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Five Biotech Companies to Watch

Written by on Thursday, March 29th, 2007

Which five biotech companies should industry followers be watching today? ran a column today written by Eric Halperin, where he identified five of the most promising biotech companies to watch.

Which companies made his list?

1. Alnylam Pharmaceuticals

2.  Affymax

3.  Jazz Pharmaceuticals

4.  Altus Pharmaceuticals

5.   Trubion Pharmaceuticals

How did Halperin decide on this list?

In the case of Alnylam Pharmaceuticals, Halperin wrote:

In October, pharma giant Merck agreed to buy Sirna for $1.1 billion, a staggering sum for a company very early in the drug development process. The reason? Sirna is one of only a few companies developing drugs based on RNA interference, a technology for which scientists won the Nobel Prize, that involves blocking gene expression.

Alnylam is another. The company has only initiated an early-stage safety trial for its lead product candidate, a treatment for respiratory syncytial virus, but RNAi could be the bigger asset. . . .

What about Affymax?  Halperin wrote:

The company priced above its range in December and has a market valuation of almost $500 million. So why does this loss-making company appeal so much to a few investors? Among other factors, the company received funding from big-name venture capitalists like MPM Capital and Bear Stearns Health Innoventures.

Another is potential sales. The company’s hopes rest on Hematide, an erythropoiesis stimulating agent designed to treat anemia in patients with chronic kidney disease and for cancer patients undergoing chemotherapy. Anemia-fighting drugs are blockbuster sellers—generally defined as more than $1 billion-plus in annual sales—for Johnson & Johnson and Amgen. And Affymax believes Hematide could be longer acting and cause fewer side effects than the existing products. The drug is in several mid-stage trials.

While Halperin is a little vague on his reasons for selecting Jazz Pharmaceuticals, he is a bit more definitive regarding Altus Pharmaceuticals, stating:

Cowen has an outperform rating on the stock. The firm likes Altus’ business model of modifying drugs to treat rare diseases . . . .

As for Trubrion Pharmaceuticals, Halperin stated:

Seattle-based Trubion develops drugs designed to bind to targets on cell surfaces. The lead product candidate, now in mid-stage trials, aims to treat rheumatoid arthritis, a market with blockbuster potential. The company believes it may also have use in treating lupus, though it has not yet begun clinical trials aimed at the disease.

Trubion carries all the usual biotech risks, but investors have warmed to the company anyway. The stock is up more than 50% since its October IPO. . . .

Even though as a lawyer, I focus less on which companies are likely to become the best investments than I do on whether or not the companies will prove to be good clients or how they are impacting the law, I think it is always useful to know what is being said in the investment world about a particular company.  It will be interesting to see how his picks do over the next few years. 

From my perspective, however, given all of the innovation coming out of the biotech industry and all of the emerging biotech start-up companies, I think that it is impossible to narrow down the list of young stars in the industry to five players.  I can only imagine that time will show that Mr. Halperin has omitted many of the biotech companies from his list who will ultimately prove to have been terrific investments.  Some of those could very well prove to be even better investments than the companies on his list. 


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