Investopedia: Teva And Mylan Show Some Value Remains in Generics

Generic drug company stocks have been all over the map this year, with companies like Teva (Nasdaq:TEVA) struggling, companies like Watson (NYSE:WPI), and the likes of Mylan (NYSE:MYL) and Impax (Nasdaq:IPXL) falling somewhere in between. While the sector is still broadly benefiting from popular branded drugs going off patent, pressures from large buyers like AmerisourceBergen (NYSE:ABC) and Cardinal Health (NYSE:CAH) and declining patient-doctor visits are making for a more challenging operating environment. 

Mylan - Good Here, Not So Good Over There  
Mylan reported 15% revenue growth (10% in constant currency), with North American sales rising over 27%. Asia-Pacific sales also grew by 17%, but Europe was flat as reported and down double-digits on a constant currency basis due in part to government-mandated price cuts in many European markets. 


Continue to the full story via this link:
http://stocks.investopedia.com/stock-analysis/2011/Teva-And-Mylan-Show-Some-Value-Remains-In-Generics-TEVA-MYL-WPI-IPXL-HSP-ESRX-MHS0804.aspx

Investopedia: Pleasure And Pain For Pfizer

Biotech and pharmaceutical investors got another reminder that the FDA can deliver pleasure or pain with the stroke of a pen, and oddly enough Pfizer (NYSE:PFE) was in the middle of all of it. While the FDA granted approval for a tamper/abuse-resistant immediate release formulation of oxycodone developed by Acura Pharmaceuticals (Nasdaq:ACUR) (and Pfizer), the same agency rejected an application for Remoxy - a long-acting abuse-resistant oxycodone formulation that involved Pfizer, Pain Therapeutics (Nasdaq:PTIE) and Durect (Nasdaq:DDRX).

Acura's Long Road to Approval
While Acura's management is no doubt happy to get the FDA's approval on Oxecta, it was not an easy process. The FDA rejected a prior application for a version of the drug that included niacin in June of 2009 and then an FDA advisory panel rejected a resubmitted application in April of 2010. Apparently the third time (this time for the version without the niacin) was the charm, and Acura is now in line to receive a $20 million milestone from Pfizer, and royalties ranging from 5 to 25% of sales.

There is no question that oxycodone abuse is a serious issue. Those inclined to abuse pain medication will take the pills with alcohol or crush them (later to snort or melt and inject) to achieve what's called "dose dumping" - getting all of the effect at once. Odd as it may sound, doctors are increasingly coming under scrutiny for their role in giving prescriptions to drug-seeking patients, and that has made some hesitant to prescribe powerful (but necessary) pain medication like oxycodone. Theoretically, then, there is a big market waiting for a pain drug that cannot be readily manipulated.

To read the full piece, please click below:
http://stocks.investopedia.com/stock-analysis/2011/Pleasure-And-Pain-For-Pfizer-ACUR-PFE-PTIE-DDRX-IPCI-JNJ-ABT0627.aspx

Investopedia: With Mylan, Maybe Smaller Is Better

Quite a lot of attention has gone to Teva (Nasdaq:TEVA) recently, as investors have tried to digest the impact of potentially greater competition in multiple sclerosis and the company's acquisition of Cephalon (Nasdaq:CEPH). While Teva has its own merits, investors may want to spend a little time on Mylan (NYSE:MYL), Teva's considerably smaller competitor. Though there is a risk that investors are underrating the patent challenges coming after 2013, growth and valuation may be more interesting here. 


A Solid Start to the Year
Most analysts seemed quite pleased with Mylan's results and that is something of a mixed bag itself - happy analysts are better than angry analysts, but Mylan is already a well-liked and widely-owned stock. Nevertheless, the company did report 12% overall revenue growth, with the company's small specialty pharmaceutical business adding a small above-trend kicker (up 14%). (For related reading, see Teva And Cephalon Solve Each Other's Problems.)

While U.S. revenue was up a very strong 22%, overseas performance was much more mixed. Growth of 10% (constant currency) was alright, but European revenue dropped 4% in constant currency. Mylan is presently suffering through some European government pricing cuts, and they are certainly not alone in this regard, but building overseas growth has often been something of a challenge here. 



Read the full piece at Investopedia:
http://stocks.investopedia.com/stock-analysis/2011/With-Mylan-Maybe-Smaller-Is-Better-MYL-TEVA-NVS-PFE-IPXL-WPI-IPCI0506.aspx

Investopedia: Tepid Teva Somewhat Tempting

Once again Israeli generic drug giant Teva Pharmaceutical (Nasdaq:TEVA) has proven that although generic competition may bedevil the branded drug industry, there are no free rides here either. Teva's results and outlook will likely leave the stock cooling its heels for a bit in this growth-obsessed market, but patient investors should find no particular causes for long-term concern.

A Sluggish End to the Year
Before delving into Teva's results, it is worth repeating that Wall Street is a game of relative performance; companies can report objectively good (if not great) results and nevertheless disappoint analysts and investors.

To that end, Teva's 16% revenue growth this quarter was not bad, even if it was about 5% shy of the consensus estimate. While the company's biggest drug, Copaxone for multiple sclerosis (MS), did well with 26% sales growth (more than one-fifth of the company's sales), North American generic sales declined 5%. That is a bit puzzling, particularly given the company's exclusivity on generic Effexor XR. Then again, with doctor visits down across the board in the U.S., maybe that is where the answer lies. (For more, see There's Nothing Generic About The Profits.)

Profitability was not too problematic this period. Gross margin improved by both GAAP and non-GAAP calculations, and the company's non-GAAP operating income grew about 23% for the quarter. All in all, the company missed the average analyst guess by about three cents, though a better-than-expected tax rate helped. (For more, see Zooming In On Operating Income.)

The Road Ahead
Perhaps it has been going on a bit too long now to still be ironic, but one of the major concerns surrounding Teva involves competition in its branded drug business. Novartis (NYSE: NVS) will likely take some business away from Teva with its new oral MS drug Gilenya, and Genzyme (Nasdaq:GENZ) likewise has big hopes and expectations for its entry into the market.

Continue on via the link below:
http://stocks.investopedia.com/stock-analysis/2011/Tepid-Teva-Somewhat-Tempting-GENZ-NVS-ELN-BIIB-MYL-WPI-RDY-IPXL-IPCI0209.aspx

What's Going On With Intellipharmaceutics?

I have not written anything so far on Intellipharmaceutics (Nasdaq: IPCI), but this is an interesting emerging generics company. With the recent action in the stock, I am wondering if I have waited a bit too long and whether something big is stirring with this name.

What makes IPCI most interesting to me is its Hypermatrix technology. This technology incorporates multiple factors into the design of oral drugs that have desirable controlled release properties. Although its not new within the generics space, controlled/extended-release drugs are very popular and its tantamount to must-have technology to compete in certain drug classes.

Right now, Intellipharamaceutics basically has three shots on goal. A generic form of Novartis's (NYSE: NVS) Focalin XR (dexmethylphenidate), used to treat ADHD, has been filed in partnership with Par (NYSE: PRX), but likely won't hit the market until late in 2012. The company has also filed an ANDA for a generic XR version of Pfizer's (NYSE: PFE) Effexor, but Pfizer has filed suit to block this. Last and not least, the company has a generic form of Pfizer/Nycomed's Protonix (for GERD) in development as well.

Beyond this, the company has several other potential generics products, as well as some potential branded/NDA drugs. What is great about generics is that the clinical pathway to approval is quite a bit simpler than with new branded drugs. Of course, there are still prodigious legal expenses involved, so it's not easy money by any means.

What has kept from getting more interested in this name has been the company's balance sheet. With basically no revenue, the company is bleeding money as it develops its pipeline. Unfortunately, the company ended its last quarter with only about $2 million in cash, and has had to rely upon its own co-founder and CEO for some loans. What that means, then, is that the company has little choice but to go to the markets to raise funds and/or try to partner off another one of these filed ANDA candidates. 

The idea that a public round of funding was a "when, not if" circumstance is what has kept me away from these shares so far. Why should I buy shares today only to get diluted in a round of funding shortly thereafter? On the other hand, maybe I got too clever for my own good. 

IPIC's stock has been strong the last couple of days - jumping about $1.50, or over 50%. Is the company about to announce a licensing deal with Teva (Nasdaq: TEVA), Mylan (NYSE: MYL), or Watson (NYSE: WPI)? Or perhaps a deal for the entire company outright? Let's face it, lots of generic companies could use more extended-release technology, particularly something that genuinely looks like a better mousetrap like Intellipharmaceutics' Hypermatrix. 

If this spike in the shares is due to an upcoming buyout bid, I'm pretty much hosed and this will go down as a miss that I regret. If its a licensing/partnership deal, though, I would expect the company to launch a financing round in the wake of it (strike while the iron is hot, you know) and that could be a chance to get into the name. I don't think I'm going to get another shot below $3 unless/until something goes wrong, but that's the price I pay for waiting and being cheap. 

In the meantime, I think Intellipharmaceutics is a name that is worth a spot on aggressive investors' watch lists. There is a definite scarcity of credible small-cap generic companies and this company has an attractive late-stage pipeline. I would be a little nervous about buying into this recent strength without a better explanation for why the stock moved, but the stock does not seem expensive provided the company can get the funding it needs. 

Aggressive investors could BUY IPCI here. I, however, am going to keep waiting for news...