I could easily blog about how badly biopharma is performing in this bear market, how all of the big pharma stocks hit new lows this morning with the lone exception of AstraZeneca (Update: AstraZeneca is no longer an exception. AZN has now joined the rest of the big pharma stocks touching new lows today.)

But there's enough gloom and doom out there so, I'm going to write about a little good news for a bunch of companies in the sector.

History has shown again and again that times like these represent a huge long-term buying opportunity. This may be particularly true for the biotech segment that, despite weathering the storm better than other segments, has had its share of price declines.

During the past several weeks, great biotech stocks, from small early stage companies to fully commercialized companies have been thrown out of portfolios like bad auction rate securities, but the truth is that the value proposition of most of these biotechs did not change at all, and is not likely to change as a result of market conditions. This is why current prices create the best opportunity to get into the biotech segment since 2002.

Merck & Co. v. Apotex, No. 2008-1133 (Fed. Cir. 2008)

In 2005, Hi-Tech Pharmacal (HITK) became the first company to file a paragraph IV certification relating to Merck's (MRK) glaucoma drugs Trusopt and Cosopt. Hi-Tech filed paragraph IV certifications with respect to all three of the Orange Book-listed patents for these drugs: U.S. Patent Nos. 4,797,413; 6,248,735; and 6,316,443.

Lev Pharmaceuticals (LEVP.OB) is a biotechnology company, which has focused on developing a treatment for the serious, and potentially life-threatening disorder known as hereditary angioedema, which has no FDA approved treatments in the United States. Lev's treatment is known as Cinryze and the company is seeking approval for both acute and prophylactic indications with a PDUFA date of October 14, 2008.

In late January 2008, Lev received a complete response letter from the FDA for the acute indication seeking additional information regarding manufacturing, chemistry and controls used in the studies. Lev did not present the prophylactic treatment for approval for the late January 2008 decision. In early May, Lev presented in-depth findings to an FDA advisory panel for the prophylactic treatment of HAE where the panel unanimously recommended approval to the FDA which will be making its decision next week.

Typical of the irony in this market, after buying a large swath of Sequenom (SQNM) Monday at $21, in after hours comes news of "competition" (i.e. a study of 18 patients). Details found here.

• Researchers led by Stephen Quake of Stanford University in California created a way to look for the extra chromosomes that cause Down's and similar birth detects in the tiny amounts of fetal DNA that circulate in the mother's blood.
• Quake's team demonstrated the accuracy of the new genetic test in a small study involving 18 women.
• Quake said the new test could be widely available in two or three years, and could become a routine prenatal test of a baby's health. Quake said the next step is a larger study involving hundreds of women. Stanford University has filed a patent on the test and two companies are negotiating for the licensing rights, Quake said. He said he is has been hired as a consultant for both companies, which he declined to identify.
• San Diego-based Sequenom Inc (SQNM) is also working on a Down's syndrome blood test using a different approach.

Nothing easy in this market, eh? What I do like is a management who is responsive and within hours

Recent gyrations in the market have caused more than one investor some heartburn. Each day I hear disgruntled comments due to losses and see many people looking for an out.

Ryan Detrick, senior technical strategist at Schaeffer's Investment Research said:

Well, it looks as if I'll finally be able to stop talking about Imclone (IMCL): the word came out Monday morning that they've agreed to a $70/share deal with Lilly (LLY). Some thoughts on this:

1. I would still like to know how the uncertainty around the Erbitux follow-up antibody is supposed to be resolved. It's hard for me to make sense of this for Lilly unless they think that they can get substantial revenue from it, and Bristol-Myers Squibb (BMY) presumably will disagree with their projected figures. None of the news stories so far has addressed this issue, and I presume that it's going to be a matter for negotiations (or for the courts, if it comes to that).

Although the third quarter of this year was one of the more downbeat ones, there are still some ETFs that managed to post gains amid the wreckage.

Doug Rogers for Investor’s Business Daily reports that these funds are doing well because investors actually like their holdings.

Prasco v. Medicis Pharm. Corp., No. 2007-1524 (Fed. Cir. 2008)

Medicis markets a benzoyl peroxide cleansing product, Triaz.  Prasco sells a competing benzoyl peroxide cleansing product, Oscion.  Prasco filed a declaratory judgment complaint, requesting judgment that Oscion does not infringe four patents owned or licensed by Medicis (MRX).  Prasco alleged declaratory judgment jurisdiction based on three facts: 

Okay, what were the chances that ImClone (IMCL) would get bought and Dendreon (DNDN) would come out with its interim test results on the same morning? Slim to none, I'd say. But that's exactly what the news gods had in store for two of the hottest names in biotech.

In what became a poorly kept secret, Eli Lilly (LLY) announced that it is going to pay 70 bucks a share for ImClone in all cash money. Eli Lilly CEO John Lechleiter did a "First on CNBC" interview on "Squawk Box" yesterday morning. You can watch it here. Meantime, IMCL Chairman Carl Icahn took a told-you-so victory lap in this press release. But Miller Tabak healthcare analyst Les Funtleyder told clients in a research note yesterday morning that he's not sure the fight over ImClone is finished yet. "Until we get clarity on who wins IMCL and at what price it is difficult to quantify valuation," he wrote.

Q4 2008 Earnings Call

Last week, BioSante Pharma (BPAX) announced that it had reacquired Elestrin (estradiol gel) from privately-held Nycomed, which acquired the rights to the product along with its acquisition of Bradley Pharma in February 2008.

BioSante will assume all manufacturing, distribution, and marketing responsibilities for Elestrin, which is a fast-drying gel formulation of estradiol (the natural form of estrogen in women) and FDA approved for the treatment of hot flashes in menopausal women. Elestrin will now be added to the formal strategic review being conducted by Deutsche Bank to maximize shareholder value.

I think the recent decline in Discovery Labs (DSCO) since the company announced a minor delay in submitting a complete response to the FDA for an approvable ruling on Surfaxin represents a buying opportunity and bought some shares on Friday at $1.74 per share.

Insider buying over the past two months, (click to enlarge chart, below), -- including a 75,000 share buy from the CEO at $1.87 -- demonstrates management's confidence in already meeting the FDA's requirements and the plan to submit a complete response to FDA for Surfaxin, which should now occur by about the third week of October. As long as DSCO submits the complete response by the end of October, a Class I review (60-day) would still allow for approval by the end of 2008.

The FDA has published a table with the names of products and potential signals of serious risks and/or new safety information identified for these products during 1Q08 in the AERS database. The FDA notes that patients should not stop taking these medications and should consult their prescriber with any questions as the agency will investigate each of the claims further before taking action or issuing more definitive statements on the reported concerns.

Some highlights from this table of products that are sold by public-traded pharma and biotech companies are listed below in the following format: active ingredient [brand name] - company[ies] - new safety information reported.

Last week in China, it was time for the National Day Holiday, and most of China took the week off, a celebration that put considerable constraint on news flow. Nevertheless, there were a few deals announced (and one that fell apart), and several companies released their financial results from the previous quarter as the current one came to a close. At ChinaBio Today, we interviewed Dr. Sofie Qiao, who delineated for us the business plan of the US-China biopharma she formed, LEAD Therapeutics.

Among the deals that made news, China Biologic Products (CBPO.OB) said it had agreed to terms that will give it control of a competitor in the plasma-based pharmaceutical sector (see story). China Biologic will pay $28.5 million for a 90% stake in Chongqing Dalin Biologic Technologies Co. Dalin owns a 54% equity interest in Qianfeng Biological Products Co., Ltd., which has a 9.5% market share of China’s highly fragmented plasma-based biopharma space. China Biologic is responsible for 6.1% of the country’s plasma-based products. A 15.6% share would make the combined company the largest non-state owned business in the sector. The plasma business remains very fragmented: the six largest China companies in the sector (including Qianfeng) have a total market share of only about 50%. China Biologic projects synergies between the two entities, though it did not estimate a dollar value for them.

The Wall Street Journal unmasked the identity--Eli Lilly (LLY)--of ImClone's (IMCL) secret suitor. A spokesman for LLY said he couldn't confirm or deny the report.

IMCL put out a press release Wednesday night saying that the mystery bidder has asked to remain anonymous.

Merck (MRK) has taken a step that many people have been expecting, and announced that they are no longer developing taranabant, their cannabinoid antagonist (or is it an inverse agonist?).

I'd expressed grave doubts about the drug earlier this year, which turned out to be well-founded. That latter post included the line "I don't see how they can get this compound through the FDA", and now Merck seems to have come to the same conclusion. Further clinical data seem to have shown far too many psychiatric side effects (anxiety, depression, and so on), which increased along with the dose of the drug.

Word leaked out Wednesday that Imclone’s (IMCL) secret bidder is Eli Lilly (LLY). Well, let’s revise that – so far, Lilly hasn’t made a bid for the company. And that’s the first thought I had about this business: isn’t it taking quite a while? You’ll recall that Carl Icahn told Bristol-Myers Squibb (BMY) a couple of weeks ago that he’d been in talks with someone else. Then we were going to hear about it over the weekend. Then the name would be revealed Wednesday at midnight (of all times). Now here we are on Thursday with no official announcement.

And the delay probably doesn’t have anything to do with the situation in the credit markets, because Icahn has been sure to emphasize that the deal he’s looking at is not subject to financing. That means all this extra time is probably due to good old caution – and I don’t blame Lilly for mulling things over. There are plenty of reasons to wonder if Imclone is worth the money for an outside company, given its status with BMS. This clearly isn’t the instant-winner operators-are-standing-by deal that Imclone would like to have us believe it is.

The past year certainly was not an easy one for ArQule’s (ARQL) investors who saw their shares plummet more than 50%. Perhaps this kind of decline does not look like too big of a deal for a small biotech company when compared with “solid” investments such as AIG (AIG) or Citi (C), but the current price level is certainly not what the institutions who bought $55 million worth of stock for $7.75 a share last year envisioned. The good news is that now, with a new management team and an imminent partnership deal for ArQule’s lead compound, ARQ-197, the stock represents an opportunity for an aggressive upward move in 2009.

The company has been talking about licensing ARQ-197 for some time now, but based on remarks made by its new CEO, there are active discussions with potential partners that could mature into a deal in the near future. Last month, the Oppenheimer & Co healthcare team issued an insightful report titled “Collaborations as Catalysts” which mentioned ARQ-197 as a potential licensing candidate. According to Oppenheimer, although such a licensing deal could happen already this year, it is more likely to happen next year following the release of clinical data from ongoing clinical trials.

The more I think about all the research layoffs that have been going on for the last year or two around the industry, the more I think that we really are seeing a change in the way drug discovery is being done.

Most of the jobs have been lost from the large companies. There have, of course, been shutdowns at the smaller ones, but I don’t think that those have been running at any different rate than usual. Startups and other smaller shops are always rearranging as their skills, finances, and luck dictate – that seems to be going on at the usual pace. But what’s different is the wave after wave of job cuts at the Pfizers (PFE), GSKs (GSK), AstraZenecas (AZN), J&Js (JNJ) – the big hitters (and big employers) of the industry. Even the companies that haven’t had major layoffs (Novartis (NVS) comes to mind) aren’t exactly hiring heavily.