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DBL%20Hendrix%20small.png College chemistry, 1983

Derek Lowe The 2002 Model

Dbl%20new%20portrait%20B%26W.png After 10 years of blogging. . .

Derek Lowe, an Arkansan by birth, got his BA from Hendrix College and his PhD in organic chemistry from Duke before spending time in Germany on a Humboldt Fellowship on his post-doc. He's worked for several major pharmaceutical companies since 1989 on drug discovery projects against schizophrenia, Alzheimer's, diabetes, osteoporosis and other diseases. To contact Derek email him directly: Twitter: Dereklowe

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« Am I Blue? | Main | Idle Hands »

October 6, 2002

Bad News at a Bad Hour of the Night

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Posted by Derek

10:30 PM Eastern time, to be exact. That's when Schering-Plough released their unwelcome news that they're not going to be making nearly as much money as they'd been letting on they would. They had an all-day session with analysts last Thursday, but only got around to laying the egg after everyone had gone home.

Wall Street didn't react to it very well. Forbes quotes a Lehman Brothers research note that sarcastically refers to this as "the perfect time" to announce earnings guidance. Actually, I think part of the ill will was the that company had waited so long to come clean at all. Claritin goes off-patent in December, and it's become increasingly clear that son-of-Claritin (Clarinex) isn't going to even come close to picking up the slack. So where was the guidance before this?

As I've said before, I think that Clarinex's fate is deserved. I don't see it as any real advance over Claritin, and I believe that it's just there to try to keep what money it can flowing in. (And yes, I still own SGP stock, which is now revisiting the heady days of 1996.)

A better drug, in every way, is the forthcoming cholesterol absorbtion inhibitor Zetia, co-marketed with Merck. That's an actual innovation, with a unique mechanism of action. Neither of those are any guarantee of success, but there's a lot better chance of something like that taking off than there is with a feeble effort like Clarinex. Of course, the big question is just how well Zetia's going to do, and estimates are all over the place.

The statin drugs have been coming under toxicological scrutiny recently, and Zetia could possibly allow them to be used at a lower dose in combination. That would be good news, and that's the bullish case in a nutshell. The bearish case on the drug has to do partly with that new mechanism - no one knows how it's going to play out there in the real world - and partly with worries about liver enzyme elevation seen at a low level in the clinic. That effect is never good, but it doesn't have to be awful. Again, no one's really going to know until the drug gets out there and a wider patient population tries it out.

That'll be a nail-biter even for those who don't hold the stock. If things go well, the shares could retrace their way back through the late 1990s, which would ease the pain a bit. If something goes wrong, the only way to hold the stock will be with rubber gloves and tongs.

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