Diabetics Are The New "Golden Child" For Biotech and Pharmaceutical Investors: No Cure And Increasing Rates Make For Global Growth Industry

• On 2:54 pm EDT, Wednesday October 21, 2009

67 WALL STREET, New York - October 21, 2009 - The Wall Street Transcript has just published its Biotechnology Report offering a timely review of the sector to serious investors and industry executives. This 70 page feature contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Heightened M&A Activity - Trend Toward Orphan Disease Drug Development - Generic Drug Competition - Current Length Of FDA Approval Process - Ownership Ego Preventing Shareholder Returns - IPO And Secondary Offering Window Opening - Big Pharma R&D Pipeline - Decreased Clinical Development Risk - Impact Of Health Care Reform - Convergence Of Large-Cap Biotech And Pharmaceutical Companies - Easier Credit For Small Cap Biotech Companies - Developments In Cancer Chemotherapeutics - Gene Delivery Technology

Companies include: ADVENTRX (ANX); Abbott Labs (ABT); Advaxis (ADVX); Amedisys (AMED); Amgen (AMGN); Amylin Pharmaceuticals (AMLN); Antares Pharma (AIS); BioDelivery Sciences (BDSI); Biogen Idec (BIIB); Biomarin (BMRN); Boston Scientific (BSX); Bristol Myers (BMY); CVS Caremark (CVS); Celgene (CELG); Cerner (CRN); Cerus (CERS); Coke (KO); CombiMatrix (CBMX); Coventry Health Care (CVH); DARA (DARA); Eisai (ESALY); Eli Lilly (LLY); GenVec (GNVC); Gilead (GILD); GlaxoSmithKline (GSK); Health Management Associates (HMA); Human Genome Sciences (HGSI); Inspire Pharmaceuticals (ISPH); Intellect Neurosciences (ILNS.OB); InterMune (ITMN); International Stem Cell (ISCO.OB); Javelin Pharmaceuticals (JAV); Johnson & Johnson (JNJ); Keryx Biopharmaceuticals (KERX); Kraft (KFT); MAP Pharmaceuticals (MAPP); Medco (MHS); Merck (MRK); Merit Medical (MMSI); Novartis (NVS); Novelos (NVLT.OB); Novo Nordisk (NVO); Nutrisystem (NTRI); OSI Pharmaceutical (OSIP); Orexigen (OREX); Pepsi (PEP); Pfizer (PFE); Rite Aid (RAD); Schering-Plough (SGP); Takeda (TKPHF); Teva Pharmaceuticals (TEVA); Viropro (VPRO.PK); Walgreens (WAG); Wyeth (WYE); XOMA (XOMA); ZIOPHARM (ZIOP).

In the following brief excerpt from just one of the indepth interviews in the 70 page report, an expert in Diabetes treatment and the companies providing Diabetic Treatment and Services discusses the outlook for the sector and for investors.

DAVID A. KLIFF is the Publisher of Diabetic Investor, the only investment newsletter covering the diabetes care industry.

TWST: What are the latest trends in diabetes-related areas? Is there anything more promising on the horizon in the way of new products?

Mr. Kliff: As far as trends, I would divide them by category. I think the most positive trend is that people are beginning to realize the extent of the problem. You can't fix something unless you acknowledge that you have a problem. I think people are beginning to realize and I think part of this has to do with the debate that's going on with healthcare reform where people are beginning to realize just what a big problem this is . A few years ago I predicted in one of my issues, I was writing about how diabetes will become one of the most popular disease states because it has everything a business wants. It's got a growing patient population and absolutely no chance of a cure anytime soon. It's no accident that when I first started writing Diabetic Investor many gray hairs ago, I was covering maybe a handful of companies that were really making a concentrated effort in diabetes. Now, my list of companies has grown to include companies like Kraft (KFT), for example. Kraft right now is developing a complete line of food products for people with diabetes. Nutrisystem (NTRI), on television what do you see, you see these ads for Nutrisystem D, which is a diet they've designed for people with type 2 diabetes. Lap-Band for people who are obese, and there was an ad today in The Wall Street Journal that said, Hey, maybe I should consider the Lap-Band to help me control or possibly reverse my diabetes.

Diabetes is no longer the province of, let's say, somebody like Eli Lilly (LLY) or Novo Nordisk (NVO), who are the insulin companies or Sanofi-Aventis. This is the province now of literally almost every company that's out there, whether it be a pharmacy benefit manager like Medco (MHS), a retailer like CVS, Walgreens or Rite Aid (RAD) or any of those. They realize how important their diabetic patient is to their bottom line. I think if I had to identify one very positive trend is that because of the impact the diabetes is having on both the economy and our healthcare system, people are trying to design new ways to deal with it. I think a negative trend is for reasons that I think only the FDA understands, we've lost our perspective on what I call risk-reward benefit. We've seen a lot of drugs come under fire, whether it be Avandia, which is a diabetes drug, Vioxx or some of these other drugs and I'm not saying that we shouldn't look at these problems, but what I'm more accurately saying is that, every drug that's out there carries risk. Avandia and Actos were two very popular diabetes drugs. Seven years after they were on the market, used by millions of people, we found out that there's an increased incidence of bone fractures for patients who use these drugs. Now, this never showed up anywhere in this trial data. It took seven years for this problem to become aware. If drug companies were required to run 10-year studies, drug discovery would grind to a halt. I think part of the issue we're facing right now on the negative side is how far do we take this risk-reward ratio and say, "Okay, the fact of the matter is, diabetes is the enemy here, and the other fact is no matter how much research we do, no matter how many studies we run, no matter how many computer models we generate, the fact is until the drug is out on the market, even with all of this data, until the drug is out there and used by a wide number of patients on a regular basis, there's no way to predict." For example, to give you an idea, metformin, which is a generic drug, it's been around for probably 50 years, probably one of the most popular therapy used with patients with type 2 diabetes. While even that drug, which is considered safe and reliable, comes with adverse events. Lactic acidosis is an unfortunate side effect with some patients who use metformin. Yet, it's also well known that metformin is extremely effective in almost every patient that uses it. Where do you draw the line here, and I think that the FDA tends to work like a pendulum where you get one side of the pendulum where drugs are being approved too quickly, then what happens is you have a problem like you do with Avandia or Vioxx or something. They've been swinging all the way to the other side of the pendulum where they slow approval and look at every aspect. It takes a while to get back to that center position.

The Wall Street Transcript is a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs and research analysts. This 70 page special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online .

The Wall Street Transcript does not endorse the views of any interviewees nor does it make stock recommendations.

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