Teva Pharmaceuticals Industries Ltd., an Israeli generic drug maker with an estimated 875 workers in Irvine, got good marks in a recent Goldman Sachs Group Inc. research report.
The thinking: Generic drug companies could benefit from healthcare reform in coming years.
President Barack Obama’s proposed healthcare reform plan could work to increase the use of cheaper generic drugs. The Obama administration and Congress are likely to deal with some kind of healthcare reform plan to reduce costs.
Prescription drugs, which are backed by expensive marketing campaigns and carry high research and development costs, often are cited as culprits in the healthcare cost equation.
Goldman drug analyst Randall Stanicky reaffirmed a “buy” rating on Teva, citing its size and scale. Teva just completed a $7.5 billion deal for Barr Pharmaceuticals Inc. of Woodcliff Lake, N.J. The deal makes Teva among the largest generic drug makers.
“Overall, we believe Teva’s global reach and scale make it a best-in-class generic manufacturer and allow for geographic diversification and growth from emerging markets,” Stanicky said.
Stanicky also added Mylan Inc., a Teva competitor based in Canonsburg, Pa., to his “buy” list, saying the company could have positive fourth-quarter results and guidance.
Mylan has been doing its own buying. It purchased India’s Matrix Laboratories Ltd. in 2006 and then acquired the generic drug business of Germany’s Merck KGAA in 2007, tripling its revenue.
Watson Pharmaceuticals Inc., based just over the county line in Corona, also is a major generic drug player. Watson recently gained the rights to 15 drugs sold off in Teva’s acquisition of Barr.
Masimo Nod
Masimo Corp., an Irvine-based medical device maker, got a nod from analyst Sean Lavin of Lazard Capital Markets LLC despite lower revenue and profit estimates.
The company makes patient monitoring devices including pulse oximeters, which measure oxygen levels in the blood.
Lavin lowered his 2009 profit estimate for Masimo to $46.2 million on $356 million in sales. Earlier, he projected a $47.9 million profit on revenue of $360.6 million.
Pulse oximeter sales could slow, the analyst wrote, as hospitals instead buy Masimo’s Rainbow devices, which cover pulse oximetry and the monitoring of hemoglobin (a protein that carries oxygen) and other substances.
Masimo, which was one of 2007’s hottest local stocks but saw a cooling last year, may benefit in 2009 from what Lavin called “event-driven investments.”
“While investors are concerned about capital spending, potential Medicare reform and potential FDA changes, we believe investors will look toward events that cause significant upside potential as reasons to invest in stocks,” he wrote.
In Masimo’s case, Lavin said he believes the company is moving toward full launch of its hemoglobin monitoring device, a product that he wrote would save lives and significant amounts of money for hospitals, in March.
“We believe there will be substantial excitement around this launch and we recommend that investors buy (Masimo) shares ahead of the launch,” Lavin said.
Startup Raises $7M
A startup has broken through what has been a lull for local venture capital funding.
OrthAlign Inc., a Laguna Beach-based medical device maker, has received $7.2 million in a first round of funding.
Okapi Venture Capital LLC of Laguna Beach and Research Corporation Technologies Inc. of Tucson led the round. Other investors included Pieter Wolters, OrthAlign’s chief executive, and D. Ronald Yagoda and Ned Scheetz, the company’s seed investors.
OrthAlign is developing computer-assisted medical devices to be used in joint replacement surgeries. The devices would feature “the critical features and benefits of large surgical navigation systems in a disposable, palm-sized device,” according to the company.
Chief Executive Wolters said in a release that the funding will provide money that OrthAlign needs to finish developing its products and bring them to market.
As part of the deal, Sharon Stevenson, Okapi’s cofounder and managing director, and Christopher Martin, Research’s chief financial officer, joined OrthAlign’s board.
Shayne Kennedy and Timothy Andrews of Latham & Watkins LLP’s Orange County office advised OrthAlign.
Wolters started OrthAlign in August. He previously was chief executive of IsoTis Inc., an artificial bone maker that was based in Irvine. Integra LifeSciences Holdings Corp. of Plainsboro, N.J., bought IsoTis for $51 million in 2006.
Bits and Pieces:
Irvine device maker SenoRx Inc. said the Patent and Trademark Office granted an additional patent for its Contura catheter for treating breast cancer. SenoRx said the patent was the fourth directly related to Contura and the sixth related to brachytherapy, which places radiation inside or near the source of a cancer Clarient Inc. of Aliso Viejo said it introduced a second gene mutation test for colorectal cancer, the BRAF, which follows KRAS, which was launched in July. Clarient provides anatomic pathology and molecular testing services for pathologists, oncologists and drug makers Alsius Corp., an Irvine company that makes devices used by hospitals to monitor the temperature of critically ill patients, said it received a three-year contract with Novation LLC, a hospital purchasing group.