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Best of the Blogs, Biotechnology: Merck's Sleeping Pill Drops Nasty Side Effects


Plus, Elan's split into two companies -- biotech and assets -- might be right for shareholders.

This column highlights the most interesting and useful business and financial commentary on biotechnology from around the Web.

Bloomberg Businessweek
Link: Merck's Novel Approach to a New Sleeping Pill
"A sleeping pill that offers the snooze-inducing benefits of Ambien and Lunesta while avoiding next-day grogginess and disorientation has eluded drug heavyweights including GlaxoSmithKline (GSK) and Japan's Takeda Pharmaceutical (TKPYY). Merck (MRK) thinks it may have found a solution.

"The drugmaker is in final testing of an insomnia product, named suvorexant, that works differently from the market leaders. Rather than boosting the brain's complex sleep system, suvorexant uses a more precise approach to block a tiny group of receptors that keep the body alert."

Financial Times
Link: AstraZeneca Sells Drug Rights to Pfizer
"AstraZeneca (AZN) has sold the global rights to Pfizer (PFE) for an over the counter version of its leading heartburn drug Nexium, as it seeks to maintain revenues from the product by marketing it directly to consumers.

"Pfizer of the US will pay the $250m upfront, and commit to milestones and royalties, in a deal that led AstraZeneca to lift its 2012 core earnings per share guidance by $.16 to $6-6.30."

"Gbola Amusa, European pharmaceuticals analyst with UBS in London, said: 'This is fairly positive for AstraZeneca. It can gain new life through over the counter sales. Rather than taking time off to see a doctor, the convenience benefit would steer patients to buy it in a pharmacy.'"

Seeking Alpha
Link: Elan's Split Will Create 2 Very Different Companies
"Give credit where due -- Ireland's Elan (ELN) has always been willing to take dramatic steps in the hope of improving ultimate returns to shareholders. The latest move is a doozy -- basically splitting the company into an early-stage research-driven biotech and a cash-farming collection of assets. Odd as it may seem, this may be a case where breaking up a company results in parts worth more than the whole."

Link: Democrats Caution Gilead Over Quad Pricing
"In an attempt to get ahead of the curve, 14 Democratic members of Congress have written Gilead Sciences (GILD) to caution the drugmaker to maintain a reasonable price for its forthcoming 'Quad' AIDS drug, a once-a-day treatment that was recently recommended by an FDA panel and may be approved by the agency this month. They express concern that Gilead may charge as much as $34,000 for Quad, which they say might contribute to further strain on state AIDS funding programs."

"'Without more affordable HIV/AIDS drugs, we fear that Ryan White Part B-funded co-pays and deductibles will continue to rise, leaving less funding available for ADAP and thousands of our most vulnerable constituents untreated. Therefore, we urge Gilead to consider sustainable pricing strategies for its products that would help allow ADAP to provide treatment to as many individuals as possible,' they urge Gilead CEO John Martin (here is the letter)."

The Street
Link: Book Profits on Health Care Stocks
"I have been looking at economic sectors that are overvalued recently, and another sector where investors should take profits is health care.

"At, we call this sector the medical sector and consider it to be 5.5% overvalued. Only three other sectors are more overvalued: Utilities by the largest amount, 13.4%, followed by consumer staples at 7.7% and finance at 6%.

"This strength should be difficult to sustain given the depleted new drug pipeline among the major pharmaceutical companies. The most notable prescription drug that recently came off patent is Pfizer's blockbuster cholesterol drug Lipitor. Now patients can use a Lipitor generic. Also, the companies involved with health care insurance must cope with the Affordable Care Act."
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