Mylan (MYL) has sued Celgene (CELG) over the what Mylan says are illegal actions that Celgene has taken to keep generic versions of its Revlimid and Thalomid blockbuster drugs off the market.
Mylan wants to force Celgene to sell it enough Revlimid and Thalomid at market prices so that it can carry out bioequivalence testing. Mylan also wants damages for its inability to sell generic versions of the therapies.
Revlimid treats disorders caused by poorly formed blood cells and Thalomid is for Hansen's Disease, or leprosy.
Celgene (CELG +4.2%) has deepened its relationship with biotech Forma Therapeutics, signing a collaboration deal that will use the latter's screening technique to identify potential new drugs that Celgene could license.
Celgene has paid $225M up front for 3 1/2 years of co-operation, after which the sides can participate in two more periods of collaboration of two years each. Celgene would pay a total of $375M in milestones and would also eventually have the option to acquire Forma.
Forma will retain U.S. rights to any therapies developed in the deal.
The agreement follows Celgene and Forma initially forging a partnership almost a year ago. (PR)
The WSJ profiles "pharmaceutical scouts," who, like talent-spotters in baseball "trying to pick tomorrow's big-leaguers from farm teams," search outside their companies to find drug candidates that have the potential to become blockbusters.
In 2011, for instance, Johnson & Johnson's (JNJ) Peter Lebowitz helped his company beat competitors such as Novartis (NVS) to buy the rights to a blood-cancer drug from Pharmacyclics (PCYC) called Imbruvica.
The treatment was eventually approved in November for a rare lymphoma and for chronic lymphocytic leukemia in February. J.P. Morgan forecasts Imbruvica will generate $1.3B in revenue for J&J in 2017.
Half of J&J's drug pipeline is from outside the company, up from 20% in 2002.
Speaking with three leading physicians about their plans to utilize Celgene's (CELG +0.4%) Otezla in psoriasis and psoriatic arthritis, analyst Matthew Roden says the feedback "generally is consistent with the bull case ... particularly on Otezla slotting in as a go-to pre- biologic for some prescribers."
"Our analysis further shows that the number of patients needed to be on drug to hit 2014, 2015, and 2017 targets looks beatable, and hence we raise our Otezla estimates, and our PT goes to $209 (from $200 prior)."
Size alone is somewhat irrelevant in examining a particular market sector, says Bernstein's Geoffrey Porges, but at some point it needs to reflect future profit potential. The market value of the booming biotech sector has reached $582B, he says, putting the industry on par with chemicals, beverages, and heavy equipment manufacturers. Biotech is now worth more than the aerospace/defense companies and auto manufacturers combined, and is on its way towards the $600B+ territory of investment banks, semiconductor and related, and utilities.
Over the last two years, the value of biotech is up 128%, more than double the increase in pharma and medtech stocks, and 3x the growth in the overall market. In two years, biotech has added value greater than the total current value of the transportation industry, or of the metals mining industry, or of the auto industry.
Biotech's size along with the fast raising of capital (about the same as during the 1999-2001 boom) has Porges somewhat worried, and he thinks higher interest rates and a stumbling broader market could see the sector slumping up to 40%. His favorites to own are Celgene (CELG) and Gilead (GILD) because of strong cash flows and very low relative multiples.
Two correspondences raised concerns about Abraxane benefits, toxic effects, incremental cost and the effect of pancreatic tumor location on the drug’s efficacy; however, Citigroup would buy CELG on today's weakness, seeing the drug as a strong seller and the NEJM story as a non-event.
Alexion Pharma (ALXN +22%), on the other hand, reported a strong Q4 with solid guidance; Brean Capital praises ALXN as "highly committed to developing a portfolio of drugs for diseases that are both rare and severe."
Deutsche's Robyn Karnauskas makes a big call on big-cap biotechs, boosting price targets for Biogen (BIIB) to $415 from $340, Celgene (CELG) to $190 from $170, and Gilead (GILD) to $132 from $95. The $132 PT for Gilead is a new Street high "by a nautical mile," says Notable Calls, and Karnauskas sees upside all the way to $165.
"We view large-cap biotech as fundamentally stable yet providing attractive growth," she writes, citing more diversified businesses, pipelines, new product launches, strong balance sheets, and strong free cash flow. "Therefore, we are changing our valuation methodology to 2015 PE multiples from DCF for Gilead, Celgene, and Biogen. Our '15 EPS estimates are higher than consensus and we think near-term franchise success could drive re-rating."