On May 13, 2008, I wrote about the likelihood of Myriad Genetics’ (MYGN) Flurizan failing its phase III clinical studies for Alzheimer's disease.  I don’t want to revisit the rationale for my skepticism again, but those interested can view the article and comments that describe it in some detail. 

Not too many folks consider India when thinking of pharmaceutical services.  That is changing.  The pharmaceutical service sector had been somewhat late to the outsourcing party compared to the IT sector.  But it is expanding quite well. According to research firm Frost & Sullivan, the pharmaceutical outsourcing business in India will grow to around $7 billion by 2013. A report by Value Notes forecasts a growth of 23.6 percent annually for the industry up to 2010.  

Currently, India conducts about 1.5 percent of the global clinical trials. This could rise to five percent by end of 2008 and 15 percent by 2011.  Outsourced pharmaceutical manufacturing activity in India is expected to cross $1bn by 2010 (Motilal Oswal Report).   

Since my last articles on smallpox and anthrax, I found out about Cangene (CGNOF.PK), a Canadian company.  Looking into it, I found out that Cangene has products related to smallpox and anthrax.  For anthrax, it got an award from the US department of Health and Human Services on July 28, 2006 to purchase 10,000 therapeutic courses of treatment of Anthrax Immune Globulin [AIG] for a total of $143,833,719 (source). 

Fascinating that two companies (Cangene and Emergent Biosolutions (EBS)) use the same nomenclature for their anthrax antibody – AIG.   AIG is not a common acronym such as IVIG (intravenous immunoglobulin) that many companies use.  The companies should talk to each other to avoid confusion over which company has the rights to use the term AIG. 

Elan (ELN) and Wyeth (WYE) presented their phase II data on June 17^th with bapineuzumab in Alzheimer’s Disease. 

In brief, the data showed that out of the 240 patients in the trial, those who had no apoE4 had statistical improvement compared to those who did. The skeptics made their case, to which I reply:

This is the second of two articles on bioterrorism and the companies involved in the field.  The first article was on Smallpox.  This one is on Anthrax. 

Anthrax is caused by the gram-positive bacterium Bacillus anthracis. The bacterium exists in nature in two forms: vegetative and spore. A spore can persist for long periods of time (even decades) in the environment. When it enters a human or animal host, the spore becomes a vegetative cell that produces three toxins. Anthrax Protective Antigen [PA] initiates the onset of the illness by attaching to cells in the infected person where it then facilitates entry of the two additional destructive toxins - Lethal Factor [LF] and Edema Factor [EF] into the cell.  Anthrax in humans can be pulmonary, cutaneous, or gastro-intestinal depending on the mode of entry (inhalation, contact, or consumption of tainted food). 

Since 2001, bioterrorism has become a well-recognized threat. The list of possible agents is long, and includes Bacillus anthracis (Anthrax), Clostridium botulinum (Botulism), Francisella tularensis (Tularemia), Variola Major (Smallpox), Yersinia Pestis (Plague), etc. Do companies that work on these threats represent an investment opportunity? I don’t plan to write on all these diseases – just two of the more visible ones. This article will concentrate on companies working on Smallpox and the follow up article will focus on Anthrax.

Smallpox

A virus, Variola Major, is the cause of Smallpox. The disease was declared eradicated worldwide in 1980; the last naturally occurring case was in Somalia in 1977. Routine vaccination against smallpox in the U.S. stopped in 1972, and Dryvax (made by Wyeth from Vaccinia, a relative of Variola) production was halted in 1982. After the eradication of smallpox, the World Health Organization (WHO) recommended that all remaining stocks of Variola virus be destroyed or sent to one of two designated reference laboratories: at the Centers for Disease Control and Prevention [CDC] in Atlanta, Georgia, or the Research Institute of Viral Preparations in Moscow, Soviet Union. It was discovered later that Russia moved its smallpox samples to VECTOR, a Siberian facility that had previously served as a biological weapons development plant.

Editor's note: This article was corrected on June 1.

Democrats and stem cells -- a budding romance. Pundits opine that this will be the year of the Democrats, at least as far as Congress is concerned. Conventional wisdom holds that pharmaceutical stocks suffer under the Democrats due to concerns over pricing and liberal drug importation.

Myriad Genetics (MYGN) has a diversified portfolio, which includes genetic testing as well as therapeutics. While the genetic testing part of the business continues to grow well, the run up in the stock over the past two years reflects hopes that the company's r-flurbiprofen (Flurizan) for Alzheimers Disease [AD] could be a huge blockbuster.

Here is the science, for what it's worth. R-flurbiprofen (like other anti-inflammatory compounds) lowers toxic Aβ42 production by selectively modulating γ-secretase activity to shift cleavage of amyloid precursor protein [APP] away from Aβ42 production toward shorter, less toxic peptide fragments. This would inhibit the cascade of amyloid accumulation, plaque formation, and neurodegeneration that are the hallmarks of dementia.

For a long time, few drugs were developed for rheumatological diseases. It was considered unattractive from a commercial viewpoint since relatively few patients (compared to cardiovascular diseases, for example) suffered from them. It was also thought that this market had little pricing power.

This changed dramatically with biologics such as Etanercept (co-marketed by Amgen (AMGN) and Wyeth (WYE)) and Infliximab (Centocor, a division of J&J (JNJ)). Developed for rheumatoid arthritis [RA] and inflammatory bowel disease [IBD], these compounds changed the treatment paradigm. Much better efficacy was possible, and today these drugs sell in the billions. Rheumatology suddenly became hot. So much so, that one can argue that with anakinra (Amgen), adalimumab (Abbott (ABT)), abatacept (Bristol Myers Squib (BMY)), and rituximab (Genentech (DNA)), the field of RA therapy may be getting a bit crowded with biologics.