Statins, Genomics, Patents, And Speculation

| About: Complete Genomics, (GNOM)
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Statin drugs have been taking a beating lately. Dr. Eric Topol, formerly a statin proponent, now has an op-ed in The New York Times questioning their efficacy, given new research linking them to an increased risk of diabetes.

The FDA's latest advisory on statins suggests periodic tests on blood sugar for statin users, but also says regular liver tests may no longer be necessary. The advisory also notes memory loss and confusion experienced by some patients, which ends when they go off the drugs. (Full disclosure. I have been on statins for over 10 years, due to a family history of high cholesterol. My dad had his first heart attack at age 47, and I'm now 57, still awaiting one -- knock on wood.)

The big names in statins today are Pfizer (NYSE:PFE), whose Lipitor just went off-patent, Crestor maker AstraZeneca (NYSE:AZN), and Merck (NYSE:MRK), which combined its simvastatin with another medication years ago to create Vytorin.

The irony is that the controversy may already be in the prices of these stocks. Over the last five years, as patent expirations on statins have approached, shares in all three of these big pharma operators are down. Over the last year, however, Merck is up 15%, and Pfizer nearly 10%, as both have worked to build new drug pipelines.

The reason Dr. Topol may be speaking up now may have less to do with the actual controversy and more to do with his growing interest in genomics, which tries to customize medical treatments based on a patient's genes.

If you want to speculate Dr. Topol is right, you might want to take a look at Genomics Health (NASDAQ:GHDX), which our Leonid Kanopka recently profiled due to heavy insider buying. (Their work involves genetic testing of tumors.) Or you might consider Complete Genomics (NASDAQ:GNOM) and Illuminia (NASDAQ:ILMN), which both sell gene sequencing platforms.

Illumina is presently fighting a hostile takeover bid from Roche, which offered $44.50 in January. (The stock is presently trading at over $50.) One of the companies it's in court with is GNOM.

Of those two, I'd be most interested in GNOM given its insider moves, but this would be purely speculative, and I have yet to take a position. One data point here is that Roche has said it has other options if its Illumina bid fails -- might it move on GNOM if it fails with Illumina?

It's the outcome of all this diagnostic activity, which most interests Topol, of course. Once genetic risks and rewards in all medicines are known to doctors, they can prescribe much more accurately, and even before a disease process is underway.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.