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Biotech Roundup: Feed Me, PDUFA IV, One More Reason to Watch The Superbowl

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Summing up biotech into Super Bowl weekend...

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Feed Me

Big pharma and biopharma continue to scratch their pipeline itch this week. AstraZeneca (AZN) buys UK firm Arrow Therapeutics and Pfizer (PFE) is buying BioRexis Pharmaceuticals. Going a slightly different route, Sanofi (SNY) may or may not be buying Bristol Myers (BMY). Bristol is hiring a legion of investment bankers, though, just to "explore things." Be surprised if Bristol makes it into high summer as an independent company.

PDUFA IV

Congress is likely to shirk its responsibility to fund the FDA at adequate levels again now that the FDA extracted a hike of 33% from the industry as part of the negotiations of PDUFA IV. For those not up on their acronyms, PDUFA stands for the Prescription Drug User Fee Act. Fed up with slow-moving bureaucrats using "not enough funding" as an excuse not to do their jobs in a timely fashion, drug companies agreed over a decade ago to fund a portion of the FDA's budget to hire more staff. This funding was conditional of the FDA's ability to process drug applications faster. Assuming Congress doesn't do its part, the industry will be paying about 60% of the FDA's budget.

Keep watch for what the Dems stuff in the PDUFA bill. Presidential wannabes Senator Clinton and Senator Waxman are looking to insert biosimilar (generic biologics) authorizing legislation into the bill. Industry is up in arms, but I think it is so much hot air. Biologics are touchier and as long as the generic companies are required to run some human equivalence trials, they can have at.

The big item is competing plans from Senator Grassley and the Kenzi bill sponsored by Senators Kennedy and Enzo. Each are different ways of requiring the FDA to do a "better job" of making sure drugs are "safe." The Kenzi bill essentially requires companies to get their drugs reapproved every five years. The other creates another bureaucracy within the FDA. Both are dumb ideas pandering to a populace who is only marginally more illiterate about drug development risk benefit calculations than their representatives. I think the likely outcome is the FDA will have some additional powers and an insignificant amount of money to start upgrading their last-century technology to handle the avalanche of information necessary for an adequate safety-monitoring program.

One More Reason to Watch the Super Bowl

This might be the last year you get to hear about four-hour erections, how your cholesterol is from steak and your cousin Jake (or whatever that rhyme is), and see Dr. Jarvik shill for Lipitor. Congress badly wants to restrict direct to consumer advertising in this session. They have this little problem of the First Amendment, of course, but I expect they'll get the drug industry to "volunteer" to do something.

If you are invested in media stocks, be aware drug advertising amounts to about $2 bln in ad revenues per year. I'd quip this significant loss of ad revenue could make the entire sector limp, but that might be in bad taste.

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No positions in stocks mentioned.

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