Biotech Week in Review
Dec 2nd 2013 10:44AM
Updated Dec 2nd 2013 10:46AM
BioMarin Pharmaceutical is at the center of the buyout rumor mill recently after receiving a positive advisory committee vote for its Morquio syndrome drug called Vimizim. Although this rumor started well before this regulatory meeting, I previously said the rumors would only grow stronger if Vimizim was approved. Indeed, this is turning out to be the case. BioMarin is believed to be currently luring bid offers in the $13 billion range, which is roughly a 25% premium compared to Friday's closing price of $70.43 per share.
What's my take? I think this rumor has legs, and orphan drug pipelines like BioMarin's are simply too valuable for big pharmas like Pfizer and GlaxoSmithKline to ignore. In short, some company is going to make a bid, and it will be at a premium to today's price. Besides the possibility of a takeover, Vimizim could be the company's next orphan blockbuster in the making. In short, there are a number of good reasons why Foolish investors might want to dig deeper into BioMarin.
A move on interim results
Orexigen Therapeutics reported positive interim results from a large cardiovascular outcome trial called the LIGHT study for its obesity medication Contrave. Specifically, Orexigen stated the trial has so far shown that Contrave does not appear to present an excessive risk of increased cardiovascular events. It's important to remember that this is an interim analysis, and the final analysis won't be completed until late 2017. In other words, this is only a suggestive trend in the data, not a final outcome.
So, why is this interim readout a big deal? First off, this interim analysis should be enough to get the drug approved in the United States next year -- at least according to Orexigen's management. Moreover, Orexigen's management believes these interim results will be sufficient to answer any questions the European Medicines Agency, or EMA, poses about the drug's safety profile. In sum, this interim readout could be enough to get Contrave approved in both regions.
Despite its developmental delays, Contrave could thus end up beating out both Arena Pharmaceuticals' Belviq and VIVUS' Qsymia to the European market. As a reminder, the EMA applications for both Belviq and Qsymia were recently rejected, and neither company has laid-out clear cut plans on how to proceed with the stalled applications.
Nonetheless, Arena and VIVUS investors should keep a close watch on Contrave's pending EMA application. If the agency declines Contrave again in the face of these interim results, I think that's a pretty clear signal that Europe simply isn't interested in obesity medications. Given that Orexigen's marketing partner Takeda is rolling out serious marketing muscle for Contrave's possible launch next year and the drug stands a decent chance of being approved in Europe as well, Orexigen is certainly worth keeping on your radar.
Mixed outcomes from mid-stage data
Merrimack Pharmaceuticals reported mid-stage trial results for two different studies for its breast cancer drug MM-121, with mixed results. One study evaluating the drug in combination with Aromasin failed to meet its primary endpoint of overall survival, but did show a positive trend in terms of prolonging progression-free survival.
The second study assessed MM-121 in a neoadjuvant setting in combination with Taxol and showed a favorable pathologic complete response signal compared to a placebo, although the study lacked a pre-defined endpoint. While these mid-stage results are interesting, the real catalyst behind Merrimack's 33% week-over-week jump in share price was its newly minted oncology partnership with Actavis.
Under this agreement, Merrimack will manufacture nanoliposomal technology products that Actavis will subsequently market. Merrimack is eligible to receive milestone payments up to $15.5 million, including an upfront payment of $2 million.
What's my take? Well, it's important to remember that developmental stage biopharmas are risky by their very nature, and Merrimack is no exception. That said, I am cautiously optimistic that Merrimack's pancreatic cancer drug MM-398 will report positive results from its late-stage trial next year, and this is why I've added the stock to my real portfolio. As such, Foolish investors might want to keep an eye on this intriguing oncology company.
A stop stock you need to watch
The market stormed out to huge gains across 2013, leaving investors on the sidelines burned. However, opportunistic investors can still find huge winners. The Motley Fool's chief investment officer has just hand-picked one such opportunity in our new report: "The Motley Fool's Top Stock for 2014." To find out which stock it is and read our in-depth report, simply click here. It's free!
The article Biotech Week in Review originally appeared on Fool.com.George Budwell owns shares of Orexigen Therapeutics and Merrimack Pharmaceuticals. The Motley Fool recommends BioMarin Pharmaceutical. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.