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Feuerstein's Biotech-Stock Mailbag
Welcome back to the Biotech Mailbag. This week, I'll tackle questions on Middlebrook Pharmaceuticals and Isis Pharmaceuticals.
Middlebrook Pharmaceuticals shares soared this week on the FDA approval of Moxatag, the company's proprietary, once-daily formulation of the antibiotic amoxicillin.
The news prompted an email from Neal G., who writes: "Is it me, or is this drug a big nothing? When my kids get strep they take antibiotics once a day."
I actually believe the Middlebrook story is a good one, and there's upside in the stock even with the big move Thursday. On Friday, the stock fell back to $2.75.
Middlebrook is for sale, and there's a more-than-decent shot that it finds a willing buyer. The company could go for $6 to $8 a share.
Neal is right about the non-sexiness of another antibiotic, but Moxatag employs a neat drug delivery technology owned by Middlebrook that allows for less frequent dosing. Generic amoxicillin must be taken three times a day, for example, which can be difficult to maintain.
Moxatag is more convenient and should improve compliance, especially in adolescents. Parents won't have to harangue their kids to take their pills three times a day.
There are about 60 million prescriptions written annually in this country for generic amoxicillin. Moxatag isn't going to dominate this market, because insurance companies aren't going to reimburse when they can pay for a cheaper generic instead.
But Middlebrook is being smart. The company will likely price Moxatag around $20-$25 per prescription, which is higher than the $5-$10 copay someone would pay for generic amoxicillin, but not too high to sting (especially since patients really need only one prescription to clear up their sore/strep throat or ear infection).