Specialty drug company Pharmion
The FDA approved the drug to treat all five subtypes of MDS. Because the FDA previously granted the drug orphan status, Pharmion will enjoy seven years of exclusivity in the U.S market. However, with Vidaza's overall response rate (including both complete and partial responses) at 15.7%, competitors like Celgene
Investors may also find Pharmion's business model of interest. The company does no internal research or manufacturing. Instead, it licenses, develops, and commercializes promising therapeutic products developed by others.
Worldwide rights for Vidaza, for example, were licensed from Pharmacia, which has since merged with Pfizer
Clearly, those who participated in Pharmion's IPO last November at $14 a share are very happy today. In addition to nice paper gains, they have a company with $77 million in cash and virtually no debt. Roughly $130 million in accumulated losses, meanwhile, will delay tax payments for a long time.
Still, analysts do not see the company earning money this year or next. This lack of earnings, coupled with the fact that the company reached a $1 billion market capitalization today, should be a warning to conservative investors. A solid balance sheet is nice, but over the long term, earnings drive stock prices.
Fool contributor W.D. Crotty does not own stock in any of the companies mentioned.