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Hi Folks,

I am in the process of increasing my share in biotech comanies and DNA looks appaeling. I will greatly appreciate if you can offer information in the following subjects:

1.-Patent expiration date for the main revenue drivers of this company.

2.-Why is this company losing money when its proforma income is growing?
where is this money going? is this one time charge? are these one times charges going away soon?

3.-Is it a better idea to get stock in Roche?

4.-What did the company did wrong recently with their manufacturing in San Francisco and has anyone knowledge on how they -are fixing/fixed- the problem?

5.-Any other relevant information that may affect my decision on whether to invest or not in DNA.

6.-Whos the main competitor for DNA in the areas of cardio and cancer medicines?


Churun
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Will try to keep this short and answer as well as I can.

1.)I don't have specific information here, but if you're referring to rituxan and herceptin these are fairly new products and I wouldn't imagine they'd be expiring any time soon. As Genentech is not a one or two product company I'm not too concerned w/ their patent situation as loss of protection won't kill them.

2.)This is a long story but it is described fully in their 10K and in earlier posts I made on this board. They are taking charges due to a stock related event w/ Roche.

3.)Can't answer this one, I know very little about Roche and I tend to avoid pharma.

4.)During their 4-12-01 webcast, still available on their site, they commented that the FDA has been through recently due to the Xolair review and that everything looked ok.

5.)Great pipeline, the best in the industry bar none. Other factors to consider are that as biotechs grow they will need to in-license products to supplement in-house development efforts just like big pharma. Genentech is a preferred partner and what I mean by that is when smaller companies w/ hot product candidates are looking for a partner, they will often choose Genentech. As an example, OSI chose Genentech and Roche as partners regarding OSI-774 over 400 other potential suitors. Genentech's proven track record makes them an attractive partner in such cases and this will be an important strategy to drive growth.

At a market cap in the low $20 billion range I feel that Genentech is priced attractively considering their strong growth prospects over the next five years.

6.) Way too many to list as it seems that every biotech has cardio and oncology programs. In oncology, keep an eye on Millenium and ImmunoGen; not too familiar w/ cardio.

good luck w/ your investments
Charly
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OK thanks for these replies.
I found some areas fo concern while reading your posts and some info provided in the last annual report.

1.-Roche has a big controlling hand in this company, owning more than 50% of DNA. This may affect the price if they decide to dump the shares all at once and it may also affect the cash position of DNA as they are required to maintain Roche % of ownership by repurchasing stock in the face on any dilution....Scary thing.


2.-It also troubles me the fact that the revenue dirvers for the company Herceptin, Rituxan, Activase, and Gorwth Hormone most of them are under attack by the competition:

Rituxan=========> Corixa(Bexar), IDEC(Zevalin) have recent BLA for competing drugs in parenthesis)! Note this is the main revenue driver with almost $500M/year!

Growth Hormone ($200+M/year)====>they pint out 4 main competitor and some of them with new applications for their drugs! with a potential sudden decline on this area forecasted.

Activase===========>Centocor(Retavase)

This part does not look good.

Pipeline is great though most projects are shared so revenue will be shared as well....hum may be I need to wait to see what happens with Rituxan after competitors get approval.....

Also patent expiraton is ot an issue as the oldest patent dates 1997 which is likely to last for 10 years that is 2007!

May be DNA is a bit expensive for the risks at this time lets wait a bit.

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1.-Roche has a big controlling hand in this company, owning more than 50% of DNA. This may affect the price if they decide to dump the shares all at once and it may also affect the cash position of DNA as they are required to maintain Roche % of ownership by repurchasing stock in the face on any dilution....Scary thing.

I don't think that it would be in Roche's interest to do anything that would harm DNA as they currently have a mutually beneficially relationship (see the terms of the licensing arrangements.)


2.-It also troubles me the fact that the revenue dirvers for the company Herceptin, Rituxan, Activase, and Gorwth Hormone most of them are under attack by the competition:

Rituxan=========> Corixa(Bexar), IDEC(Zevalin) have recent BLA for competing drugs in parenthesis)! Note this is the main revenue driver with almost $500M/year!

Growth Hormone ($200+M/year)====>they pint out 4 main competitor and some of them with new applications for their drugs! with a potential sudden decline on this area forecasted.

Activase===========>Centocor(Retavase)

This part does not look good.


I don't think this is as bleak as you think. As far as Rituxan goes, it is demonstrating tremendous growth and is entrenched in the market. Great clinical data came out supporting use of Rituxan in combination with CHOP therapy and Q1 2001 sales jumped to $171 million; Rituxan could drive in $800 million in sales this year. IDEC stated in a webcast earlier this year that they will not cannibalize the royalties they receive from Rituxan w/ Zevalin. Instead, they will position Zevalin as a combination or supplemental therapy to Rituxan. Corixa is having issues w/ the FDA regarding Bexxar and this will be the third product to enter the market, not an enviable position from which to launch a drug. There are concerns about side effects due to the radioisotope on the antibody, not a good sign for Bexxar.

Herceptin could see slowing sales growth but Q1 2001 picked up over Q4 2000 so we'll see how this plays out during the remainder of 2001.

Activase approval for use in catheter clearance is expected this year. It will be the only pharmacological agent for use in catheters occluded by a blood clot, which is a market of 700,000 patients in the U.S. each year.

Growth hormone sales have been flat for a while, though they are important. Sure it wouldn't be great to see this decrease, but its by no means a catastrophe.



As far as the pipeline and sharing revenues, in most cases Genentech is partnering on drugs developed by other companies. As such, they are taking a cut of someone else's pie and aren't giving away something they developed themselves. These agreements allow them to receive revenues off of someone else's product at very little risk. For pharma and big biotech, 30-70% of pipeline products are in-licensed in this manner and this is an important strategy to maintain pipeline productivity. If you take away the pipeline products which Genentech has in-licensed, their pipeline would be pretty poor.

In the near future, Genentech should launch Xolair, Tracleer, and have additional indications approved for Activase and others. Xolair could be a huge drug for the company, even bigger than Rituxan. As DNA is near a 2 year low, my opinion is to buy now before these approvals drive revenues higher.

Charly



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Charly

Thanxs for the feedback. Very in depth view of whats going on with DNA.
I know Roche will not want to hurt DNA but in some occassions their interests may go against other shareholders: i.e. if some dilution comes up in the stock due to some transaction I would rather DNA live with the dilution and use their cash to keep their leading position and not to buy back stock to maintain the Roche share in the company, Roche may very well be happy with the buyback...not me as a individual shareholder.

In any case I think you points deserve consideration and we are likely to see a brighter future for DNA.

Churun
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http://www.idecpharm.com/product/pr_zev.html

Nice reading about Zevalin, the competing product from IDEC for Rituxan.
Also note that Rituxan manufacturing has been transferred to DNA, I am wondering if IDEC still has a stake in Rituxan earnings?

Seems that Rituxan and Zevalin make a good complement to each other...


Chrun
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Coulter Pharmaceutical, Inc. is engaged in the development of novel drugs and therapies for the treatment of cancer and autoimmune diseases. The company currently is developing a family of therapeutics based upon two drug development programs: therapeutic antibodies and targeted oncologics. The company's most advanced product candidate is Bexxar, a monoclonal antibody conjugated to a radioisotope. On September 15, 2000, Coulter and SmithKline Beecham submitted a BLA to the U.S. Food and Drug Administration (FDA) seeking commercial approval of Bexxar for the treatment of patients with relapsed or refractory, low-grade or transformed low-grade B-cell non-Hodgkin's lymphoma. Bexxar recently received FDA priority review status. The company's therapeutic antibodies program also includes an interferon receptor antagonist. Initial efforts in the targeted oncologics program are based on tumor activated prodrug (TAP) and tumor-specific targeting (TST) technologies. For more company information, visit Coulter Pharmaceutical's web site at http://www.coulterpharm.com.


From Corixa web site about Bexxar o posible competing product for Rituxan.

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Seems that Rituxan and Zevalin make a good complement to each other...

If IDEC can convince oncologists that their proposed Zevalin+Rituxan regimen is better than Rituxan alone, it may entrench Rituxan in the market and make it more difficult for Bexxar to steal market share. From listening to Genentech's webcast in February, I got the impression from them that Bexxar will be solely a salvage therapy for use in patients that did not respond to Rituxan. We'll have to wait and see how this plays out, though I'm not too concerned given the stocked pipeline of late-stage candidates.

Charly
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