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GATX Corp. Message Board

flatlander_60048 10 posts  |  Last Activity: Sep 18, 2014 11:42 AM Member since: Jul 8, 2000
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  • flatlander_60048 by flatlander_60048 Sep 18, 2014 11:42 AM Flag

    When Science Outpaces Payers: Molecular Diagnostics Pose Reimbursement Dilemmas

    http://www.onclive.com/publications/oncology-live/2014/august-2014/when-science-outpaces-payers-molecular-diagnostics-pose-reimbursement-dilemmas/1#sthash.WIe0o5QT.dpuf

    Quote:Many see the industry at a crossroads, with reimbursement issues at the center. The future of molecular diagnostics is both entwined in the broader discussion of paying America’s healthcare tab and constitutes its own separate beast, for reimbursement issues present a steep scientific and regulatory challenge. Most of the experts who spoke with Evidence-Based Oncology predicted an industry shakeout would occur, with some promising small companies joining large ones while others will disappear.

    Right now, the divide looks like this: Payers have seen a new cost category explode across their balance sheets, and they are determined to understand what they are funding and whether tests are necessary. Molecular diagnostic companies, meanwhile, say they can’t understand what they call a penny-wise, pound-foolish approach. Why, they say, should insurers pay ever-rising sums for cancer therapies, with prices measured in tens and hundreds of thousands of dollars, but balk at a $3000 test2 that would tell doctors whether the drug is likely to work?

    “We overtreat people continuously in this country,” said Macey Johnson, vice president of managed care and reimbursement at bioTheranostics, based in San Diego, California. “It’s overkill to give people all these drugs, with oncology being the poster child.”

    As both regulators and testing companies implement a new reimbursement law, many stakeholders see opportunities for change. “It brings the industry into the bright light,” said Mike Barlow, vice president of operations at Palmetto GBA of South Carolina, the Medicare contractor that developed the MolDx program to create billing expertise around an emerging industry. “Too often, the lab industry has been opera

  • flatlander_60048 flatlander_60048 Sep 18, 2014 9:39 AM Flag

    From what I understand MNTA filed the necessary data in May and does not see this to be an impediment to approval.

  • flatlander_60048 by flatlander_60048 Sep 10, 2014 9:59 AM Flag

    In order to get to GHDX's stated projection of $1B in product sales by 2020, sales growth will have to ramp to over 20% in the next year or so and 25% or so after 2016. As such, this is a very pivotal time for GHDX. A lot of us have been impatient (me included) while the foundation for growth is put in place. I believe that if GHDX is successful in executing this plan, the share price could triple by 2020. If this occurs, the Backer Bros will be in a position to determine whether GHDX goes it alone or whether they are acquired. From what I can see from several of their past holdings, they will not be in a hurry to sell out. This hopefully plays out well for the rest of us small shareholders. Given the relatively limited float, any significant upturn in buying can lead to quick share price appreciation.

    FL

  • flatlander_60048 by flatlander_60048 Sep 8, 2014 5:34 PM Flag

    Went back and revisited my NVS holdings, and decided to trim less than 10% which represents a overweight position. The thing that keeps catching my eye is that NVS is currently #1 in follow on biologics. There are approximately $60B of biologics coming off patent in the next few years and NVS is the single best positioned company to capitalize on this.

    NVS as 6 huge biologics in Phase III testing or registration. These include huge blockbusters including:

    Humira (currently #1 selling Drug) expires in the US in 2016
    Rituxan (already expired in EU, expires in US in 2016)
    Enbrel (expires next year in the EU)
    Neulasta (expires in the US in 2015)

    Throw in Copaxone which could be approved any day and the numbers are staggering. It is apparent that guidance is fairly conservative regarding these products. If quick approval of just a few occurs and few competitors emerge, there will be huge upside.

    There have been notable failures (TEVA canning their Rituxan program), thus it is apparent that the bar is much higher (high costs and technical expertise levels) and the margins will be much higher than typical generic drugs. The worldwide pressure to cut costs on these projects is great. With a worldwide sales force and established specialty areas that allow access to physicians and cost effective marketing, NVS seems to provide a great way to play the graying of the worldwide population. Thus, hanging on to most of my shares makes sense to me.

    FL

  • flatlander_60048 by flatlander_60048 Sep 5, 2014 1:13 PM Flag

    I believe that the Baker Brothers currently own about 45% of GHDX. When NVS bought out a majority stake (more than 50%) in Alcon they had to consolidate Alcon's earnings as a separate line item into their SEC reporting. This continued until they bought out the rest of Nestle's shares and fully consolidated Alcon into the NVS structure. Are hedge funds held to a similar limitation. Are the baker Bros limited to less than 50% of GHDX? In which case, they may be more bullish on it than the 6th position it currently occupies ($ wise) in their portfolio.

    Any thoughts

    FL

  • Reply to

    One hundred dollars on Monday!

    by blackmonday1987 Aug 30, 2014 6:34 PM
    flatlander_60048 flatlander_60048 Sep 1, 2014 12:54 PM Flag

    Happily, I'm wrong. Up 4.3% in Europe today. If NYSE follows suite this should be the largest 1 day increase I remember since I first bought NVS in 2002. Market is ascribing huge blockbuster potential.

    FL

  • Reply to

    One hundred dollars on Monday!

    by blackmonday1987 Aug 30, 2014 6:34 PM
    flatlander_60048 flatlander_60048 Aug 30, 2014 7:13 PM Flag

    I wish that $100 was in the realm of possibility. However, I have been in NVS for more than a decade and don't think I've ever seen it move more than 3% on any news. I've been contemplating when to lighten up some since NVS has grown to be way too large a portion of my portfolio.

    I still like the direction Vasella set them on. If emulation is a sign of flattery, they have definitely set the pace for big pharma. Biogenerics, vision care are some examples of NVS identifying the trend and acting on it before others.

    This definitely comes at a good time as diovan generic competition heats up. I expect that biogeneric news to be a catalyst for the next couple of years.

    Good Luck Longs.

    FL

  • flatlander_60048 by flatlander_60048 Aug 25, 2014 10:26 PM Flag

    With Sunday's earthquake in Napa, I was thinking that GHDX might have some backlash. I think at some point in the near future they will need to look at opening a second lab facility in Europe. The earthquake risk is a major reason, but it will also help with marketing western Europe to show that the company is bringing jobs to the area. Obviously the acceptance of Onco DX breast, and prostate tests with reimbursement codes would be helpful. I'm sure they are waiting for the moment when the test volumes justify such a move. However, risk management may move them a little sooner.

    FL

  • Reply to

    Europe vs US

    by flatlander_60048 Aug 12, 2014 12:52 PM
    flatlander_60048 flatlander_60048 Aug 13, 2014 10:50 AM Flag

    Proton radiation, robotic surgery, hormone treatment, targeted drugs and even the physicians all have a stake in the over treatment of diseases like prostate cancer. On paper, the ACA seeks to switch the payment model to outcomes rather than treatment for treatment sake. I think it will take a while to switch the mindset of the medical community since it will result in shifting of the winner and looser landscape. The lobbyist power is firmly entrenched to maintain the status quo.

    I think the Europeans have come to grips with their limited resources and are taking steps before the US. I hate to admit it but they seem to be a couple of years ahead of the US in healthcare trends. Take biogenerics for example. They have had guidelines in place for biogeneric drug approvals for a couple years whereas we are still struggling with it in the states. Everyone realizes that it is necessary to control costs, but the entrenched interests and lobbyists are too strong for logical legislation to be passed quickly. With national debt pushing $17T we are able to kick this can down the road because borrowing costs are so low. As soon as interest rates kick up, this will no longer be the case. It will become immediately apparent that we as a nation cannot afford to spend 17% of our GDP on health care. Then companies that save money like GHDX will have a tailwind.

    Regards
    FL

  • flatlander_60048 by flatlander_60048 Aug 12, 2014 12:52 PM Flag

    It has become apparent to me, that GHDX will experience better traction in Europe than in the US in the short term. Europe seems to have come to grips with their slow growth dilemma and is trying to trying to squeeze the most out of the GDP which means being more efficient in health care spending. This is the crux of the NICE and recent Spanish recommendations for Onco DX. In the US too much of the Health Care economy is still dependent on overtreating disease. As long as the analysts line up behind an Intuitive Surgical and others, it will be hard to get coverage for a company that is dependent on testing that stands to reduce costs for managing these diseases.

    The key is seems to be approval for the payer reimbursement codes for the prostate test. That is the tipping point for GHDX. Until that time, the build out of the sales force and the scientific research journals will continue to cause cash burn that will hold back the share price. Payers will endorse the test whole heartedly once the codes are approved since the ACA requires cost reduction and more efficient treatment. 2015 Looks Bright to me. However, I suspect that GHDX will be taken out before 2016 when the full measures of success are realized.

    FL

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