The good news: This article contains not one word about yesterday's Fed decision on interest rates -- er, starting now. Phew! Nope, today we've got just the pure, unadulterated news that our three biotechs are doing exactly what they said they would.
First up, Amgen
Over half of Amgen's (Nasdaq: AMGN) annual revenues come from Epogen, its recombinant DNA version of the human protein erythropoietin. This wonder drug stimulates the body's ability to produce red blood cells, and Amgen rakes in $2 billion a year directly, plus roughly another 10% of that through a license to Johnson & Johnson (NYSE: JNJ) that sells the drug under the name Procrit.
With its Epogen patents beginning to expire in 2004, Amgen has fattened its drug candidate pipeline. Its near-term hopes rest on Aranesp, a version of Epogen, that patients can take less frequently. Why? First, less frequent, simpler administration means Aranesp can be prescribed for a wider variety of patients and conditions than Epogen.
Second, while Aranesp will initially target anemia from chronic kidney failure, human trials have already provided data to allow Amgen to seek approval to market Aranesp for cancer chemotherapy-related anemia -- a huge additional patient population. Finally, and best, where Amgen and Johnson & Johnson currently split the worldwide erythropoietin market about 50-50 between their Epogen and Procrit products, Amgen will own Aranesp rights entirely. Sweet.
Amgen's application to market Aranesp in the U.S. is pending before the Food & Drug Administration. But in encouraging news for Amgen investors, Europe's drug review and recommending panel, the Committee on Proprietary Medicinal Products (CPMP), has recommended approval, and the European Commission should act within three to four months. Assuming approval, Amgen then satisfies regulators in each of the EU nations within days or weeks, and Aranesp hits the market.
Jeff Fischer addressed Amgen's prospects positively at the end of January.
Next, Celera!
Celera Genomics (NYSE: CRA) is not wavering from its mission to become the definitive source of genomic and related medical and agricultural information. Rather than decide to reinvent the wheel in-house, Celera makes deals with centers of excellence to add value to its flagship data product, the Celera Discovery System (CDS). The partners presumably share revenues.
Celera's latest deal meets the needs of researchers who want to know not only the DNA sequences of genes, but also gene expression data that shows what genes are "turned on" (expressed, or lead to the production of proteins) in types of tissues. Celera signed agreements with Lynx Therapeutics (Nasdaq: LYNX) for gene expression data and analysis tools, and will add Lynx data to CDS and develop more in partnership.
The Lynx gene expression alliance joins others for data mining software tools from Germany's Lion Bioscience (Nasdaq: LEON), environmental DNA sequencing with Diversa Corp. (Nasdaq: DVSA)(check out our interview with CEO Jay Short), next-generation computational biology with the Dept. of Energy's Sandia Labs and Compaq (NYSE: CPQ), and full-length gene and DNA sequence cloning with Life Technologies, now a unit of Invitrogen (Nasdaq: IVGN), to position Celera positively with its major competitor, Incyte Genomics (Nasdaq: INCY) which already sports a well-stocked clone depository in St. Louis.
The companies release the deals' financial details, so investors must watch Celera's revenue, cash burn rate, and any announcements of results from the deals. It's a good idea with any company you've researched and chosen for an investment to check in with your company's quarterly and annual results through its 10-Q and 10-K SEC filings.
Last, and best for today, Human Genome Sciences!
In our Rule Breaker interview (parts one and two) with CEO William Haseltine, we learned that Human Genome Sciences (Nasdaq: HGSI) planned to put several new drug candidates into human trials this year. He reminded us of HGS' purchase of antibody technology from aptly-named Cambridge Antibody Technologies to make monoclonal antibodies as big a focus of HGS research and development as therapeutic proteins.
Alert biotech investors may recall a worldwide dearth of manufacturing capacity in just those two core HGS research and development areas. Witness this lead sentence from Nature Biotechnology March's issue: "The biotechnology industry is suffering from a severe shortage of manufacturing capacity for recombinant protein therapeutics and must find a way to make all the proteins, especially monoclonal antibodies." Sources report that contract manufacturing organizations are booked one to two years out. (Note to self: Investigate that industry!) The article's author puts a typical facility's price tag at $250 million -$500 million with three to five years to build.
Never fear, because HGS may be sitting in the catbird seat. In February, HGS announced completion of a 42,000 square foot plant to support clinical trials of its projected antibody drugs. Soon after, the company trumpeted its planned $55 million purchase of Life Technologies' three-building, 240,000 foot research and development labs and offices, doubling HGS' current space and adding more manufacturing capability.
That ain't all. The company will break ground on another 300,000 square foot commercial scale manufacturing facility in September, as well as start work on a 1 million square foot new R&D campus and headquarters in June, hoping to finish in time for the 2003 expiration of its current lease.
HGS appears to be securing its future while making only a minor dent in its $1.8 billion cash pile. We'll be keeping our eye on HGS' cash burn, given that its first products are unlikely to hit the market until around 2005. In the meantime, to provide today's King of Understatements, the company appears to be ensuring that its success or failure won't be due to lack of capacity to produce and test its drug candidates in a timely manner.
Sounds very good to me.
Tom Jacobs (TMF Tom9) has heard that there's some kinda tournament going on now involving a round ball. He owns shares of Celera Genomics and Human Genome Sciences. To see his stock holdings, view his profile, and check out The Motley Fool's disclosure policy.
