| BUSINESSWEEK ONLINE : MARCH 1, 1999 ISSUE | ||||||||
| ||||||||
 | ||||||||
| COVER STORY
Where the Pain Plays Are No pain, no gain, right? That's not what drug- and biotech-industry experts say when asked about the crop of companies competing in the underserved market for pain therapies. While investors need to be picky--and also aware that with hot new therapies come serious investment risks--the field of pain research offers some promising plays. One is the arthritis drugs coming to market from Monsanto Co. (MTC) and Merck & Co. (MRK). Known as Cox-2 inhibitors for the enzyme they block, these drugs aim to offer the same relief as widely used nonsteroidal anti-inflammatory drugs (NSAIDs) such as ibuprofen but without their sometimes dangerous gastrointestinal side effects. Monsanto's Celebrex, the first of the Cox-2s, racked up a stunning 254,000 prescriptions in its first four weeks, according to estimates from NDC Health Information Services, giving analysts confidence that the drug is on track to be a blockbuster. Merck is following close behind with Vioxx, expected to roll out later this year. SAFER BET. Should investors grab shares in both Merck and Monsanto? The smart money is betting that Merck is a better play. Analysts expect Vioxx to be approved for general pain as well as osteoarthritis and to have more persuasive data on safety than Celebrex. Jack P. Lamberton, an analyst at HSBC Securities, says Merck should grab top market share within one year of launch. He also thinks good news on Vioxx will boost Merck's relatively cheap stock. ''We think Merck is a more attractive investment right now,'' says Ronald M. Nordmann, a portfolio manager at Deerfield Management Co. Analysts also see opportunity in another new arthritis treatment. Centocor Inc. (CNTO) won approval last summer for Remicade, a custom-designed antibody for Crohn's disease. Lehman Brothers analyst C. Anthony Butler expects the company to get approval late in 1999 for the drug's use in rheumatoid arthritis as well. But Butler says the market hasn't factored that into Centocor's stock, now trading at around 39, and he has a 12-month target for the stock of 65. Good investments don't have to stem from revolutionary science. Next fall, tiny Algos Pharmaceutical Corp. (ALGO) is expected to roll out MorphiDex, a combination of morphine and a drug commonly used in cough syrups, for moderate to severe pain. Tests have shown MorphiDex to work twice as fast and last twice as long as morphine alone. Credit Suisse First Boston analyst Shekhar K. Basu thinks MorphiDex and two other Algos painkillers in development will generate $400 million in sales by 2002. He expects the stock to hit 38 in 12 months, from about 29 now. MIX-UPS? Basu says Algos is a better bet than hot anti-pain company Anesta Corp. (NSTA). Its Actiq, a lozenge-like form of the narcotic fentanyl, delivers a quick dose of the drug for cancer pain. But Actiq carries very strict label wording because of concerns that children might mistake it for candy. Basu warns that when MorphiDex rolls out in pill form, with what he expects to be a less restrictive label, ''I think that will impact Anesta negatively.'' Competition may be bruising for some players, but investors who make the right picks shouldn't feel any pain. By Amy Barrett in Philadelphia _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP |
|  |
 | |
 Return to main story INTERACT E-Mail to Business Week Online | |||
