These days headline risks, like reality TV, come in many forms. writes Landon Whaley. Join him at Mo...
An "Inaugural" Look at Diabetes
03/11/2005 12:00 am EST
I’ve read many of the advisors covered in the Money Show Digest for over two decades, and most since their first issue. I''ve rarely been as impressed with a new publication as I am with the Forbes/Gottlieb Medical Technology Investor, from Scott Gottlieb, MD. Here’s a sample of the inaugural issue.
"By 2012, diabetes sufferers globally will top 50 million, with some 17 million people already afflicted with the disease in the US alone. Indeed, diabetes is America’s fifth leading cause of death, and it’s gaining. Currently there are few new treatments for diabetics. The last major diabetes drugs are almost a decade old. But this is about to change, and with it, perhaps, strategies for blunting the health effects of the disease.
"In the next decade, at least three new classes of diabetes drugs are likely to enter the market. One of the most promising—as well as the first to hit the market— will be the Glucagon-like Peptide or GLP-1 agonists. And the GLP-1 drug closest to approval isExenatide, developed jointly by Amylin Pharmaceuticals (AMLN NASDAQ)and drug giant Eli Lilly & Co. For this reason and more, I think Amylin represents the best way to profit from the rising prevalence of diabetes.
"Exenatide has excellent prospects as a successful agent for combating and controlling the disease. Exenatide works by lowering blood sugar levels without the side effects often seen with insulin injections. Exenatide, which should launch in 2005, has to be injected under the skin, just like insulin and frequent injections may deter some patients. But Exenatide LAR, which is expected to launch in 2007, promises to solve this problem with its ‘long-acting release’ formulation, which means that the patients will only have to inject themselves once a week or even once per month.
"Meanwhile, I do not believe the daily injections for the first formulation will deter patients for whom it will mean staying off insulin. Most patients will willingly substitute injections of Exenatide for injections of insulin. Exenatide is the first drug to show that it may also restore some of the function of the insulin-producing cells in the pancreas. This differentiating characteristic should resonate strongly with patients and their doctors. It’s another key characteristic that sets Exenatide apart from other drugs, especially insulin.
"I think even a conservative estimate puts Exenatide’s sales between $500 million to $1 billion by 2007 or 2008. This would represent a fairly small penetration of the market of patients who fail the oral agents. But there’s an even more bullish case for this drug. Wall Street is only considering the new drug as a bridge between patients who fail existing oral medicines for diabetes, but don’t want to start on insulin. But if you talk to the doctors, as I do regularly as a practicing physician, they will tell you that they are ready to prescribe Exenatide earlier, before patients have failed all of the oral drugs. Such a medical strategy would expand the market for Exenatide beyond Wall Street’s expectations, providing unexpected upside for Amylin.
"The FDA’s deadline for acting on the Exenatide application is April 30, 2005. While Exenatide is likely to provide most or all of Amylin’s near-term stock gains, this biotech company is no one trick pony. It has a number of other interesting but early compounds in its pipeline, which could provide long-term upside. The farthest along of these is AC2592, which is being testing in congestive heart failure. AC162352 is perhaps the most interesting. It is a potential treatment for obesity and independent researchers have reported that this molecule suppresses appetite and food intake. Amylin plans to start phase I studies in 2005.
"I’d add that another lead product from Amylin to treat diabetes,Symlin, is under review by the FDA and a decision is expected in late March. I do not think the drug will be approved. While I don’t think it matters much for the company’s long-term performance, the stock may take a hit if Symlin is rejected. Given this view, the best time to buy Amylin may be after Symlin is rejected and the stock sells off, but before Exenatide is approved and boosts the shares again. But I am not a trader nor am I a market-timer so despite the potential for a short-term setback if Symlin is rejected, I am nevertheless adding Amylin to my core portfolio now as a buy."
It is called the last mile, and it’s crucial to the future of all commerce. Yet most investors...
So, does my headline capture the sentiment about metals right now? While the title may seem a bit ex...
Our latest featured fund, Invesco DWA Healthcare Momentum ETF (PTH), provides an alternate take on U...