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Healthcare companies still desperate for a partner 4 comments
Six months on from EP Vantage’s review of companies in critical need of securing a partner for their late stage asset (Companies desperate for a partner, November 28, 2008), not only to commercialise the product but critically to provide much-needed cash, the same analysis reveals that the list has grown from 22 to 24 companies, with only Cougar Biotechnology truly successful in finding a partner following its recent takeover by Johnson & Johnson.
Almost two-thirds of the original list of 22 companies appear again (see table below), suggesting that the majority of partnering discussions have been slow to progress. Whilst the likes of Mannkind, NeurogesX and NicOx remain convinced that a major partnership is just around the corner, the going concern statements affecting others like Anesiva and Repros Therapeutics reflect the dangerous predicament a number of these companies are currently facing.
The following analysis presents essentially one-product companies, whose single-product NPV equals the total NPV, who have yet to sign a partner for their late stage asset in a major market.
Meanwhile, La Jolla Pharmaceutical also drops off the list, having almost produced a fairy-tale ending for its arduous development of lupus drug Riquent by signing a deal with BioMarin Pharmaceutical, only for the drug to fail in phase III trials (La Jolla drug failure leaves few options, February 12, 2009).
Current predicaments
Probably the most high profile name on the list is MannKind, the only company brave enough to be pushing on with an inhaled insulin product. At the recent American Diabetes Association meeting earlier this month, the company’s chief executive Alfred Mann was once again talking up prospects for a deal. Despite the company’s bullish stance real concerns over the approvability and commercial potential of the product exist. As such, the chance of securing a deal before the outcome of the January 15, 2010 PDUFA date is known, looks slim.
Advanced Life Sciences' chances of finding a partner for its antibiotic cethromycin were effectively dashed by a ruling by an FDA advisory committee earlier this month. The panel ruled in favour of the drug’s safety, but voted strongly against efficacy. A decision from the regulator due by July 31 is unlikely to be positive.
Although ALS has $2m cash at hand and has the option to draw down a further $12m over the next 15 months from a committed financing agreement, the outlook for the company appears fairly bleak. As such, if any partners are tempted, the asset is likely to be available a lot cheaper in the months ahead (Advanced Life Sciences reeling from FDA rejection June 3, 2009).
Anesiva meanwhile is in an even worse financial situation, its auditors having issued a going concern qualification in April, and its stock breaching Nasdaq listing rules. The group has pared back costs and plans to be operating largely as a virtual company by year end, in an attempt to keep hopes of finding a partner for Adlea, its long-acting, non-opioid analgesic drug candidate which is in development for the management of acute pain following orthopaedic surgery.
Savient Pharmaceuticals meanwhile has long been in search of a partner for its gout treatment Krystexxa, but has learnt the hard way about toying with investors’ expectations. A long promised deal failed to materialise in 2008, and the stock was hit hard (Savient's broken promises cause share woe, September 30, 2008). As a result, management are now refusing to comment on the situation, other than to say options are being explored, but following strong endorsement for the product at an FDA advisory committee earlier this week, ahead of an August 1 PDUFA, there is a good chance that Savient will not be on the same list in six months time.
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by: Zacks.com June 22, 2009 | about: ALPMF.PK / NGSX
By Jason Napodano
seekingalpha.com/artic...
On June 22, 2009, NeurogesX (NGSX) (Analyst Report) announced that it has entered into a development and commercialization partnership for Qutenza, the company’s cutaneous patch for neuropathic pain, with Astellas Pharmaceuticals (ALPMF.PK). NeurogesX has licensed for commercialization Qutenza in all 27 EU member states, plus Iceland, Norway, Liechtenstein and Switzerland, along with the Middle East and Africa.
Astellas has also agreed to fund the required additional studies as requested by the European Commission, which include a long-term safety program in on-label indications. In return, Astellas has agreed to pay NeurogesX an upfront payment for Qutenza of €30 million ($42 million).
We expect that NeurogesX will recognize this payment over the life of the agreement. Astellas has also purchased an option to co-develop NGX-1998, the company’s liquid formulation, for €5 million ($7 million). In addition to these upfront payments, Astellas has also committed €70 million ($97 million) in development and sales related milestones for Qutenza and NGX-1998.
NeurogesX will be entitled to a mid-teen to mid-20s percent scaling royalty on sales of the product. NeurogesX will continue to supply Qutenza to Astellas at a fixed transfer price. Astellas plan to be ready to launch the product during the first half of 2010.
We view the deal as a major positive for NeurogesX. The $49 million in cash provides a significant runway for management to push forward with commercialization plans in the U.S.
On the recent conference call, management noted that the 20-person bridging study requested by the U.S. FDA testing a 2.5% lidocaine + 2.5% prilocaine pre-application cream has completed and the company plans to analyze the data shortly. This data will be submitted to the FDA in July or August 2009. We expect that the FDA will push back the U.S. PDUFA action date from August 16, 2009 to October / November 2009. If approved, NeurogesX should be in position to launch the product during the first half of 2010.
The $49 million upfront payment from Astellas will help management fund the creation of a specialty sales force to promote the product. We view the current cash balance, which should stand between approximately $60 and $65 million at the end of the second quarter 2009, is sufficient to fund operations to cash flow positive by 2011.
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