Ebola Vaccine and Inhaled Insulin Incoming

Biotech partnerships, an IPO that wasn't, and how big data is fighting Ebola.

Aug 16, 2014 at 6:01AM

In this healthcare-focused of episode of Where The Money Is, analysts David Williamson and Michael Douglass tackle the weeks biggest stories in pharma and biotech, and how the industry is attempting to combat the Ebola Outbreak.

MannKind's big news

It was a jam-packed week for biotech investors. MannKind (NASDAQ:MNKD) unveiled a marketing partner for its recently approved inhaled insulin Afrezza. Big pharma and diabetes powerhouse Sanofi (NYSE:SNY) is as good a partner as investors could have hoped for, but the terms of the deal left a bad taste. Shares of MannKind were up only 5% the day the deal broke and promptly fell 12% the next day on what should have been the last great catalyst for the stock before quarterly sales determine its valuation. And that is part of the problem -- investors may have had unrealistic expectations, as giving away 65% of global Afrezza revenue for less than $1 billion in milestones and upfront cash makes it seem Sanofi got the better deal if the drug turns out to be a blockbuster.

Dendreon's debt problem

Dendreon (NASDAQ:DNDN) stands in contrast to MannKind. It decided to go it alone with prostate cancer vaccine Provenge, and the results have been disastrous for investors. Shares have grinded downwards losing 94% of their value over the last 5 years. Sales have roughly plateaued in the face of tough competition and a looming $620 million debt payment in 2016 hovers over the company's future like the sword of Damocles. Management disclosed that the threads holding that sword in place are fraying, and that current investors may be left with little (dilution) to no (bankruptcy) stake in the biotech going forward. Shares plunged over 33% on management's acknowledgment of the looming threat, but it shouldn't have been a surprise to anyone doing full due diligence on the stock.

Predicting, and fighting, Ebola

The Ebola outbreak in western Africa has captivated and concerned health officials. However, nine days before the World Health Organization declared the emergency, a computer program gobbling up public data warned of a rapidly spreading hemorrhagic fever. Big data may help contain future outbreaks, but preventing them from happening in the first place is the focus of drug developers. Leading the pack is GlaxoSmithKline (NYSE:GSK), marking a brief moment of good news for investors slogging through a tough 2014. Second quarter results were dismal, allegations of massive corruption scandal in China get more bizarre by the day, and concerns remain over Glaxo's marketing practices in a number of other countries as well. With the big pharma is shifting its focus to vaccines, bringing the first for Ebola vaccine to market would do wonders for investors confidence and Glaxo's image. 


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David Williamson owns shares of Johnson & Johnson. Michael Douglass owns shares of Johnson & Johnson. The Motley Fool owns and recommends shares of Johnson & Johnson. 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.

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