Seeking Alpha: Baxter Still Defensive, But Is Now The Time For Offense?

The best thing about Baxter (BAX) is that so much of its business comes from oligopolistic markets with pretty steady demand and reimbursement. The worst thing about Baxter is that so much of its business comes from oligopolistic markets with pretty steady demand and reimbursement.

In theory, Baxter is a good stock to own during slow patches in the med-tech world because the demand for profitable businesses like infusion, recombinants, plasma-derived therapies, and other bioscience products doesn't drop much with the economy, and Baxter reports growth while others contract . On the flip side, the company has historically not looked to target new growth markets, and the company's growth looks pretty pokey when the sector revives.

With a few signs of life here and there in med-tech, as well as oncoming competition in biosciences, it is worth asking whether Baxter is still a name that investors want to hold today.

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Baxter Still Defensive, But Is Now The Time For Offense?

Seeking Alpha: Biodel Back At Square One, Not Zero

Like many other biopharmas taking on the diabetes market, Biodel (BIOD) has had pretty serious setbacks. The decision to abandon the original Linjeta absolutely hammered the stock, and it is true that the company is a very speculative stock at this point. That said, with a near-term glucagon program that has relatively lower clinical risk and multiple attempts at the insulin market still in hand, it may be premature to completely close the book on this stock.

Can Glucagon Fill A Gap?
Biodel's nearest-term opportunity is with its glucagon rescue program. Glucagon is a naturally-occurring hormone produced by the pancreas to raise blood glucose levels. In healthy individuals, this is part of the normal blood glucose regulation process.

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Biodel Back At Square One, Not Zero

Merck Makes A Smart Buy

Large pharmaceuticals buy small private companies all the time, often paying so little that they are not even obligated to report the transactions to shareholders. With Merck's (NYSE: MRK) deal to buy SmartCells, though, things are a little different on two levels. Not only is the purchase price large enough to get some attention, but the technology could be a real game-changer down the road. 

The Deal
Rumors had been creeping around for a little while on this deal, but Merck made it official Thursday morning that it was acquiring SmartCells in an all-cash deal. Although the companies did not discuss the upfront payment, it is a comprehensive deal that includes potential milestones and follow-on payments that could all total in excess of $500 million. Given the size of the transaction and the timing of the payments, I am not sure that Merck will have to file an 8-K for this, so investors may be hard-pressed to find more details on the transaction. (For more, see The Wacky World Of Mergers And Acquisitions.)

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Trick or Treat for Biodel?

Biotech CEOs should be forgiven if they feel like the FDA has turned almost every day into Halloween. Companies ranging from Jazz Pharmaceuticals (Nasdaq:JAZZ) to Alexza Pharmaceuticals (Nasdaq:ALXA) to the obesity triumvirate of Vivus (Nasdaq:VVUS), Arena (Nasdaq:ARNA), and Orexigen (Nasdaq:OREX) have all seen the scarier side of the FDA drug approval process lately. The FDA has handed out rejections to the first two, panels have recommended against the next two, and Orexigen has been batted around by investors who wonder if the FDA (or its panel) will take out their knees next. 

All in all, it is easy to understand why shareholders of biotech Biodel (Nasdaq:BIOD) would be nervous these days. Although the company's Linjeta insulin could be a blockbuster for the company, problems with a pivotal study and an October 30 FDA PDUFA date have investors wondering if they are going to be left waiting in vain for the Great Pumpkin on Halloween. 


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