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A New Breath for Asthma Treatment

09/05/2003 12:00 am EST


John McCamant

Editor, Medical Technology Stock Letter

"Like many inflammatory diseases, asthma involves a cascade of events," says John McCamant, editor of The Medical Technology Stock Letter. "In this case, the cascade is initiated in response to a specific allergen and the immune system responds by producing IgE antibodies. A drug that could inactivate IgE would stop the inflammation cascade early." His latest new buy operates in this area.

"Tanox (TNOX NASDAQ) is a biotechnology company, which is focused on developing therapeutic antibodies to treat asthma, allergy, inflammation, HIV, and other immune system diseases. The company's lead product is Xolair, a monoclonal antibody designed to bind and inactivate IgE. The drug was recently approved by the FDA for the treatment of moderate-to-severe asthma in adults and adolescents whose symptoms are not controlled by steroids. The drug rights are shared through a compromised agreement between TNOX, Genentech, and Novartis.

"In addition to having large sales potential, Xolair will have a positive impact on saving lives and will significantly improve the quality of life for asthmatics. An estimated 400,000 fall into the adult-to-adolescent grouping and could benefit from Xolair treatment and label expansion and off-label use will be fueled by ongoing testing. W e believe that Xolair--which was just launched on July 7--is poised for significant growth, with modest risk. Genentech has worked to ensure broad managed care coverage for the drug. The high visibility of Xolair has helped make providers aware of the tradeoff between the high price of Xolair and the significant costs associated with treating asthmatics in the emergency room. Generally, doctors administer the first few doses in the office. Over time, we expect that patient self-administration will increase, as other drugs (insulin for example) are self-administered once the patient reaches a comfort level.

"A future oral drug that could neutralize IgE would have large sales potential as their cost could be much less than an antibody-based drug like Xolair. However, any such drug is many years from the market, and an in the interim, we expect Xolair to be the drug of choice. Overall, Xolair is a testament to the prowess of biotechnology and its ability to develop drugs that actually treat the underlying cause of disease, not just the symptoms. We believe that Xolair is poised for significant growth, and we are adding Taxon to our buy list as a new recommendation. Buy under $20."

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