By Charles Craig
SAN FRANCISCO — Centocor Inc. and Cephalon Inc., threatening to join biotechnology’s elite group of companies with positive earnings, made strides in 1996 with the former posting its first quarterly profit and the latter filing its first new drug application with the FDA.
Dave Holveck, president and CEO of Malvern, Pa.-based Centocor, said Monday his company is expected to achieve its first profit when the fourth quarter 1996 fiscal report is completed.
He credited dramatic increases in sales of ReoPro, an anti-blood clotting drug, for the positive earnings milestone.
In its first year on the market in 1995 sales were sluggish, reaching only $23 million. That figure more than doubled in the fourth quarter of 1996, Holveck said, with nearly $50 million in sales, boosting total revenues from ReoPro to $140 million for the year.
For Cephalon Inc., of West Chester, Pa., President and CEO Frank Baldino said his company ended 1996 by filing its first new drug application (NDA) with the FDA for Provigil, or modafinil, to treat narcolepsy.
Cephalon also expected to submit an NDA before the end of last year for Myotrophin, its higher profile drug for amyotrophic lateral sclerosis (ALS), but that much-anticipated FDA market application has yet to be filed.
Baldino said Monday the Myotrophin NDA will be submitted “as soon as possible“ and many analysts expect it to be in FDA hands by the end of this month.
Holveck and Baldino discussed their business plans in presentations at Hambrecht & Quist’s 15th Annual Healthcare Conference in San Francisco.
The four-day meeting, which ends Thursday, has attracted about 3,000 institutional and venture capital investors to hear status reports from CEOs of more than 240 companies, many of them biotechnology firms.
Centocor and Cephalon are considered among the maturing stars in biotechnology, ready to break from the pack of money losers with promising prospects to become money makers with marketed products.
Holveck called 1996 Cephalon’s “break out year.“ But he said getting a drug, such as ReoPro, accepted for use by hospital doctors, even after it was approved by the FDA, was challenging.
“We found out you need more than one [late stage] clinical trial to bring a drug into a hospital setting and you need a big partner,“ he added.
Centocor’s marketing partner for ReoPro is Eli Lilly and Co., of Indianapolis.
Sales of ReoPro, a monoclonal antibody that inhibits platelet aggregation, took off in 1996 after results from two Phase III trials in December 1995. That data proved the drug’s effectiveness beyond its 1994 label restrictions, which limit ReoPro for prevention of cardiac events in patients at high risk of artery reclosure following angioplasty. Those patients total about 30 percent of people undergoing angioplasty.
The additional Phase III studies supported prescribing ReoPro for all angioplasty patients and those with unstable angina.
Holveck said Centocor expects to file for an expanded label with the FDA early in the first quarter of 1997.
He also said other clinical studies demonstrating ReoPro’s benefits in treating heart attacks and stroke are planned.
Cephalon suffered what some analysts considered a temporary setback with Myotrophin in 1996, but the drug is expected to gain FDA approval and help the company into the realm of positive earnings.
In January 1996 a delay in getting FDA approval to make Myotrophin available to amyotrophic lateral sclerosis (ALS) patients outside clinical trials generated concern among investors and drove down Cephalon’s stock price 35 percent.
The regulatory agency eventually allowed broader use of the drug in June 1996, but the company’s stock did not recover.
Baldino said Myotrophin, which is human insulin-like growth factor (IGF-1), proved it can slow progression of muscular deterioration in patients with deadly ALS and can enable those patients to maintain mobility. The drug was co-developed with Chiron Corp., of Emeryville, Calif.
In June 1995, positive data from the first Phase III trial of Myotrophin was credited with sparking a bull market in biotechnology that eventually pushed stocks and capital raised in public offerings to record levels in the first half of 1996.
The industry, however, went through a correction beginning in late spring, sending share prices plummeting and leaving cash-starved companies hungry.
Dennis Purcell, New York-based Hambrecht & Quist’s managing director of life sciences, noted the rally in biotechnology shares in the second half of 1995 resulted in gains for 78 percent of biotechnology companies that year.
While about 50 percent of the industry recorded increases in stock prices for 1996, a nearly equal percentage experienced decreases.
Although 1996 was a banner year for both public offerings and product approvals, Purcell observed the biotechnology sector lagged far behind broader market indices, such as the Standard & Poors 500 Index, The NASDAQ Composite Index and the Dow Jones Industrial Average, all of which increased more than 20 percent in 1996.