ZACKS COMMENTARY: EXPERT WATCH PRINTABLE VERSION
Betting on Biotech
by Trace Johnson
28-JUN-04
Each spring the American Society of Clinical Oncologists convenes for the reporting of the most recent data in the battle against cancer. The Experts closely scrutinize the data that comes out of this meeting as it can be incredibly lucrative. Genentech (NYSE: DNA) reported incredibly strong data for its drug, Avastin, that sent the company’s stock price soaring more than 170% over the last year. In spite of the fact that the AMEX Biotech Index is off 14% from its highs in mid-April, the Experts believe there are a number of hot biotech stories that can help round out your portfolio.
ASCO 2004
According to Dr. Scott and Nadine Wong, editors of the Biotech Stock Report , the biggest story to come out of this year’s ASCO meeting was data on Imclone’s (NASDAQ: IMCL ) drug, Erbitux. The drug was revealed to improve the efficacy of radiation in the treatment of head and neck cancers. Because 30-40% of patients with head and neck cancer tend to suffer recurring attacks, the drug could be effective in preventing another infection. Erbitux is a mouse/human chimeric monoclonal antibody that targets the human epithelial growth factor receptor (EGFR) that is found in normal and cancerous tissue. Imclone is not currently in the Wong’s Bioportfolio, but the head and neck cancer theme is very important to their current investment strategies.
Abgenix (NASDAQ: ABGX ) and Amgen (NASDAQ: AMGN ) presented data together at the ASCO meeting on their EGFR treatment. The company’s report on ABX-EGF places it on par with Erbitux, according to the Wongs. Specifically, patients in a Phase II clinical trial exhibited a 10% objective response rate, which provided stimulus for a larger Phase III clinical trial. The Wongs will be looking for that next release of data, but they own both companies in their Bioportfolio.
Also heating up the competition in the EGFR market is news out of OSI Pharmaceuticals (NASDAQ: OSIS ). The company announced in April that its drug, Tarceva, which is a small molecule inhibitor against EGFR met the primary and secondary endpoints in patients with relapsed Non Small Cell Lung Cancer (NSCLC). The primary endpoint was to extend life and the secondary was to improve time to symptomatic deterioration. The result was to send its share price soaring 136%.
Of the group, the Wongs find the valuation and growth prospects most compelling in Amgen and Abgenix. The Wongs note that Abgenix seems to be in a bit of a downswing at the moment and recommend waiting for signs of bottoming out. As for Amgen, the company offers a diversified pipeline and solid long term prospects, particularly in sales of its Rheumatoid Arthritis drug, Enbrel, and the Wongs recommend buying the stock anywhere under $55.
Dendreon (NASDAQ: DNDN ) adopts an alternative approach. The company is working on the development of a cancer vaccine. Dendreon's proprietary Antigen Delivery Cassette technology delivers small pieces of the HER-2/neu protein to a patient's antigen presenting cells (APCs), specialized immune cells such as dendritic cells. These APCs activate other cells of the immune system to seek out and destroy HER-2/neu-containing cancer cells. Interestingly, Dendreon’s share price appreciated during the last week of June, after a workshop held by the FDA on Tuesday, June 22, to formulate a strategy on possible alternative standards the agency could use to gauge the effectiveness of drugs to treat prostate cancer. Dendreon did announce it received fast track FDA designation for the use of Provenge in treating asymptomatic metastatic androgen-independent prostate cancer, and released data that it improves survival times in patients. The Wongs have a target price of $17.
Seeing Biotech Profits
Lon Juricic, editor of the Biotech Insider , also sees profits to be made in the biotech arena. Specifically, he recently added ISTA Pharmaceuticals (NASDAQ: ISTA ) to his portfolio. ISTA’s products seek to address serious diseases and conditions of the eye such as vitreous hemorrhage, diabetic retinopathy, hyphema, glaucoma, ocular pain and inflammation. ISTA announced FDA approval of Istalol for glaucoma, which is the company’s second FDA approval; the company announced FDA approval for Vitrase as a spreading agent in May. ITSA is expected to launch Istalol within the next few months and said, based on NDC Health data, it estimates that the U.S. pharmaceutical market for the treatment of glaucoma exceeds $1.1 billion per year, and that the U.S. ophthalmic beta-blocker market exceeds $170 million per year, with over 4.4 million prescriptions written annually. Because of the company’s successful navigation of the FDA system, its undiscovered status, and the numerous positive catalysts, Juricic believes ISTA represents a major opportunity for risk adverse biotech investors.
Healthy Upside
Between mapping the human genome and curing cancer, the biotech sector has a full plate. Nevertheless, many of the companies in this sector have a number of blockbuster drugs already on the market and should generate significant profits and upside potential.
Betting on Biotech
by Trace Johnson
28-JUN-04
Each spring the American Society of Clinical Oncologists convenes for the reporting of the most recent data in the battle against cancer. The Experts closely scrutinize the data that comes out of this meeting as it can be incredibly lucrative. Genentech (NYSE: DNA) reported incredibly strong data for its drug, Avastin, that sent the company’s stock price soaring more than 170% over the last year. In spite of the fact that the AMEX Biotech Index is off 14% from its highs in mid-April, the Experts believe there are a number of hot biotech stories that can help round out your portfolio.
ASCO 2004
According to Dr. Scott and Nadine Wong, editors of the Biotech Stock Report , the biggest story to come out of this year’s ASCO meeting was data on Imclone’s (NASDAQ: IMCL ) drug, Erbitux. The drug was revealed to improve the efficacy of radiation in the treatment of head and neck cancers. Because 30-40% of patients with head and neck cancer tend to suffer recurring attacks, the drug could be effective in preventing another infection. Erbitux is a mouse/human chimeric monoclonal antibody that targets the human epithelial growth factor receptor (EGFR) that is found in normal and cancerous tissue. Imclone is not currently in the Wong’s Bioportfolio, but the head and neck cancer theme is very important to their current investment strategies.
Abgenix (NASDAQ: ABGX ) and Amgen (NASDAQ: AMGN ) presented data together at the ASCO meeting on their EGFR treatment. The company’s report on ABX-EGF places it on par with Erbitux, according to the Wongs. Specifically, patients in a Phase II clinical trial exhibited a 10% objective response rate, which provided stimulus for a larger Phase III clinical trial. The Wongs will be looking for that next release of data, but they own both companies in their Bioportfolio.
Also heating up the competition in the EGFR market is news out of OSI Pharmaceuticals (NASDAQ: OSIS ). The company announced in April that its drug, Tarceva, which is a small molecule inhibitor against EGFR met the primary and secondary endpoints in patients with relapsed Non Small Cell Lung Cancer (NSCLC). The primary endpoint was to extend life and the secondary was to improve time to symptomatic deterioration. The result was to send its share price soaring 136%.
Of the group, the Wongs find the valuation and growth prospects most compelling in Amgen and Abgenix. The Wongs note that Abgenix seems to be in a bit of a downswing at the moment and recommend waiting for signs of bottoming out. As for Amgen, the company offers a diversified pipeline and solid long term prospects, particularly in sales of its Rheumatoid Arthritis drug, Enbrel, and the Wongs recommend buying the stock anywhere under $55.
Dendreon (NASDAQ: DNDN ) adopts an alternative approach. The company is working on the development of a cancer vaccine. Dendreon's proprietary Antigen Delivery Cassette technology delivers small pieces of the HER-2/neu protein to a patient's antigen presenting cells (APCs), specialized immune cells such as dendritic cells. These APCs activate other cells of the immune system to seek out and destroy HER-2/neu-containing cancer cells. Interestingly, Dendreon’s share price appreciated during the last week of June, after a workshop held by the FDA on Tuesday, June 22, to formulate a strategy on possible alternative standards the agency could use to gauge the effectiveness of drugs to treat prostate cancer. Dendreon did announce it received fast track FDA designation for the use of Provenge in treating asymptomatic metastatic androgen-independent prostate cancer, and released data that it improves survival times in patients. The Wongs have a target price of $17.
Seeing Biotech Profits
Lon Juricic, editor of the Biotech Insider , also sees profits to be made in the biotech arena. Specifically, he recently added ISTA Pharmaceuticals (NASDAQ: ISTA ) to his portfolio. ISTA’s products seek to address serious diseases and conditions of the eye such as vitreous hemorrhage, diabetic retinopathy, hyphema, glaucoma, ocular pain and inflammation. ISTA announced FDA approval of Istalol for glaucoma, which is the company’s second FDA approval; the company announced FDA approval for Vitrase as a spreading agent in May. ITSA is expected to launch Istalol within the next few months and said, based on NDC Health data, it estimates that the U.S. pharmaceutical market for the treatment of glaucoma exceeds $1.1 billion per year, and that the U.S. ophthalmic beta-blocker market exceeds $170 million per year, with over 4.4 million prescriptions written annually. Because of the company’s successful navigation of the FDA system, its undiscovered status, and the numerous positive catalysts, Juricic believes ISTA represents a major opportunity for risk adverse biotech investors.
Healthy Upside
Between mapping the human genome and curing cancer, the biotech sector has a full plate. Nevertheless, many of the companies in this sector have a number of blockbuster drugs already on the market and should generate significant profits and upside potential.
