North Carolina biotechnology company BioCryst (NASDAQ:BCRX) remains on schedule developing its various drug programs and the company is well capitalized. CEO Jon Stonehouse said the company’s $72 million in cash is enough to last the company two years.
Yet on a morning that saw the company disclose nothing remotely controversial during its quarterly conference call, BioCryst’s stock fell about 15 percent.
What’s going on?
When one biotech company sneezes, the others catch the cold.
Right now, industry eyes are on sickly Dendreon (NASDAQ:DNDN), the Seattle biotech that released second quarter financial results that saw sales of prostate cancer treatment Provenge fall spectacularly short of expectations.
Dendreon stock plunged more than 60 percent on the results. The company said the reason Provenge sales are growing slowly is because doctors are concerned about getting reimbursed for an expensive drug. Provenge costs about $93,000 a year.
So The Nasdaq Biotechnology Index, an index of biotechnology and pharmaceutical stocks listed on the Nasdaq, was down 6.2 percent through Thursday afternoon. Maryland-based Human Genome Sciences (NASDAQ:HGSI), shares fell about 9.4 percent. Chelsea Therapeutics (NASDAQ:CHTP) stock dropped by nearly 8 percent.
A Deep-dive Into Specialty Pharma
A specialty drug is a class of prescription medications used to treat complex, chronic or rare medical conditions. Although this classification was originally intended to define the treatment of rare, also termed “orphan” diseases, affecting fewer than 200,000 people in the US, more recently, specialty drugs have emerged as the cornerstone of treatment for chronic and complex diseases such as cancer, autoimmune conditions, diabetes, hepatitis C, and HIV/AIDS.
The reimbursement issue is an important one for all drug companies. TheStreet.com notes that doctors are business people too. Implementing $93,000 worth of Provenge treatment without assurances that the drug will be covered could adversely affect a physician’s cash flow. Until a payer issues reimbursement, doctors cover those costs themselves. That limits the number of patients a doctor would want to prescribe the treatment.
One analyst asked BioCryst about the additional tests on BCX4208, the company’s gout drug candidate. BioCryst’s Stonehouse replied that among the reasons the company is conducting additional phase 2 trials is to get a more complete information profile for the drug. Information about how the drug interacts with other medications is important because many gout patients have conditions such as diabetes and are on other medications.
That additional information could also help BCX4208 along the regulatory process and provide additional detail that a potential acquirer might want. That information will also help inform payors make their decisions about reimbursing the drug.
That’s smart, the analyst said.
Indeed.
