Pharmacyclic's Imbruvica: New Hope for Cancer Patients

Imbruvica, by Pharmacyclics (PCYC-$135.20), received accelerated approval for MCL based on a study where 111 participants were given Imbruvica daily until their disease progressed or side effects became intolerable. Results showed nearly 66 percent of participants had their cancer shrink or disappear after treatment (overall response rate).

Imbruvica blocks the function of Bruton’s tyrosine kinase (BTK), a key signaling protein of the B-cell receptor signaling complexes that stimulate malignant B-cells to grow and divide uncontrollably.

MCL affects the white blood cells called lymphocytes found in the “mantle zone” of a lymph node. A rare form of NHL, and most prevalent in older adults (mean age, 68), MCL is an aggressive B-cell malignancy affecting about 6% of the 72,000 new cases of NHL diagnosed in the U.S. annually.

To date, first-line treatment has usually consisted of Roche’s monoclonal antibody Rituxan (rituximab) – which is directed against the CD20 antigen found on Beta lymphocytes – combined with a multi-agent chemotherapy regimen, most often CHOP (cyclophosphamide, doxorubicin, vincristine, and prednisone).

Given the complex pathophysiology of the disease (multiple cell-signaling division triggers), combined with a late-stage diagnosis typically discovered after the spread to the GI tract and bone marrow, MCL is characterized by short median survival times (3 – 5 years).

See more at YCharts: $10B Market By 2022: Pharmacyclic’s Piece of It

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy. 

Checking for Signs of Life at Vivus

Led by new chief executive Seth Fischer, Vivus (VVUS-$9.18) is walking a new path with its erectile dysfunction (ED) drug Stendra (avanafil), choosing to outsource promotion via licensing deals: in July 2013, VIVUS announced an exclusive pact worth up to $121 million (plus royalties) with the Italian pharmaceutical group Menarini to commercialize avanafil in Europe; Auxilium Pharma (AUXL), which already markets a portfolio of ED treatments, including testosterone and Xiaflex (recently approved for Peyronie’s disease – painful curvature of the penis caused by plaque buildup), inked a marketing deal worth up to $300 million to Vivus (plus royalties) for rights to Stendra in the U.S. and Canada.  

With ED afflicting up to 30 million men in this country alone, management opines that there remains significant commercial opportunity for Stendra to stake claim to a double-digit share of the $2.9 billion U.S. market. Unfortunately, peak sales estimates of $400 million - $500 million in 2016 (one-year prior to expiration of Cialis’ first key patent), could prove too optimistic.

Notwithstanding marketing claims, after adjusting for proper dosage, no one agent in the class has been shown to be more efficacious or safer than the others. How, therefore, are Vivus’s marketing partners going to surmount reimbursement challenges when therapeutic substitutions -- generic versions of Viagra -- are available at less than $2.00 per pill in most industrialized countries (save the U.S.)? Further, Auxilium has only about 150 sales representatives to sell the drug here at home.  

Read more at YCharts: New ED Drugs: Analysis of Vivus’s Prospects

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy. 

SolarCity's Bright Growth Prospects

Founded in 2006 with the initial objective of selling solar energy systems outright, SolarCity (SCTY-$55.60) has since embraced the concept of being in the “energy finance” business. Avoiding utility-scale solar projects dominated by the likes of a First Solar (FSLR), the company now aggregates small PV residential rooftop projects into large solar leasing portfolios that offer predictable, recurring revenue streams either through power purchase agreements (where customers – residential homeowners – pay a fee per kWh based on the amount of electricity the solar energy system actually produces) or by contracted lease agreements (fixed monthly fees).

Third-quarter 2103 gross margins speak to the profit potential afforded this “finance company’s” business model: gross profit of operating leases to retail customers (homeowners and small business owners) was $16.3 million, or 66% of lease revenue; the gross profit margin of PV energy systems sold was $1.1 million, or 5% of sales!

SolarCity is the U.S. leader in rooftop residential solar installations, with a market share of….

Continue Reading at YCharts: Facts and Myths Behind SolarCity’s 331% Rise

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy. 

Frosty Future for Erectile Dysfunction Drugs

A recent report published by Transparency Market Research has cast a pall on the future profitability of the PDE5 inhibitor sex drug class, forecasting that annual sales of sexual dysfunction drugs will fall from $4.3 billion in 2012 to $3.4 billion in 2019. The study authors opine that the loss of Pfizer’s (PFE) Viagra patent exclusivity in Canada, Asia and Europe will weaken all drug manufacturers’ lock – including Eli Lilly’s (LLY) Cialis and Bayer’s (BAYRY) Levitra – on pricing power in coming years.

Though a U.S. federal judge reaffirmed Pfizer’s “method-of-use” patent, blocking Teva Pharmaceuticals (TEVA) and others from launching their own generic versions until October 2019, the competitive landscape elsewhere is more hostile. Through September 2013, Pfizer reported that U.S. sales of Viagra held steady at $819 million; international revenue declined 13% to $586 million, however, as the Israeli-based drug maker, U.S.-based generic manufacturers Actavis (ACT) and Mylan (MYL), and other generic houses started to roll-out cheaper copies of sildenafil back in July.

Continue reading at YCharts: Why Pfizer’s Expiring Viagra Patent Hurts Lilly Most

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy. 

J&J's Remicade Versus Inflectra

Johnson & Johnson (JNJ-$95.63) isn’t waiting until decade’s end to expand its offering of anti-inflammatory therapies: to refresh the immunology franchise, JNJ is directing R&D at promising next-generation biologics, including the anti-interleukin (IL)-23 monoclonal antibody Guselkumab for psoriasis and rheumatoid arthritis (RA); Sirukumab, an anti-interleukin (IL)-6 monoclonal antibody in the treatment of patients with RA; and, an oral Janus Kinase (JAK) inhibitor (ASP015K) for RA.

Management also told analysts at a recent healthcare conference that new products are expected to comprise almost 46% of pharmaceutical sales by 2017. Auspicious product launches across other disease markets (including the blood thinner Xarelto, prostate cancer drug Zytiga, hepatitis-C antiviral Incivo and interleukin inhibitor Stelara for psoriasis) suggest JNJ is having early success in executing on its goal to lessen dependence on Remicade through diversification.

Read more at YCharts: J&J’s Top Drug vs. Generic: Investment Thesis

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.  

Celgene Grows Beyond Cancer Products

Although growth prospects for Celgene’s (CELG-$154.44) oncology franchise remain strong, the product portfolio remains highly concentrated. To justify a PE ratio almost twice that of key competitors, the company needs additional revenue streams to offset competitive risks.

Just in 2013, Celgene has invested more than $500 million in third-party ventures – young companies working on promising drugs, ranging from epigenetics (structure-based drug design) to cancer metabolism and immunotherapy. Celgene will owe millions more in milestone payments – should any of these ventures pan out. 

Luckily, the balance sheet is sound, with healthy credit metrics and liquidity available to finance both internal R&D expense and external ventures. The company holds a revolving credit facility totaling some $1.5 billion and its long-term debt maturities are staggered, with the bulk of maturities scheduled out to 2017 and beyond.  

Read more at YCharts: Celgene’s Revlimid: Sales to $8B? Patent to 2023?

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.  

Roche Holding More than Oncology Franchise

Notwithstanding safety concerns and narrow therapeutic labeling, Roche Holding’s (RHHBY-$69.63) rheumatoid arthritis treatment Actmera has still managed to show respectable sequential growth: January – September 2013 sales grew 33% to 763 million Swiss francs ($826.9 million), likely due to study results presented last year showing Actemra was more effective than Humira as monotherapy in reducing common disease-activity endpoints of RA (e.g. reduction in tenderness and swollen joints) in those sufferers who couldn’t take methotrexate, the standard-of-care in most newly-diagnosed patients.

Recent events suggest that estimated peak annual sales of $1.1 billion in 2017 could prove conservative, too.

Read more at YCharts: New Player in the $18B Market for Arthritis Drugs?

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.  

Managing Weight-Loss Expectations at Arena Pharmaceuticals

The current market potential for Arena Pharmaceuticals’ (ARNA-$4.39) weight-loss drug Belviq here in the U.S. is approximately $1.0 billion – or about $315 million net to Arena.

Such bullish estimates, however, assume two variables not within current reach: (1) Add-on therapy for phentermine; and (2) broad reimbursement coverage by commercial and Medicare plans.

In a recent press release, Arena boasted that “Belviq is now covered by several prominent health plans and PBMs, including, among others, Express Scripts (including its legacy Express Scripts and Medco operations), Tufts, Health Alliance Plan, Excellus BCBS, Highmark BCBS, BCBS of Michigan, and BCBS of North Carolina and Healthnet (California).”

Jack Lief, co-founder and CEO of Arena, told analysts on the second-quarter conference call, too, that “as much as 50% [of insurance plans]” would likely reimburse for Belviq prescriptions by April 2014. Recent channel checks suggest that this statement is inaccurate at best, misleading at worst.

Read more at YCharts: How Arena’s “$3 Billion” Belviq Withered

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.  

Gold Mining Values in a Bear Market

Despite cuts to cap-ex and exploration, Citigroup data reveals that gold majors like Barrick Gold (ABX), Goldcorp (GG), and Yamana Gold (AUY) are burning cash at all-in costs of $1,600/oz., 1,800/oz., and $2,000/oz., respectively – in part, due to overpayment for leases and acquisitions of marginal properties during the commodities bull market of the last decade.

Looking ahead, World Bank, Fitch Rating Agency and other commodity forecasters opine that gold prices will continue to trend lower, bottoming around $1,000/oz. by 2025. Ergo, the aforementioned miners and other peers with poor cost positions will likely need to shutter additional operations, reduce production and slash capita budgets to adjust to lower cash flow being generated in this new, lower pricing environment.

In addition, expect liquidity constraints to stress already weakened balance sheets (due to asset write-downs) and to increase borrowing costs as risks of loan covenant defaults increase – resulting in the suspension of remaining cash dividends, too. Nonetheless, for those investors willing to stomach residual risk, there are a few gold mining stocks with stable balance sheets and attendant all-in costs significantly lower than the industry average capable of paying healthy dividends in the current slow growth environment.

Read more at YCharts: Gold Stocks That Can Afford Their Dividends

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

Prospects Not Terminal for Endocyte's Cancer Drug Vintafolide

Following an interim analysis, Endocyte (ECYT-$11.40) reported last Thursday that the independent Drug Safety Monitoring Board (DSMB) advised investigators to tell non-small cell lung cancer patients enrolled in the TARGET study that vintafolide use in monotherapy was unlikely to prove superior to docetaxel in progression-free survival (PFS) at the termination of the study.

However, news that the DSMB observed the combo arm of the TARGET study (vintafolide & taxotere) was trending toward the statistical goal of a 50% improvement in PFS relative to the taxotere arm (and didn’t demonstrate any new safety concerns) ultimately could prove to be good tidings for Endocyte shareholders.

Read more at YCharts: Endocyte’s Plunge Ignores Drug’s $2.5B Potential

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

Will Medivation PREVAIL in Prostate Cancer?

Medivation’s (MDVN-$57.57) senior management remains upbeat on growth prospects for the prostate cancer drug Xtandi. In fact, chief executive officer David Hung boasted to analysts on the second-quarter earnings call that Xtandi is “quickly becoming the leading therapy in the post-docetaxel market.”

However, Xtandi’s clinical advantages versus Johnson & Johnson’s (JNJ) competitor Zytiga – dosing without regard to timing of meals or concomitant steroid use and monthly monitoring, such as liver function testing – haven’t proven attractive enough to change physician prescribing habits. In fact, market data available through April continued to show Zytiga held a 57% share of the chemo-refractory mCRPC market, compared with Xtandi’s roughly 30% share.

Although physician enthusiasm for Xtandi remains high in the post-chemo setting mCRPC, a confluence of issues could prove problematic to Xtandi gaining any material ground against Zytiga. In particular, post-launch experience is showing that Zytiga’s approved labeling to be used in a broader clinical spectrum of prostate cancer and Xtandi’s aggressive cost (average wholesale price of $7,450 for a 30-day supply is roughly 28% more expensive than Zytiga) may hinder Xtandi’s reimbursement and uptake -- especially in economically-depressed countries in the EU, like France, Greece and Spain

Read More at YCharts: Uh Oh: IsThis Cancer Highflyer In Your Account?

 

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

Roche-Genentech Profitability Linked to Oncology Portfolio

Convenience advantages of Roche’s (RHHBY-$65.84) new injectable version of Herceptin could outweigh the lower price advantage of a biosimilar trastuzmab, especially in a metastatic maintenance setting: The subcutaneous form of Herceptin is a ready-to-use liquid formulation that is administered as a 600 mg/5 ml fixed dose every three weeks, simplifying healthcare procedures by removing the need for reconstitution or dose calculation according to the body weight of the individual. Timesaving advantages cuts the treatment time down to just two to five minutes, from 30 to 90 minutes to administer the drug intravenously.

Read More at YCharts: Remember Blockbuster Drug Pipelines? See Here

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

Is Pfizer's Pipeline Filled With Lemmings?

Between 2010 and 2012, Pfizer (PFE-$28.37) stumbled off the patent precipice, as branded drugs that made up 42% of annual pharmaceutical sales, including the $11 billion lipid-lowering drug Lipitor (atorvastatin), the antacid Protonix (pantoprazole), and its glaucoma drug Xalantan (latanoprost ophthalmic solution) lost patent protection.

Walking on the ledge out to 2015, the patent cliff looks just as daunting, as more than 17.5% in sales derived from the company’s existing branded portfolio is at-risk of losing market exclusivity, including two of its top-selling prescription drugs: Enbrel (etanercept) copies are already on the market in Asia and India, and the Novartis AG (NVS) subsidiary Sandoz is readying its own intrusion on Pfizer’s $3.7 billion auto-immune franchise with a biosimilar version for rheumatoid arthritis and psoriasis; and, the original basic patent for the anti-inflammatory Celebrex (celecoxib) expires on May 30, 2014, which means cheaper copies to Pfizer’s $2.7 billion pain drug could be on U.S. pharmacy shelves no later than January 2015.

Read More at YCharts: Pfizer’sPipeline Story Begins to Unravel

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

AMC - The Walking Dead Network?

Referencing the ratings success of AMC (AMCX-$62.40) cable shows like The Walking Dead and the western Hell on Wheels, chief executive officer Josh Sapan told analysts on the quarterly earnings’ call that the company was expanding original content on its three other channels, too: IFC, home to eclectic comedy shows and independent films; Sundance Channel, devoted to the airing of documentaries, award-winning film classics and scripted dramas; and, We tv, a women’s network showcasing “unscripted” reality shows celebrating everyday women and stars like Joan Rivers or singer Toni Braxton.

“We feel pretty good about the challenge and particularly good about the expansion of our programming initiatives,” said Sapan.

However, the success of several AMC channel shows, such as Breaking Bad and The Walking Dead – number one in the coveted 18 – 49 year-old demo group across all broadcast television – hasn’t pushed the ratings dial for all of AMC’s properties. AMC Network was the 11th most-watched cable channel during prime-time as of week-ending August 11, according to data compiled by Nielsen ratings.

Mad Men and Breaking Bad - both in their final seasons - combined with a limited international presence (an anemic $30 million in revenue), suggest near-term prospects for continued growth could be at risk. Initial ratings for new programs belie Sapan’s cozened optimism, too: A new cop drama on AMC, Low Winter Sun, which followed the season-5 return of Breaking Bad, lost close to 60% of its lead-in audience in its debut outing earlier this month.

Read More at YCharts: Off The Meth, AMC Finances Could Break Bad

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

Patent Precipice at Pfizer

Through successful litigation, Pfizer (PFE-$28.16) has extended the patent for its sex drug Viagra (sildenafil) in the U.S. until October 2019. However, up to twenty generic manufacturers, including powerhouse Teva (TVA), are poised to market their own versions of the little blue pill in Europe and other global markets after international patents expired in June.

Worldwide sales totaled $945 million in 1H:2013 (4% of product sales), with half of this revenue coming from abroad.

Concerns have been expressed, too, by analysts that the drug could lose incremental sales here at home to a generic version of Pfizer’s proprietary treatment for pulmonary arterial hypertension, Revatio, which contains sildenafil as the active ingredient and lost marketing exclusivity in November 2012.

Albeit Pfizer is looking to mitigate the impact of generic competition by bringing to market new products, including treatments for auto-immune disorders, cardiology, and oncology, as demonstrated by Viagra, its portfolio of drugs at-risk of losing market exclusivity is high. Up to 35% of the $23.6 billion in sales derived from branded pharmaceuticals in 1H:13 is either currently battling an onslaught of cheaper alternatives or will soon face generic competition, including several best-selling drugs.

Read more at YCharts: Dark Patent Issues Behind Pfizer's Cash Machine

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

Onyx and Amgen Marriage -- Not So Fast

The key asset driving the upside valuation for Onyx (ONXX-$126.26) is Kyprolis (carfilzomib), a proteasome inhibitor recently approved for the treatment of patients with relapsed and refractory multiple myeloma (whose disease has progressed (got worse) on their last therapy or within 60 days of their last therapy). Analysts opine that this disrupter of cancer cell growth could generate peak annual sales of up to $2.1 billion by 2020.

Nonetheless, there are risk considerations that could thwart the assigned value attached to Kyprolis, including a failure to gain label expansion (earlier usage). Whether Kyprolis can take share from Celgene (CELG), whose $4.3 billion immunomodulatory drug Revlimid (lenalidomide) is used in all stages of multiple myeloma (MM), will depend on clinically significant improvements in comparative overall survival outcome studies....

Given competitive risks, future regulatory uncertainties, and a price-to-sales multiple almost twice the industry average of 11.2 times sales, Onyx management’s price could prove too rich a multiple even for the hungriest of dug manufacturers.

Read more at YCharts: $10 Billion Onyx Joke MayBe On Amgen Holders

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

Obstacles to Growth at Sanofi

Current fundamentals at Sanofi (SNY-$51.81) look dismal. Total revenue declined 2.8% to $9.36 billion (EURO 8.06 billion). Although quarterly sales missed consensus estimate of EURO 8.3 billion, double-digit gains from its rare-diseases division Genzyme (purchased for $20.1 billion in 2011), diabetes segment (driven by insulin Lantus), and emerging markets (like China in the Far East and Brazil in South America) saved the company from an even bigger hit to sales.

Additionally, blockbuster status (defined as annual peak sales of at least $1.0 billion) of recently approved medicines - like the colorectal cancer drug Zaltrap and multiple sclerosis therapy Aubagio - is far from certainty.

Read more at YCharts: Ugly Truth About Sanofi Stock

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

Merck Looking to Sunburns for Growth

Given research setbacks and the known quantity that its melanoma therapy lambrolizumab is unlikely to receive approval prior to 2015, merger and acquisition activity will be critical to Merck’s (MRK-$47.96) pipeline expansion strategy and subsequent sales growth objectives in the next decade. Though the company has ample liquidity – with $16 billion in available cash and short term investments, free cash flow of $8.2 billion (trailing twelve months), and manageable debt–to-equity ratio of 0.31 times – some $6 billion in debt will need to be refinanced through 2015. Additionally, as Merck is looking to keep investors happy with its $1.72 per share dividend and an expanded stock buyback program, the company is unlikely to get involved in a premium bidding war for the likes of an Onyx. 

See more at YCharts: Merck Needs Acquisitions - Here's the List

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

Januvia and Victoza Pancreatic Cancer Lawsuits Have Begun

The lawyers are circling  all drug makers of incretin mimetics, including the newer DPP-4 inhibitors – Tradjenta (linagliptin) from Eli Lilly (LLY-$49.89) and Nesina (alogliptin) from Takeda – as a growing body of evidence suggests causality between use and increased risk of pancreatic injury. In addition to lost sales, the drug makers will need to put aside reserves due to the possibility of multi-million dollar injury settlements.

See more at YCharts: Diabetic Franchises at Risk

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

Patent Losses to Stall Sales Growth at Eli Lilly

Having spent $5.28 billion on R&D in 2012, up from $4.88 billion in 2010 – and with approximately 60 potential new drugs in human testing -- management at Eli Lilly (LLY-$49.89) is confident that post-2014 it can mitigate the adverse impact of patent expirations and return the company to resumption of profitable growth through a combination of cost-controls (layoffs and co-product terminations) and successful commercial launch of innovative molecular entities, currently either in late-stage research or awaiting FDA regulatory review.

Unfortunately, an analysis of the most-heralded of these products suggests that the timing of peak sales for these drugs could substantially lag the loss of up to $8 billion, or some 36% in revenue, due to generic intrusion.

Read more at YCharts: Pipeline vs. Expiring Patents: Eli Lilly's Future

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.