Shionogi's Strong Core Offers More Capital Return Possibilities

Japanese drug companies are quite a bit different than U.S. and European pharma companies, partly because the pricing/reimbursement environment is much different, but those differences aren’t always bad. In the case of Shionogi (OTCPK:SGIOY) (4507.T), investors can take advantage of a highly profitable company with a strong HIV franchise and a willingness to simultaneously walk that fine line between reinvesting in the growth potential of the business and sharing the benefits with shareholders.

Shionogi’s ADRs are not particularly liquid, and that is an issue for investors to consider, though the shares listed in Japan offer ample liquidity. Although I’d like to see a more efficient sales and marketing operation from Shionogi, the company’s pipeline has exciting assets both in late and early stages of development, and I believe investors can reasonably expect a high single-digit/low double-digit long-term annualized return from these shares.

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Shionogi's Strong Core Offers More Capital Return Possibilities

Aspen Pharmacare Has Continued To Grow And Branch Out

It has been many years since I've updated my coverage on South Africa's Aspen Pharmacare (OTCPK:APNHY)(APNJ.J), but the intervening years have seen a lot of familiar themes. Management has continued to use M&A to expand its market reach and has continued to expand beyond South Africa, while organic growth has continued to be underwhelming relatively to perpetually rosy expectations from investors and most sell-side analysts.

Assessing the shares remains a difficult exercise. On one hand, the likely underlying discounted cash flow doesn't seem to support the share price, but that has long been the case and the shares have risen despite that (up more than 20% since my last article for the ADRs and up over 100% at the interim peak price). Aspen continues to offer rare access and potential to high-potential markets like China, Brazil, Indonesia, and Sub-Saharan Africa, but price controls and consumers' ability to pay remains a real concern. I expect that investors will continue to be willing to pay a premium for this emerging market pharma story, and the price isn't so unreasonable relative to EBITDA growth, but I would remain alert to the various macro challenges, as well as the sub-standard liquidity of the ADRs.

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Aspen Pharmacare Has Continued To Grow And Branch Out

Seeking Alpha: Alnylam Pharmaceuticals Keeping Multiple High-Potential Programs Moving Forward

The biotech sector has gotten a little "interesting" since drug pricing re-emerged as a tempting target for political soundbites and investors started looking back on just how far the sector has come in terms of valuation and multiples. Alnylam Pharmaceuticals (NASDAQ:ALNY) has taken its share of drubbing, with the shares down about 20% since my last piece on concerns about the implications of potential drug pricing reforms on its largely orphan drug-focused pipeline, as well as concerns relating to the company's Phase III revusiran program.

I wasn't thrilled with the valuation back in June, but I think the combination of the share price performance and the company's clinical updates makes for a more interesting opportunity today. Time will tell whether my estimates and model are reasonable, conservative, or aggressive, but I do see significant value-add potential over the next six months as more information comes out on programs like ALN-CC5, ALN-AT3, ALN-GO1, and the core TTR platform.

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Alnylam Pharmaceuticals Keeping Multiple High-Potential Programs Moving Forward

Seeking Alpha: Amicus Therapeutics Has Driven Value Through The Clinic

In prior articles on Amicus Therapeutics (NASDAQ:FOLD) I spoke of the significant value creation potential of successful clinical trials. If Amicus could show investors that its lead drug migalastat was both safe and effective as a treatment for Fabry disease, the market would reward the company with a substantially higher valuation.

That has happened. Data from the '012 study and additional extension data from the '011 study have established that migalastat offers comparable efficacy to enzyme replacement therapy (or ERT) and meaningful benefits to cardiac and renal function. While the path to FDA approval is still a little murky, investors should have more information relatively soon and I believe the odds now favor approval and commercial success - at least in a subset of patients with amenable mutations. Migalastat's future as a part of combo therapy is still uncertain, but offers further upside, as do clinical programs in Pompe's disease and MPS-1.

Amicus Therapeutics has risen more than 160% over the past year, but still looks undervalued on the basis of its market potential in Fabry disease. With a more convenient administration (it's an oral medication) and a potential safety benefit, there could be still more upside from pricing and/or market share. Value creation through de-risking the Pompe and MPS-1 programs is certainly still possible (positive data will support higher odds of regulatory/commercial success), but those events are further off.

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Amicus Therapeutics Has Driven Value Through The Clinic

Seeking Alpha: XenoPort Prepping For Key Data In 2015

Nine months ago, I thought XenoPort (NASDAQ:XNPT) had some appeal for very aggressive investors willing to play the odds that not only would the biotech sector recover, but that the Street would get more bullish on XenoPort's relaunch of Horizant and the prospects of XP23829 ('829) in multiple sclerosis and possibly psoriasis as well. Since then, the shares have risen almost 120%.

Is there still enough upside in XenoPort to make it worth holding these shares? The answer is a guarded "yes". The markets for both psoriasis and multiple sclerosis are each likely to be worth more than $15 billion a year by the time '829 achieves commercial sales, but the company is still facing comparatively long odds for commercial success. That makes the Phase II psoriasis data later this year very significant - a strong indication of efficacy should unlock significant value (by de-risking the outlook), but inadequate results will sap virtually all of the upside.

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XenoPort Prepping For Key Data In 2015

Seeking Alpha: Vectura Group Following A Familiar Path

Investors who like Nektar Therapeutics (NASDAQ:NKTR) or Alkermes (NASDAQ:ALKS) may want to take a look at Britain's Vectura Group plc (OTC:VEGPF) (VEC.L). Although not a household name, Vectura has established itself as a technology leader in the formulation and manufacture of inhaled drugs and devices to administer these drugs. Vectura boasts a key partnership with Novartis (NYSE:NVS) for potential blockbuster Ultibro as well as Seebri, as well as a diverse pipeline of generic and branded respiratory drugs.

Vectura Group has multiple avenues to growth. The company can continue its policy of being a partner of choice for companies that wish to enter the large (and still under-served) market for therapies for respiratory ailments like COPD and asthma, or the company can choose to start developing and commercializing drugs on its own - transitioning from earning mid-single digit to mid-teens royalties to being a more fully fledged specialty pharmaceutical company. While there are risks associated with the performance of its licensing partners, clinical development risks, and potential risks from a long-term change in strategy, I believe Vectura could be almost 50% undervalued today.

Readers considering these shares should note that the U.S. ADRs are of the "F-type" and not very liquid. The London-listed shares (VEC.L) are considering more liquid and most major brokerages will allow clients to trade on major foreign exchanges like the LSE.

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Vectura Group Following A Familiar Path

The Motley Fool: Should Roche Buy Exelixis?

Investors in Roche (NASDAQOTH: RHHBY  ) and Exelixis (NASDAQ: EXEL  ) saw a bit of positive news Monday, when Roche announced that its phase 3 combo study of MEK inhibitor cobimetinib (licensed from Exelixis) and BRAF inhibitor Zelboraf met it primary endpoint. No details were supplied, other than that the company is moving forward with regulatory filings in the U.S. and EU.

Although this combo therapy is not likely to move the needle too far for Roche, it could be significant for Exelixis and talk is now circulating that Roche may buy the company to capture full economics on the drug.

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Should Roche Buy Exelixis?

Seeking Alpha: Amicus Therapeutics Still A "Show Me" Story

When investors are keen on a sub-sector within biotech, as they have been relatively recently for immuno-oncology, RNAi, and liver disease, companies and their stocks often get the benefit of the doubt, with gaudy sales forecasts and approval odds well in excess of historical norms. On the flip side, and in a case like Amicus Therapeutics (FOLD), once investors have largely written off a company it can be very hard to regain their interest and confidence.

To be very clear, I believe Amicus still has a difficult road ahead of it. The data on lead compound migalastat are not clean and sufficient evidence of efficacy to drive approval (and/or market adoption) is no guarantee. Likewise, the company's 3-in-3 strategy to get three rare disease enzyme replacement therapies (or ERTs) into the clinic over the next three years is ambitious but high-risk. These shares do still appear to be undervalued, but I can frankly understand why many investors may conclude that there are better reward-to-risk opportunities elsewhere in biotech.

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Amicus Therapeutics Still A "Show Me" Story

The Motley Fool: Can Novartis AG Maintain Its Momentum?

Novartis (NYSE: NVS  ) has done better over the past six months than I thought it would back in December of 2013, as investors have liked what they've seen with the company's restructuring efforts and surprisingly positive clinical data on heart failure drug candidate LCZ696. In the "what have you done for me lately?" world of Wall Street, though, I do wonder whether Novartis has enough potential catalysts in hand to keep up a level of enthusiasm that frankly seems outsized relative to the valuation.

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Can Novartis AG Maintain Its Momentum?

Seeking Alpha: Almirall Quietly Building A Better Business

Definitely not a household name for most American readers, Spain's Almirall SA (OTC:LBTSF) (ALM.MC) is building an interesting specialty pharmaceutical business for itself in Europe. Roughly 80% of the company's sales are in Europe (half of that in Spain) and the company still depends upon in-licensed products for close to half of its sales, but aclidinium and a newly expanded dermatology business could lead to meaningful revenue growth and margin leverage in the coming years.

Almirall certainly still has challenges in front of it, including getting a combo version of aclidinium through the FDA approval process and bulking up its drug development efforts, but the forward valuation doesn't seem demanding and mid-cap drug companies are being hunted to extinction in the M&A market.

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Almirall Quietly Building A Better Business

The Motley Fool: Is This a Good Deal for Novartis AG and GlaxoSmithKline plc?

This seems to be a week for Big Pharma to do big things, and Novartis (NYSE: NVS  ) and GlaxoSmithKline (NYSE: GSK  ) are certainly doing their part. The two companies announced a series of transactions that seem to offer "win-win" opportunities to clean up and consolidate some non-core operations for both companies. Though it seems like Glaxo is getting the better deal, there's arguably less risk to the Novartis side of the transactions.

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Is This a Good Deal for Novartis AG and GlaxoSmithKline plc?

The Motley Fool: Cancer Vaccines: Doomed to Fail?

Some ideas sound good in theory but just never manage to work out in real-world experience, and cancer vaccines are on their way to that destination. Following the failures of Vical and Merck KGaA with their respective cancer vaccines, GlaxoSmithKline (NYSE: GSK  ) has announced the second pivotal trial failure for its MAGE-A3 cancer vaccine. Glaxo will continue to try to identify patient sub-populations in both melanoma and lung cancer that could/do respond to a clinically significant degree, but the odds are good that this high-risk/high-reward program is on its last legs.

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Cancer Vaccines: Doomed to Fail?

The Motley Fool: Will Pfizer Inc's Vaccine Strategy Pay Off?

Pfizer (NYSE: PFE  ) recently lost a battle to preserve its patent coverage on Celebrex, but it's not all bad news for this pharmaceutical giant. The company's Prevnar-13 pneumococcal vaccine is shaping up as a stronger-than-expected product, with comprehensive outcomes data potentially supporting much broader recommendations for use and a larger addressable market. Better still, it's not just Prevnar that could drive higher vaccine sales for Pfizer in the coming years.

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Will Pfizer Inc's Vaccine Strategy Pay Off?

The Motley Fool: GlaxoSmithKline PLC: The All-Weather Dividend Giant

Britain's GlaxoSmithKline (NYSE: GSK  ) isn't built to run like a gazelle, but it has a pretty diverse business that addresses multiple large therapeutic areas like respiratory, vaccines, HIV, and consumer health. The company has taken some big swings with high-risk/high-reward pipeline candidates that haven't really worked out as hoped, but the pipeline still appears deep and broad enough to keep this supertanker-like pharma company moving forward at a steady pace.

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GlaxoSmithKline PLC: The All-Weather Dividend Giant

The Motley Fool: Sanofi Takes A Deep Dive Into RNA With Alnylam Deal

In contrast to Merck (NYSE: MRK  ) , Sanofi (NYSE: SNY  ) is stepping up in a big way to gain exposure to the RNA interference (RNAi) therapeutic class. Sanofi announced Monday morning that it would acquire a 12% stake in Alnylam (NASDAQ: ALNY  ) as well as forge a far-reaching partnership for multiple pipeline projects under way at Alnylam. With this deal, Sanofi gets a valuable "seal of approval" from Big Pharma and will also significantly expand its commercialization options for its pipeline. For Sanofi, the company gains access to a therapeutic/treatment approach to rare diseases where IP is precious and where sentiment has shifted from enthusiasm to despair and back again to rampant enthusiasm.

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Sanofi Takes A Deep Dive Into RNA With Alnylam Deal

The Motley Fool: Alnylam Offers an Exciting Rare Disease Pipeline, but Expectations Are High

"Biotechs are risky" is a standard boilerplate warning when writing about the sector, but some situations are riskier than others. In the case of Alnylam Pharmaceuticals (NASDAQ: ALNY  ) , the sell-side seems so eager to make a bullish case that uncommonly high approval odds are already being applied to the company's early stage pipeline.

There is also still the prospect of competition from Isis Pharmaceuticals (NASDAQ: ISIS  ) and its partner GlaxoSmithKline (NYSE: GSK  ) , as well as other large players like Sanofi (NYSE: SNY  ) , Novo Nordisk (NYSE: NVO  ) , and Baxter (NYSE: BAX  ) . Against that is the possibility that Alnylam is following a path that could closely resemble that of other rare disease biotechs like Genzyme, Alexion (NASDAQ: ALXN  ) , or BioMarin (NASDAQ: BMRN  ) .

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Alnylam Offers an Exciting Rare Disease Pipeline, but Expectations Are High

The Motley Fool: A Pain Specialist Buys a Technology Call Option

Endo Health Solutions (NASDAQ: ENDP  ) has not been shy about using M&A to rebuild its growth prospects in the wake of losing patent coverage on Lidoderm and Opana ER. While prior management didn't do well with its M&A, new management has already made some smart (albeit not necessarily cheap) deals for Paladin Labs and Boca Pharmaceutical. Now management is going for for a different sort of deal -- the acquisition of NuPathe (NASDAQ: PATH  ) is hardly a slam dunk value-adding deal, but the upfront consideration of $105 million excluding deal costs is not a terribly high price to pay for taking a chance.

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A Pain Specialist Buys a Technology Call Option

Seeking Alpha: Amicus Takes A Certain Step Back For An Uncertain Step Forward

I'll happily grant that the best path between two points isn't always a straight line, but with all of the ups and downs (mostly downs) from Amicus (FOLD) over the past year, I can understand if investors no longer want to wait around to see if this recent strategic retrenchment proves a sound move for the long-term.

With lead drug migalastat unlikely to make it to market as a monotherapy, little data on combo therapy in Fabry's, and a one year delay in the Pompe program, not to mention Glaxo (GSK) bowing out of the migalastat program, bears have a lot to chew on. I'm somewhat more bullish on the acquisition of Callidus, though, and I think the market may be overlooking signs that migalastat could still be viable as part of a combo therapy. Amicus shares could still be worth as much as $4 today, but investors should note that this is a very high-risk/high-uncertainty opportunity.

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Amicus Takes A Certain Step Back For An Uncertain Step Forward

Investopedia: Vertex Building A Fortress In Cystic Fibrosis

It's not too often that you see a biotech company establish a truly differentiated product portfolio with multi-billion dollar potential and minimal competition, but Vertex (Nasdaq:VRTX) seems to be doing exactly that. This one-time specialist in virology is already well on the way to more than $5 billion in potential revenue, and could ultimately see nearly double that amount if clinical trials go the right way. This may ultimately put the company in the “nice problem to have” category of figuring out how to reinvest the proceeds and determining whether or not further investments in the hepatitis C program are worthwhile.

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http://www.investopedia.com/stock-analysis/082813/vertex-building-fortress-cystic-fibrosis-vrtx-gild-gsk-bmy.aspx

MassDevice: Is Valeant About To Make A Bold Bid For Bausch & Lomb?

Never let it be said that Valeant (NYSE: VRX) management is shy about doing deals. With a roster of past deals including Biovail, Cephalon, OraPharma, and Medicis, Valeant claims that better than 80% of its deals have attained the 20% internal return target it uses to evaluate potential transactions. If rumors out Friday prove true, Valeant is about to bag its biggest target yet in what would be a particularly bold move.

Multiple sources have reported (or repeated) rumors that Bausch + Lomb's private equity owners Warburg Pincus are near a deal to sell the eye care giant to Valeant in a deal worth close to $9 billion. That Bausch & Lomb is on the block is well known – Warburg Pincus hired Goldman Sachs back in December of 2012 to assist them, and reportedly approached companies including Sanofi (NYSE:SNY), GlaxoSmithKline (NYSE:GSK), and Abbott (NYSE:ABT) without getting any takers on the then-reported price tag of $10 billion. At that point, Warburg Pincus reportedly began considering an IPO of Bausch & Lomb to cash out of a company it originally acquired for $4.5 billion.

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http://www.massdevice.com/blogs/massdevice/valeant-about-make-bold-bid-bausch-lomb