearing advantage

One of the advantages of Aubagio was its similarity to the rheumatoid arthritis drug

Although some investors seem to think that AstraZeneca (AZN) will announce a major acquisition at its long-awaited corporate update this Thursday, an M&A flurry is unlikely to feature on the agenda for Pascal Soriot, the group’s recently appointed chief executive.

The reason? The company is still smarting from its disastrous pre-crash $15.6bn takeover of MedImmune and as the saying goes, once bitten, twice shy. True, there are no quick fixes, but radical change is both necessary and possible. The optimists will thus see today’s R&D restructuring as a prelude to bigger things.

Prudence is often wise, but caution should not be allowed to get in the way of a deeper corporate revamp involving smart deals, acquisitions and divestments. Neither is it the right response to the complexity and size of Astra’s problems.

The move announced yesterday will see Astra axe 1,600 R&D jobs, with another 2,500

U.S. approval of the cancer tracer Lymphoseek, granted on Wednesday, came as something of a surprise given a previous rejection and an approval decision date some six weeks off. But the good news for Lymphoseek’s developer, Navidea Biopharmaceuticals (NAVB), has been tempered by a drop in its share price.

Navidea’s stock has fallen by 15% over the past two days, wiping nearly $60m off the company’s market cap, and fell a further 7% today as investors took advantage of recent gains and sold on news of the NDA approval, as well as perhaps displaying uncertainty over Lymphoseek's ability to compete against a cheap generic.

Lymphoseek is tilmanocept labelled with a technetium-99 isotope. When injected, it binds to CD206 receptors in lymph nodes, and a hand-held gamma counter is used to locate the lymph nodes draining a primary tumour site. It has been approved

Back in 2007, when China’s Simcere Pharmaceutical (SCR) raised $181m in a New York float underwritten by none other than Goldman Sachs (GS), it left a significant equity interest in the hands of Jinsheng Ren, its founder, chairman and chief executive.

Six years on, the same Mr Ren is heading up a bid to take the business private again – at a 34% discount to the IPO. Without doubt the approach is opportunistic, barely valuing the company at its price of a year ago. But it also brings home the harsh new reality of China’s drug price controls, the 2008 market crash and the blind faith once put in emerging economies.

Simcere was one of the worst-performing Chinese pharma companies listed in the US last year, and underperformed the S&P 500 by some 25%. Last September, with the stock down 48% on its IPO price, Mr Ren

Medtronic parked its tanks squarely on Edwards Lifesciences' lawn yesterday by CE marking its Engager transcatheter aortic valve. Unlike CoreValve, the other transcatheter valve Medtronic sells in Europe, the device is delivered transapically. Medtronic will now be able to contest the 20% of the market over which Edwards has hitherto held sway.

Elsewhere in Medtronic's transcatheter aortic valve implantation (TAVI) franchise, though, trouble may be brewing: the FDA has warned that informed consent had not been properly obtained from some of the participants in CoreValve's pivotal US trial. Medtronic says that the issues are "site-specific" and will not affect the overall study but, with the European market increasingly crowded, US approval of CoreValve is crucial - anything that could delay it is bad news indeed.

From the bottom of my heart

Engager is approved for the treatment of patients with severe aortic

The advent of transcatheter heart valves has had a seismic effect on valvular disease: more patients can be treated more safely and more cheaply than ever before. The trouble is, the devices have only been approved for the replacement of two of the four valves in the human heart.

Abbott Laboratories (ABT) is attempting to extend the percutaneous approach to a third valve. Its MitraClip device is designed to repair, rather than replace, a malformed mitral valve. On March 20, an FDA panel will decide whether to advise the agency to allow this. But with efficacy data from its pivotal trial, Everest II, less than superb, Abbott must hope that the lack of a non-surgical alternative will swing the panel's vote.

Initial Population

The MitraClip is implanted using a catheter inserted into the femoral vein in the leg and threaded through to the heart. It is then used

A biotech company’s first ever market approval should be cause for a major celebration, but ImmunoGen (IMGN) shareholders largely shrugged off the FDA’s green light on Friday for the company’s antibody-drug conjugate “smart bomb” T-DM1 in metastatic breast cancer.

The nonplussed reaction proves that, as EP Vantage had speculated, the event was already priced into ImmunoGen’s strongly performing stock. More important for the biotech group is the read-across to the rest of its pipeline; the development of such conjugates has been no bed of roses, but approval of T-DM1 should validate ImmunoGen’s technology, on which many of its remaining assets are based.

ImmunoGen’s shares closed up just under 2% on Friday, valuing the Waltham, Massachusetts company at $1.2bn. The stock had risen strongly since a dip in November, when full details of the royalty ImmunoGen stands to receive from its partner Roche

Gilead Sciences’ (GILD) sofosbuvir has passed all its preliminary examinations, and now is looking like a good bet for regulatory submissions in the coming months. The last of four phase III trials in combination with one or both of the mainstays of current hepatitis C treatment has met its primary endpoint, likely providing sufficient data to support approval in combination therapy in the six major genotypes of the virus.

The pivotal data leave the California company tantalisingly close to reaching the holy grail of hep C treatment: an all-oral treatment that removes interferon and ribavirin – and their associated side effects – from the treatment regimen. With filing of the fixed-dose combination with GS-5885 not expected until next year, a limited approval of sofosbuvir should help Gilead begin to earn back the $11bn it spent to acquire the candidate.

Cold Fusion

The company reported data from the Fusion trial of