It sure has been a busy week for MGI Pharma
From all of this wheeling and dealing, MGI Pharma picked up the rights to three late-stage drug programs. On top of Dacogen there is Saforis in development for the treatment of oral mucositis, and ZYC101a is in clinical trials for the treatment of cervical dysplasia. During the conference call management stated that phase 3 trials for both of these drugs will begin early next year, so the timeframe until these drugs can start generating revenues is relatively short.
Up until this time, MGI Pharma's future revenue growth had been highly dependent upon the success of its drug Aloxi, which was approved in 2003 for the treatment of chemotherapy-induced nausea and vomiting. In one fell swoop, management has significantly broadened the company's product lineup. While only time will tell whether these were smart acquisitions, right now there appears to be a good chance that the company will realize a solid return on these investments.
In my article What's a Drug Worth? I put forth the idea that most of the value of a small biotech company is in its drug pipeline. I also noted that one flaw with that line of thinking is that it could not account for a company taking one successful drug and then leveraging that success to create value from other programs. I think this is exactly what has happened here, and MGI Pharma now seems poised for years of growth.
To read more on the exciting biotech industry, check out:
- Biotech's Full Monte
- Unraveling Biotech Potential
- Don't Be a Biotech Gambler
- Avoiding Biotech Land Mines
Fool contributor Charly Travers doesn't own shares of any company mentioned in this article.
