Roche Pays Up To Enter The Gene Therapy Space

Gene therapy is an increasingly viable therapeutic approach and Roche (OTCQX:RHHBY) very much wants to be a part of that. While this Swiss drug giant doesn’t try to do everything in the pharmaceutical space, management does try to keep the company well-placed in the most promising new therapeutic areas. To that end, the company decided to spend $4.3 billion of its shareholders’ capital to acquire Spark Therapeutics (ONCE) and its gene therapy platform.

I believe Roche is approaching the Spark deal as a true technology/platform acquisition, particularly given the company’s IP assets and its early positioning in eye diseases, hemophilia, CNS, and rare disease – all areas of interest to Roche. While the near-term results of Spark’s SPK-8011 in hemophilia A will certain impact initial sentiment on this acquisition, I believe Roche is looking at the long game with this deal.

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Roche Pays Up To Enter The Gene Therapy Space

UCB Needs Clinical Success To Drive Upside

Not unlike Denmark's Lundbeck (OTCPK:HLUYY) (LUN.KO), which I own, Ipsen (OTCPK:IPSEY), and Almirall (OTC:LBTSF), UCB SA (OTCPK:UCBJY) (UCB.BR) is an interesting mid-cap European pharmaceutical company that gets relatively little attention from U.S. investors, even though UCB generates close to half of its revenue in the U.S. Part of the issue is likely the low liquidity of the ADRs, and I would suggest that investors who are considering UCB look at the European shares instead.

I think UCB's price today is interesting for investors who can take on higher-than-average risk. Unlike Lundbeck, which doesn't have an especially robust early-stage pipeline, UCB has numerous NMEs in trials, and clinical data read-outs in 2017 should help frame some of the long-term opportunity. What's more, the company is approaching the release of very significant Phase III data on romosozumab (or "romo") in osteoporosis and strong data on non-vertebral fractures could be a meaningful driver. Success with romo and those high-risk Phase II read-outs could drive another $5 to $8 per share in value.

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UCB Needs Clinical Success To Drive Upside

Santen - An Overlooked Play On An Overlooked Space

Ophthalmology doesn't really get much attention from most drug companies, and I suppose I can't blame them - the entire global market is estimated to be worth around $25 billion in 2017 while Celgene's (NASDAQ:CELG) cancer drug Revlimid annualizes close to $8 billion in sales alone. In other words, relative to the opportunities in disease categories like cancer and auto-immune, it's not necessarily a huge moneymaker. Nevertheless, just because the space doesn't have broad appeal doesn't mean that there aren't money-making opportunities, and I think you could argue that the avoidance of the area works in the favor of companies like Japan's Santen Pharmaceutical Co. Ltd. (OTCPK:SNPHY).

While Santen's U.S. ADRs have decent liquidity, I don't think many investors pay much attention to this company, even though it is one of only three companies in the world with a full range of ophthalmic drugs. With the company holding strong share in Japan and China, building its business in the EU, and about to enter the U.S., I believe Santen could be looking at some meaningful growth opportunities in the coming years that aren't fully reflected in the share price.

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Santen - An Overlooked Play On An Overlooked Space

Seeking Alpha: Roche Could Be A Victim Of Its Own Success

Roche (OTCQX:RHHBY) (ROG.VX) hasn't done all that well in the market of late, with the shares down about 6% over the past year. Then again, that's not so bad in the larger context - Pfizer (NYSE:PFE) and Bristol-Myers (NYSE:BMY) have done significantly better (both up about 11%), but Novartis (NYSE:NVS), Merck (NYSE:MRK), and AstraZeneca (NYSE:AZN) have performed just as poorly or worse than Roche.

This market performance forms an interesting contrast with the news that Roche has been reporting. The company continues to advance one of the deepest oncology/immuno-oncology portfolios, and the company's efforts outside of cancer have achieved some notable successes of late in hemophilia and multiple sclerosis.

Even so, the question remains as to whether this will be enough to push the company back to double-digit earnings growth. Not only are politicians taking a harsher tone on drug pricing, but Roche faces significant challenges from biosimilars and intense competition in oncology. I continue to believe that Roche is a high-quality, well-run drug company, but Roche's success not only makes it a prime target for its competition but also makes it harder for the next generation of blockbusters to do more than simply maintain what the company already has.

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Roche Could Be A Victim Of Its Own Success

Seeking Alpha: Sunshine Heart's Path Is Long, But The Rewards Could Be Enormous

In the multiple times I've written about Sunshine Heart (NASDAQ:SSH), I've tried to emphasize the point that this is a "consenting adults" type of stock - the commercial promise of an effective device therapy that can not only halt the progression of heart failure but hold the line (and maybe improve it) is tremendous, but this is an undercapitalized company that still has to establish that the device works and that they can commercialize it.

Looking at other cardiology device companies, I believe there is at least a credible chance that Sunshine can generate $300 million or more in revenue ten years from now, with a gross margin in the 70%s and an operating margin potentially in the 30%s. Discounted back and adjusted for further funding needs, I continue to believe that $7 to $9 per share is a reasonable valuation range for what could well be a high-risk/high-reward story.

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Sunshine Heart's Path Is Long, But The Rewards Could Be Enormous

Seeking Alpha: Receptos Continues To Reward

Receptos (NASDAQ:RCPT) is the gift that keeps on giving for its shareholders, with the shares up another 75% since my last piece and up close to 1,100% since my initial write-up on the shares as a Top Idea in August of 2013. Sock away a few 1,000%-ers in your investing career, and you'll do pretty well.

I don't believe Receptos is just a product of the biotech boom (or bubble, depending upon your point of view). This company seems to have a legitimate blockbuster in ozanimod (formerly/also known as RPC1063), as this drug appears to be very effective in both multiple sclerosis and ulcerative colitis, and possibly effective in Crohn's disease as well. Add in more long-dated options like RPC4046 for eosinophilic esophagitis and a potential oral GLP-1 drug for the type 2 diabetes market, and it's not hard to see why this is a hot stock in the space.

Receptos's finer qualities are no secret now. Valuing biotechs is an inexact science, at best, and I'd be in no hurry to sell these shares if I owned them, but I don't see the sort of discount to fair value that I look for when considering new purchases. That said, Receptos is assumed to be for sale to the right bidder, and I wouldn't underestimate the sort of price the company could get from a Big Pharma that feels it badly needs a multi-billion dollar drug to boost its business.

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Receptos Continues To Reward

Seeking Alpha: Receptos Shopping For A Partner With Strong Data In Hand

Receptos (NASDAQ:RCPT) has come along quite nicely since I first wrote about it as a Top Idea in August of 2013. The shares' 150%-plus move has been fueled by strong clinical data, as lead drug RPC1063 ('1063) has shown solid efficacy and cleaner safety in relapsing multiple sclerosis and very encouraging data in ulcerative colitis. The latter has created a very real possibility that '1063 could be a multi-indication blockbuster, as an effective oral therapy for ulcerative colitis and Crohn's disease could be a real blockbuster.

Investors may feel a little starved for big catalysts in 2015. The Phase III RADIANCE and SUNBEAM studies in MS won't have data to show until 2017 and the expectations are already high for the company's expected release of 32-week data from the Phase II ulcerative colitis study. That said, the company may put a new diabetes drug into human studies in 2015 and the company has made no secret that it intends to find a partner for '1063.

These shares aren't nearly the bargain they once were, but there is still significant potential value locked in the MS, UC, and Crohn's programs. It is going to take time to produce the clinical data that it will take to unlock that value, but I'd be in no rush to sell these shares and I would consider them if this recent sell-off continues.

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Receptos Shopping For A Partner With Strong Data In Hand

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: Why Google Could Transform How We See

Google (NASDAQ: GOOGL  ) (NASDAQ: GOOG  ) has started making a significant push into wearables, with medical/health care-related applications among the prime targets. Some readers may already have heard of the company's efforts to develop a glucose-sensing smart contact lens that could continuously monitor glucose levels and interface with mobile devices, allowing diabetics more freedom and convenience.

Count eye care giant Novartis (NYSE: NVS  ) among those who have noticed. Novartis and Google announced on Tuesday that they would work together on smart contact lenses targeting both glucose monitoring and presbyopia. It's hard to say how close to reality (or clinical trials) a functional device might be, but this partnership just may change the landscape of the glucose monitoring market presently dominated by companies like Johnson & Johnson (NYSE: JNJ  ) , Abbott Labs, Roche and Medtronic.

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Why Google Could Transform How We See

The Motley Fool: Forget Earnings - Catalysts Incoming for Novartis Stock

With Novartis (NYSE: NVS  ) in the midst of a business transformation process and management projecting significant improvements, investors are a little less interested in quarterly results for the time being. Results for the second quarter were OK, but sluggish growth in Pharma highlights the importance of good clinical data on LCZ696 in heart failure and progress over the next 12 months in the immuno-oncology portfolio. 

The Street is pretty bullish on these shares, though the performance on a year-to-date basis has been more middle of the road between the likes of Merck (NYSE: MRK  ) , Bristol-Myers (NYSE: BMY  ) , Pfizer, and Roche. It would seem that a lot of optimism on LCZ696 and margin improvements is getting worked into the shares and while stronger-than-expected data on LCZ696 and/or the immuno-oncology portfolio would be well-received, I think investors already expect more from Novartis than virtually any other Big Pharma company.

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Forget Earnings: Catalysts Incoming for Novartis Stock

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?

The Motley Fool: Why Salix Pharmaceuticals' Good Data Wasn't Great

Investors in Salix Pharmaceuticals (NASDAQ: SLXP  ) might have had some upset stomachs in the days leading up to today's announcement of positive results from the TARGET-3 study of Xifaxan in IBS-D. Although a medical journal review from mid-2012 had suggested that Xifaxan would pass this study of long-term retreatment, there are hundreds of millions of high-margin incremental sales riding on Salix ultimately securing FDA approval for a drug that has had a tough route to approval for this large indication.

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Why Salix Pharmaceuticals' Good Data Wasn't Great

The Motley Fool: Up 8%: Does Cooper Companies Inc's Buyout Make Sense?

Eye care specialist Cooper Companies (NYSE: COO  ) is getting into the med-tech merger game and not just as a "me too" player. The company's acquisition of Sauflon Pharmaceuticals carries a steep price at nearly six times forward revenue, but the company is filling out its silicone hydrogel product line and advancing its position in this market by years. Although I continue to believe that Cooper would be well-served to either grow its ob/gyn and fertility businesses or divest them, it's hard to argue with a company generating double-digit growth and double-digit returns on capital.

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Up 8%: Does Cooper Companies Inc's Buyout Make Sense?

Seeking Alpha: Receptos Continues To Hit Its Marks

Receptos (RCPT) has given its shareholders a pretty wild ride, even for an early-stage biotech. Up around 125% from when I wrote on it as a Top Idea and 39% from my Christmas Eve update, the intervening time has seen the shares shoot up to $55 (90% higher than the price on Christmas Eve) on expectations for strong Phase II data and rumors of a buyout before the shares were cut in half over two months as that speculation cooled and momentum investors bailed out of biotechs.

Now the roller coaster is shooting higher again as those strong Phase II data on RPC1063 in relapsing multiple sclerosis have materialized. Receptos still has to successfully complete its Phase III study, but the promise in multiple sclerosis can nearly support the stock on its own, let alone adding in the potential from the ulcerative colitis indication and additional compounds in the pipeline.

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Receptos Continues To Hit Its Marks

The Motley Fool: 3 Reasons to Like Zoetis

Wall Street is often willing to pay extra to sleep better at night, and Zoetis (NYSE: ZTS  ) is the sort of business that won't often lead investors to lose much sleep. The largest player in animal health, Zoetis is in the top three in every relevant sub-market it addresses and is often #1 or #2, but its leading product is less than 10% of sales and the top 10 list of products is less than 40% of revenue. Helping Zoetis' valuation even further is the relative lack of alternatives – companies like Neogen, Virbac, and Dechra are much, much smaller (and harder to own for larger funds), while the big comparables remain locked within large pharmaceutical companies like Merck (NYSE: MRK  ) , Sanofi (NYSE: SNY  ) , and Lilly (NYSE: LLY  ) .

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3 Reasons to Like Zoetis

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?

The Motley Fool: After Missing Earnings, Is Pfizer a Good Value?

When Pfizer (NYSE: PFE  ) last reported earnings I was pretty ambivalent about the stock, and since that late January piece the shares have lagged both the broader market and pharma industry peers like Merck, Lilly, and Novartis. It's not as though the company has been sitting still either, what with positive clinical updates on its Prevnar vaccine and palbociclib oncology drug. Dwarfing all of that is the potential megadeal for British pharma company AstraZeneca (NYSE: AZN  ) . Pfizer needs to guard against overpaying in this potential deal, but these shares are getting closer to an interesting entry point for long-term investors.

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After Missing Earnings, Is Pfizer a Good Value?

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: Pfizer Inc's Palbociclib Delivers the Goods

Pfizer (NYSE: PFE  ) could use another blockbuster right now, and data presented from the phase 2 PALOMA-1 study for its CDK 4/6 inhibitor palbociclib over the weekend suggests it likely has one. The only major issue now could be the Street's already aggressive expectations, particularly as they pertain to Pfizer filing for approval on the basis of phase 2 data and getting to the market ahead of Lilly (NYSE: LLY  ) and Novartis (NYSE: NVS  ) . 

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Pfizer Inc's Palbociclib Delivers the Goods