12
BioTech Stock Report, January 2004
NOTE: BioPortfolio is not a model portfolio. It is a list of companies that lead in their appli-
cation. Companies on this list are selected only for their technology leadership, without consid-
eration of their current share price or the appropriate timing of an investment decision. The
presence of a company on the list is not a recommendation to buy shares at the current price.
Reference Price is the company's closing price on the Reference Date, the day the company
was added to the table, typically the Friday day of the month prior to publication.
ing opportunity below $25.
On December 16, Roche and
Trimeris/NASDAQ: TRMS (BSR
#33: AIDS) announced submission of
48-week efficacy and safety data from
two pivotal studies of Fuzeon to the
FDA to support its full approval. The
data demonstrate that the use of Fu-
zeon in combination regimens for the
treatment of HIV can be extended to at
least 48 weeks. The FDA granted ac-
celerated approval for Fuzeon on the
basis of 24-week pivotal data. Shares
of Trimeris have been soft and we at-
tributed to this year-end selling. There
are plenty of patients that will benefit
from this drug. With better and more
information disseminated and as doc-
tors become experienced with prescrib-
ing Fuzeon, improved sales should
emerge to justify Trimeris' valuation.
Hopefully Trimeris can be a comeback
kid.
On December 4, Vertex/
NASDAQ: VRTX (BSR #12: Hepatitis
C) announced it would sell some in-
strumentation assets and reaffirmed its
guidance of a loss of $180 million, but
lowered its 2003 outlook for revenue
and expenses from $66 to $80 million
and $205 to $202 million, respectively.
It's a sign that changes will be hap-
pening at Vertex.
With the recent setbacks in Ve r-
tex's late-stage pipeline, we don't see
any near-term profitability for the com-
pany. Instead, the company is now
focused on developing and highly de-
pendent upon merimepodib as a treat-
ment for hepatitis C to make its mark.
On December 17, Vertex presented
data at HEP DART 2003 Frontiers in
Drug Development for Therapies for
Viral Hepatitis in Kauai, Hawaii for
merimepodib. The drug demonstrated
it could enhance the antiviral effect of
pegylated- interferon (peg-IFN) and
ribavirin at 24 weeks of treatment in
hepatitis C virus (HCV) patients who
were non-responsive to treatment with
a previous course of interferon-alfa
and ribavirin. The study was tested in
a small group of patients that showed
a high level of efficacy by reducing
viral load. But we would feel more com-
fortable with more dosing work and
confirmation of efficacy to foresee the
potential of merimepodib. Vertex plans
to initiate additional studies with meri-
mepodib in hepatitis C patients in 2004.
Given pipeline setbacks and the
company's high cash burn rate and
convertible debt, we do see further
downside to Vertex over the next sev-
eral months as investors struggle with
valuation. Until we see improved fun-
damentals at the company, we will con-
tinue to rate Vertex as a hold.$$
cor has discontinued clinical develop-
ment of Soltara for the treatment of
allergic rhinitis. Back in March of 2002,
the FDA issued a "not approvable"
letter for Sepracor's NDA for Soltara
for the treatment of allergic rhinitis.
After taking into consideration the
results from recent Soltara trials, evalu-
ating the changing dynamics of the U.
S. antihistamine market, and thor-
oughly assessing the potential of all
clinical candidates in Sepracor's port-
folio, the company has decided to dis-
continue development of Soltara and
expects to incur a one-time, non-cash
charge of about $19 million in Decem-
ber of 2003.
The timing of the release of the
news may give investors' the impres-
sion that Sepracor's management was
doing a bit of damage control. Sepra-
cor's high profile and non-approvable
letter from the FDA on Soltara may
raise concerns amongst investors
about Estorra's status, Sepracor's
drug for insomnia. We do not expect
significant delays with Estorra's ap-
proval by the FDA. In fact, turnaround
time between action date and final ap-
proval may actually be shorter, given
that the FDA will have had additional
time to review the NDA. With potential
regulatory success for Estorra in Feb-
ruary/March, investors' confidence
should increase with potential upside
of at least $30 a share for Sepracor,
based on Xopenex, Xopenex MDI, Es-
torra, Allegra, and Clarinex sales.
Given how the after hours trading
of Sepracor's share price, the damage
appears to be minimal which leads us
to believe that Wall Street analysts
had no expectations for Soltara. Thus,
we continue to see Sepracor as a buy-
