Wednesday, May 11, 2011

Chart Analysis: Teva and Mylan Stock Prices Mirror Images

I am not an expert trading stocks based on chart patterns, but I came across an interesting possible pattern of stock prices of Teva and Mylan.  They are the 2 biggest generic manufacturers and are competitors and it makes sense that a decrease in the price of one stock would show an increase in the other.  It also makes sense that these stocks may move in the same direction for reasons larger than the two companies.

The 3 month chart shows that from mid-February to end of March, both stocks have similar charts. As seen in the 5 day and 1 month charts, Teva and Mylan have been moving in opposite directions, almost at the same rate, for the past month.  They appear to be mirror images.  Perhaps this can be exploited by investors.  Any thoughts or suggestions? 

What's Teva Getting Out of the Cephalon Buyout

Teva Pharmaceuticals made a push to join the company of big pharma by purchasing Cephalon.  Big Pharma have market caps over $100 billion ranging from Sanofi at the low end to JNJ at $181 billion.  The current market cap for Teva is about $45 billion.  Teva can potentially join the Big Pharma club by optimizing its purchase of Cephalon.  This purchase bolsters Teva's current product line-up and adds about a dozen candidates to their pipeline.  Also, it adds numerous biologics to Teva's arsenal. 

Teva's Copaxone, which generates 20% of its revenue, will be off patent soon, so it is important for Teva to discover new sources of revenues.  At first glance it may seem that Teva over-paid because Cephalon's best seller Provigil loses patent protection next year.  However, examining other products and candidates justifies the $6.2 billion price tag. 

It is also important to consider that Teva will need to continue spending money to conduct a large number of clinical trials of drug candidates it acquired from Cephalon.  The revenues generated from Cephalon's currently approved drugs will greatly aid to offset clinical trial costs.

Currently Approved Products from Cephalon:
  1. Nuvigil (armodafinil)- Basically the same drug as Provigil, but it's the R-isomer.  Simply, chemical compounds may have the same atoms, but the arrangement of atoms attached to a carbon may differ.  In most cases resulting in mirror images (think of your hands).  Typically one version is active and the other is not.  It is also probable that the inactive version causes most of the side effects.  Teva can begin heavily marketing Nuvigil over generic versions of Provigil.
  2. Provigil (modafinil)- Accounts of 41% of revenues for Cephalon. 
  3. Treanda (bendamustine)- generates nearly $400 million in revenues annually.  It hasn't been compared to other 1st line agents for leukemia and lymphoma, but clinical studies or patient reports are most likely ongoing that may show superiority.  It has low cross sensitivity to other alkylating agents.
  4. Amrix (cyclobenzaprine)- treatment of muscle spasms. This is an extended release formulation; Teva markets an immediate release formulation.
  5. Fentora (fentanyl buccal tablet)- Teva has a similar oral transmucousal lozenge.
  6. Actiq (oral transmucousal fentanyl citrate)- Since Teva has a generic version already, Actiq may go away
  7. Trisenox (arsenic trioxide)- indicated for inducing remission in patients with acute promyelocytic leukemia
  8. Gabitril (tiagabine)- treatment of partial seizures
Drugs in the Pipeline:

CNS Disorders
  1. Nuvigil- Phase III trial for bipolar depression.
  2. CEP-26401- Phase I. H3 antagonist for treating cognition in Alzheimer's disease/ schizophrenia.  H3 receptors are found in the CNS. Further applications include sleep disorders and obesity. Last year, Evotec received 1.5 million Euros to begin Phase I trials for their H3 antagonist
Inflammatory Diseases
  1. Cinquil (reslizumab)- Phase III. Humanized monclonal antibody targeting interleukin 5.  Treatment for adult eosinophilic asthma. There is no specific treatment for eosinophilic asthma.  Other drugs such as corticosteroids are used to control exacerbations.
  2. Lupuzor (forigerimod)- Phase II. CD4 T cell modulator for treatment of Systemic Lupus Erythematous
  3. CEP-37248- Phase I. Humanized antibody targeting interleukins 12 and 23.  Multiple autoimmune disorder indications are possible.
  1. Treanda- Phase I, II, and III for various myeloma and lyphomas including 1st line for non-Hodgkin's lymphoma, which would be a big plus.
  2. CEP-18770- Phase II. It's a proteasome inhibitor for treatment of multiple myeloma.  
    • Bortezomib (Velcade) by Millennium Pharmaceuticals is already approved.  
    • Ritonavir, a protease inhibitor developed for AIDS, has some proteasome inhibitory activity and may have potential for treating glioma.
  3. Mesenchymal Precursor Cells (with Mesoblast Limited)- Phase II for bone marrow transplantation
  4. CEP-9722 (PARP inhibitor)- Phase II for Non-small-cell lung cancer with gemcitabine and cisplatin.  Phase II for tumors with DNA repair mismatch. Phase I for treatment of tumors with temozolomide.  
    • Iniparib from Sanofi is in Phase III.  FDA has fast tracked it for triple-negative breast cancer
  5. CEP-11981- Phase I for treating solid tumors.
  6. 3 others in pre-clinical stages
  1. Fentora (fenanyl buccal tablet)- filed for breakthrough pain associated with specific chronic pain conditions.  This expands the current approval which is for only cancer pain.  Approval will lead to increased prescribing and revenues.  Also, in Phase III for high dose safety study; which allows it to bring newer, higher dosage strengths to market.
  2. CEP-33237 (tamper-deterrent hydrocodone)-  Phase III. Narcotics with tamper deterrent technologies are always looked on favorably.  They are adopted more quickly to replace current drugs than in other treatment areas.  Tamper deterrent technology helps to fight against the rising rate of prescription drug abuse.  King Pharma hit it big by investing to Remoxy, Embeda, and Acurox.  Pfizer realized the potential and bought King Pharma.
  3. CEP-37247 (anti-tumor necrosis factor)- Phase II for treatment of sciatica
  1. Revascor (collaboration with Mesoblast Limited)- Phase II for congestive heart failure and myocardial infarction