seems to me that VRTX may be buyout potential if true. I think I would let them wither away and then pounce once their stock became tempting enough. To block that move, I would sell shares and raise cash if I was Vertex making myself self sustainable and also unattractive to buy. I think in those two scenerios it could be bad for the current stockholders. However, I have given this now about 20 seconds worth of thought...I'm sure I am missing something important. I tend to focus on my one stock of the decade. Vertex was my stock of the last decade.
It's logical for Vertex to reassign their personnel to the areas that have the best chance for near term commercial success. The company's reorganization is a necessary response to the market realities that have been evolving rapidly in the treatment hepatitis C. It makes the most sense for Vertex to focus it's resources on developing the CF drugs as a priority given it's need to generate increasing revenue next year to replace Incivek. The CF drugs will dramatically improve the quality and length of life in thousands of young people suffering with this otherwise fatal genetic disease. Vertex will have no competition for years given the safety and effectiveness of their drugs to treat CF, and help fund the R&D for other areas of research in the company to develop other potential treatments in CF cancer and chronic MS in the future. If VX 135, 509 and 787 have commercial potential, they will be realized by licensing arrangements with larger pharma interested in co-developing these drugs, to provide deeper pockets to complete clinical trials for regulatory approval on a timely basis and to market these drugs worldwide.
I am in contact with several Vertex scientists who made it through the lay-off and now they are being re-assigned to a NON-HCV position (CF). It looks to me like they are giving up on HCV and focusing only on CF.
It looks like they also over-extended their CC a bit:
Vertex Pharmaceuticals - The Largest Private Construction Project in the US
AHA is proud to be a part of the design team for the two Vertex Fan Pier towers being constructed in Boston's Seaport district. Vertex Pharmaceutical's relocation from Cambridge to the Boston Seaport has been one of the most talked about stories in the last year as it is the largest private construction project in the US. The two build-to-suit buildings total 1.1MSF, and construction costs are estimated at $900M.
It should be noted that while several rounds of analogue synthesis and testing were required to go from the hit VRT-532 to drug VX-770, compounds were strictly assessed for an effect on ion transport in mutant CFTR- expressing cells, rather than CFTR binding or other assays of isolated CFTR protein. While ivacaftor is unable to restore normal CFTR function to cells with the ΔF508 mutant CFTR, due to its dual defects in trafficking and gat- ing, it restores normal CFTR function in cells with G551D, as this mutation only affects gating.107 For this reason, iva- caftor was moved into clinical trials for the treatment of patients with cystic fibrosis with the G551D mutation and found to improve not only sweat chloride measurements, reflecting the improvement in CFTR function, but also lung function and nutritional status, both important clinical parameters, leading to its approval for the treatment of patients 6 years and older with this mutation in January 2012.103
This would represent a triumph for target-based drug discovery had ivacaftor been developed with the CFTR as a target, based on structural studies of the CFTR protein— developing a precise molecular mechanism of action to repair the defects in the mutant channel. Instead, ivacaftor represents the development of a genotype-specific person- alized therapeutic using phenotypic drug discovery meth- ods and, as such, provides a counterexample to the widely held assertion that personalized medicine is only possible using the target-based drug discovery approach. Indeed, the exact mechanism by which ivacaftor exerts its beneficial effects on CFTR gating is still unclear, and although recent work suggests direct action on CFTR itself,108 this was not by design. Phenotypic drug discovery can yield targeted, personalized therapeutics.
copied from "Clinical Relevance of Target Identity and Biology: Implications for Drug Discovery and Development" J Biomol Screen 2013 18: 1164
Recent advances in the treatment of cystic fibrosis provide an example of how personalized medicine can occur with- out knowing the precise target of a novel therapeutic and can be applied with limited provider understanding of the biology at work. Cystic fibrosis is a fatal genetic disease caused by mutations in the cystic fibrosis transmembrane conductance regulator (CFTR) gene, which encodes a mul- tifunctional protein whose primary role is as an adenosine triphosphate (ATP)–gated chloride channel essential for normal salt and fluid transport in multiple organs, including the lung.102 The discovery of the CFTR gene in 1989 prompted the development of therapeutic approaches to restore normal CFTR function, either through replacement of CFTR through gene therapy or by improving the function of the mutant CFTR.103 The latter is complicated by the fact that different mutations predictably affect the CFTR protein and its function in different ways.102,104,105 While the most common CFTR mutation, ΔF508, results in both impaired trafficking to the cell surface and problems with channel gating, other less common mutations, such as G551D, affect only channel gating.104–106
Using cells expressing mutant CFTR genes, Van Goor and colleagues106 at Vertex Pharmaceuticals screened 228,000 compounds for compounds that would enhance CFTR function using a cell-based fluorescence membrane potential assay. Specifically, they screened for two types of compounds: CFTR correctors, which improve ΔF508 CFTR trafficking, and CFTR potentiators, which improve ΔF508 CFTR gating at the cell surface. From the CFTR potentiator screen, hit selection and lead optimization yielded ivacaftor (VX-770).
That's the word from scientist friends I have inside the labs. I'm not sure if that will bump up the stock or bump it down. I don't care. I just have had a scientific relationship with this company for 15 years. used to own stock at $7 a long time ago. good luck. I am still finding jobs for scientists and salespeople that got laid off.
My gut feeling says the probability is 95%. It comes from Ph II data of 809+770 and 661+770. Because 809 and 661 target the same location on CFTR molecule and the action mechanism is the same, the efficacy of one molecule reinforces the efficacy of the other. This improves the probability of success of both.
What did you think of his probability of approval at greater than 90%? An analyst I follow rate the approval percentage at 65%. The analyst could be just being conservative....
Check it out guys you have the MEGA opportunity to buy this significantly underpriced stock at the bottom if you want to make money !
AEZS has already a Drug on the Market which is partnered with pharma giant Merck (MRK) , this Product brings around $70 M in annual revenue to AEZS thats almost two times higher than current Market Cap .
AEZS has another Drug awaiting FDA approval and muliple Cancer Drugs in Late Stage some of them have potential Blockbusters .
I think AEZS has the potential for a runup to minimum to $4-5 before FDA decision in Mid 2014 . GL
AEterna Zentaris (AEZS)
Market Cap: $43 M
Cash: $25 M
Shares Out: 32 M
Annual Revenue :$ 70 M
BIG PIPELINE :
Macimorelin Acetate (AEZS-130)
Diagnostic in adult growth hormonedeficiency (endocrinology) Awaiting FDA approval
Product ..Zoptarelin Doxorubicin (AEZS-108)
Endometrial cancer in Phase 3
Tripl-negative breast cancer In Phase 2
Castration-and taxane-resistant prostate cancer in Phase 2
Refractory bladder cancer in Phase 2
Ovarian cancer (completed) in Phase 2
Product ..Ozarelix :
Prostate cancer in Phase 2
Product ..Macimorelin Acetate (AEZS-130)
Therapeutic in cancer cachexia in Phase 2
Multiple cancers in Phase 2
Yes, good discussion John.
"American/Japanese/European's are paying the R&D"
You are absolutely correct . Keeping in mind that not many american pharma companies spend a lot of their own resources in developing drugs that have applications only in 3rd world countries. Most such drug developments are either subsidized by the UN or some philanthropic organizations such as Gates foundations.
As far as India is specifically concerned, they will be serviced by China before transitioning. I would even go as far as to say China will be a significant threat to Europe here in a bout 10 years on account of some railroad projects in Russia and China's leadership in using high speed rail to compete with air package delivery.
You are right about the drug company having two choices. Which just validates my point... American's/Japanese/Europeans are subsidizing foreign healthcare because without the American/Japanese/European money, the foreign market would not exist... American/Japanese/European's are paying the R&D.
I like the discussion.
I would have to say it is not that simple. When making a decision to move production operations, you have to consider your supply chain, human resources, infrastructure, security of intellectual property, and capital expenses.
For example, when Intel (also not an employee) decided to build some factories in Vietnam, they had to import people, build roads, improve ports, and import in specialized moving equipment to safely transfer the extremely sensitive equipment. The equipment had to be thier prior to the production equipment being shipped... so your lead time is 6 months + 6 months + 12 months + 3 years = 5 years just to open the doors... and by that time, where is the market?
It is a complicated (physically and legally (trade laws, inco terms, geo-political) etc) to even consider spending the capital expenditure to build out foreign production capacity.
While I agree that India's rate is lower ($0.91), the complete lack of infrastructure makes any significant production capability their way too expensive. The infrastructure is so bad there are many parts in India where the only stable transportation services for goods and equipment is on trailers pulled by four wheelers (not kidding). This is why there is a large movement now to move production capabilities domestically (and Mexico).
As far as catching up, I stated 2 to 3 business cycles (16 to 33 years). This is not a long time off... I suggest looking at some of the UN reports for more information.
I understand what you are saying about the inequality of pricing and about labor costs in other countries going up. However, all of that is happening gradually and it will take some time for even China and India's standard of living to catch up to the United States' standards. Until it does price disparities of American drugs are given.
Right now a typical Indian's salary is way below its counterpart in US. So an American drug company has 2 choices; 1) sell its drug at prices that the Indian can afford and make a little profit, or 2) demand American prices and sell no drug and make no profit.
Exactly. So US Citizens pay a 95% margin and the rest of the world pays a 10% margin so the company nets 30%. Not actual figures of any company but shows the principle.
That is not sound business decision making... it is price gouging the wealthy... or even using those that pay to subsidize health care to those that cannot. With the advent of a health care system that will result in a single payer system if it works... I find no basis of equality why the American tax payer should fund affordable healthcare for the whole world. Especially in light of imminent wage parity which I will discuss.
The problem I have with that is that the majority of manufacturing base companies will have labor cost parity with the US in the next five years. I have worked with Boeing (I am not an employee) on developing forecast models for their supply chain, and off memory, specifically the top 8 countries for the 787 will have price parity in three years.
I could go on. But I won't for the sake of forum. Point is, within the next 2 to 3 business cycles, advances in ubiquitous hardware technologies used in manufacturing will make the more pressing issues control of input resources and proximity to end user on account of total landed cost.
In layman's terms, it will cost cheaper the less you have to ship it because the cost of labor will be the same.
Also during this time, we will see the rise of the new global middle class, predominately in India and China.
So explain to me again why it is still okay to charge the US more? And if my statements are not credible enough, simply go to the Bureau of Labor and Statistics and research manufacturing labor data.
This has all been brought to you by 'free trade'. The changes in structural employment and socio economic stratification have more to do with an equalization that is occurring amongst the industrialized countries... the only place cheap left is Africa. (Vietnam is about done) My opinion is why waste the capex.
these companies employ a ton of people here in the US. Have to keep the cycle of innovation going. The failure rate in small/mid cap biotech is extremely high. Drug pricing issue is complex and deserves a look beyond just the PRICE.
[The question is, "Why do you see fit in your business model to use the excessive profits made on the American consumer / tax payer to subsidize foreign business. "]
I am assuming you are referring to lower drug pricing in foreign countries. I think it has to do with sound business decision making. Companies usually price their products to maximize sales as long as those sales are still profitable. They have to balance the price with the local consumers ability to pay. For example, there will probably be very little sales of some of the orphan drugs in third world countries if they had to pay American prices. In addition, drug companies usually would like to balance their profit making with the humanitarian needs of those less fortunate than us in order to create good will and good publicity for their companies.