Bayer's withdrawal of Baycol with a history of 53 deaths will add fuel to the FDA's push for more extensive safety reviews. This is not going to help drug approval time-lines. It further confirms a thesis I have talked about before. Investors should be wary of drugs going through the review process that are not targeted to life-threatening conditions. The Baycol cloud will certainly spread to AstraZeneca's new super-statin and could cause a painful FDA delay (this statin uses the same p450 metabolic pathway as Baycol and other statins but not Pravachol). Recent FDA panel approvals of Remodulin (United Therapeutics) and Tracleer (Actelion) further support the proposition that drugs for bad diseases (pulmonary hypertension) with little in the way of effective therapies are more likely to get approved than me-too drugs or new agents for more benign conditions.
Investors should look to companies with new cancer drugs, drugs for rare genetic diseases and drugs for progressive neurological conditions. Also look to companies with important platform technologies or approved drugs that are good takeover candidates. Another thought expressed in a prior alert is that some earlier stage companies with interesting products that are not in the process of FDA review are also good places to invest. Continuing in that vein I want to mention Collateral Therapeutics (CLTX).
CTLX has a viral delivery system aimed at delivering genes for multiple indications to the heart. The idea is that an interventional cardiologist in a closed procedure delivers the viral particles through a catheter in the cardiac arteries. This is a single injection procedure. Early phase 2 trial results showed promising data delivering the FGF4 (fibroblast growth factor 4 gene-- codes for an angiogenic protein) and looking at exercise tolerance. Schering AG of Germany, CLTX's partner, is shouldering all the trial costs and just announced their intention of running a pivotal trial in both the US and Europe. This could be a big deal and definitely the beginning of something new in the field of cardiology. CLTX also has gene for treating CHF (congestive heart failure) and for regenerating new muscle cells in heart attack victims. The company also has an earlier stage program for delivering genes for peripheral vascular disease. The viral delivery vector is a replication incompetent adenovirus. CLTX just got a $4 million milestone payment from Schering AG. The current trading price is $6.06 (close on 8/13), just off the lows of the year and the market cap is a measly $85 million. I add this to the list of small companies to watch.
As a matter of disclosure I want all readers to know that I own many of the stocks I write about in my personal account and always maintain a long position. I also write about many of these stocks first in Biotech Insight, a web-based newsletter published at www.biotechinsight.com. The following is further disclosure: Dr. Garren is a member of Biotech Insight Management, LLC, a California registered investment adviser and the general partner of a hedge fund that invests in biotechnology companies, including some of the companies discussed in this newsletter. Garren also consults for following: 1. a second large hedge fund focused on the healthcare industry with a heavy emphasis on biotech and 2. the Biotech Select Focus Portfolio, a group of managed accounts domiciled at Schwab Institutional and managed by Smolen Capital Management, an independent fee compensated Registered Investment Advisory firm, www.smolencapitalonline.com. I recommend many of these same stocks to the investment funds mentioned above. It should be noted that hedge funds can go both long and short on any particular stock. Many of these disclosures were detailed in the fine print, which usually never gets read. The information in this column under no circumstances serves as a recommendation to buy or sell stocks. These disclosures were detailed in the fine print below, which usually never gets read.
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