The market has been showing some good days as the Fed has hinted that it will soon stop raising interest rates. Meanwhile, recent data on the GDP shows some of signs of continued growth. Undoubtedly, the macro-economic worries have made it tough to determine whether or not stocks have reached oversold levels, but we think we are there.
In regards to the biotechs, ZymoGenetics has completed enrollment for its Phase III clinical trial of rhThrombin and will disclose results either in September or at a medical meeting in the fourth quarter of 2006. The data should be adequate to support a BLA filing by yearend based on non-inferiority to the standard of care, King Pharmaceuticals’ Thrombin-JMI, with a much stronger safety profile. Thrombin-JMI is a bovine-derived topical hemostat used in hospitals to reduce bleeding during spinal surgery and other medical procedures. However, Thrombin-JMI contains coagulation Factor V and other impurities, which leads to difficulty forming blood clots and a condition similar to hemophilia in up to 0.5% of patients. The risk of clotting problems is particularly acute in patients re-exposed to Thrombin-JMI. rhThombin is human recombinant protein without the impurities inherent in bovine-derived products. Despite the limitations of Thombin-JMI, King Pharmaceuticals recorded sales of $221 million last year. Sales of Thrombin-JMI have increased at a 37% annual rate since 2001 primarily due to price increases. Thus, rhThrombin can capture 85% of the market from Thombin-JMI within three years of launch. Our target price for Zymogenetics is $24.
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