One of the riskiest aspects of investing in health care drug manufacturing companies is regulator risk. On September 11, Amarin (AMRN) indicated that regulators have not yet protected its only drug, Vascepa, from generic competition. Shares are off slightly in September, but are well-above $11-level in August, when it was reported that insiders sold large blocks of stock after Vascepa, a fish-oil drug, was approved on July 26. Amarin is one of the most traded stocks on Kapitall.
Amarin was approved in July by the FDA for treatment of high levels of triglycerides in patients. The company is seeking five years of protection from generic competition.
On August 8, the company updated its shareholders, expecting regulators to provide a decision for expanded approval for the drug during the second half of 2013. It aimed to launch Vascepa in the first quarter of 2013.
Another risk for drug companies is the influence of analysts on stock price. Idenix Pharmaceuticals Inc. (IDIX) received a downgrade from Bank of America Merrill Lynch. Its rating was lowered to “neutral” from “buy,” and its stock price target was cut to $6 from $8. The chief concern was its drug candidate, IDX-184. The drug is undergoing a clinical study for treatment of hepatitis C. The company has a deal to work with Novartis (NVS). In August, the FDA placed a hold on the study, due to concerns of heart-related side effects.
Business Section: Investing Ideas
The drug companies discussed in this article are:
2. Idenix Pharmaceuticals Inc. (IDIX, Earnings, Analysts, Financials): Engages in the discovery and development of drugs for the treatment of human viral and other infectious diseases in the United States and Europe. Market cap at $667.21M, most recent closing price at $5.11.
3. Theravance Inc. (THRX, Earnings, Analysts, Financials): Engages in the discovery, development, and commercialization of small molecule medicines for various therapeutic areas, including respiratory disease, bacterial infections, and central nervous system (CNS)/pain. Market cap at $2.54B, most recent closing price at $26.17. Expect losses this year and next, since its drugs are still in a development phase.
A previously covered pharmaceutical company was Arena
A bullish case about Theravance is available here.
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