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IVIG Growth in Check, But Space Reeks of Anticipation

pgresearch
Thursday, June 24th, 2010

The IVIG/plasma marketplace seems relatively stable at this time, despite a history of supply issues, rampant off-label use, and attempts at consolidation within the space. The PGR network reports slow and steady growth across the major players - BAX, CSL Behring, and TLCR, although parts appear to be moving in the direction of a major ramp-up.

Of the products currently available, subcutaneous formulations continue to gain share, but the true potential for the market lies in the ability of these products to treat neurological disorders, such as Alzheimer’s. Until this indication is granted FDA approval, insurance companies will attempt to contain costs from high volume off-label use. BAX, CSL Behring, and Talecris/Grifolz have all made efforts to expand their sales forces and ensure that product is available in the hope that when it is approved for Alzheimers they will be able to reap the rewards.

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Reforming the Future of Student Loan Lenders

Evan Reich
Wednesday, April 28th, 2010

President Obama’s signing of the Health Care and Education Reconciliation Act will have unintended effects on the education industry as it eliminates the Federal Family Education Loan Program (FFELP). From the investor’s point of view, what does this all mean for standalone student loan companies, banks, and for-profit education companies?

One element that’s easy to agree on is that a lot of jobs will be lost. The only traction the student lending industry generated in opposition to the bill was based on the prospect of significant job loss - that’s now a reality. Sallie Mae has announced its intention to cut 2,500 jobs and a number of small lenders have indicated their intention to exit the marketplace altogether.

The for-profit segment of the education industry is also under siege. The Department of Education’s proposed “gainful employment” regulation is likely to affect as much as 25% of the programs offered at numerous for-profit schools.

The third factor affecting student lenders comes from bankruptcy loan reform. Beginning in 2014, loan payments will be capped at 10% of a borrower’s discretionary income, down from the current 15% cap. Moreover, any borrowed amount not paid after 20 years, compared to today’s 25 years, will be forgiven and public service workers will earn forgiveness in just ten years. This will have a long-term, sizable affect on the student loan market.

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Student Lending Leads to Job Loss

Evan Reich
Tuesday, April 6th, 2010

A lot of jobs will likely be lost with President Obama’s signing of the student lending bill.  This bill will clearly have a significant effect on the education industry, but it also will have an unintended effect on investors.  For standalone student loan companies, banks, and for-profit education companies this bill makes the prospect of significant job loss a reality.

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Polysilicon pricing: soft and softer

Ishita Manjrekar
Wednesday, December 9th, 2009

Silicon prices from major producers have declined almost 20 percent over the past few months and, while a couple of producers maintain they are holding fast, the fact that most have reduced prices will be pressure enough to create equilibrium on the low end. As to pricing trends in 2010, our network thinks silicon prices will hold steady into Q1-10 as wafer/cell/module vendors buy raw material in preparation for Q2-10 demand from Germany (especially if they expect a FiT reduction on July 1). Past that, however, raw material purchases are expected to slow by May 2010, at which point prices will soften again as it takes about 2 months for polysilicon to be converted to modules.

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Would you vaccinate your son against HPV?

Allison Hsieh
Thursday, September 10th, 2009

Vaccines for Sexually Transmitted Diseases (STDs) are tricky. But it is a business that Merck and GlaxoSmithKline have invested significant capital, and assumedly expect a large return. Merck’s Gardasil has been on the market for about 3 years and targets four strains of human papillomavirus that are linked to cervical cancer. While it is currently approved for girls and women aged 9 to 26, the FDA recommended approval this week for boys and men of the same age range.

It is interesting to see how much impact this potential label expansion will have. Earlier this year, Merck lowered its revenue projections for 2009 to $1.1 billion and the company is scrambling to grow a market that seems to have reached a threshold. While the company may still be pushing for mandated vaccination, they have reached most of the girls that will likely be vaccinated. The >$300 cost in this economic environment probably does not help the matter either. In addition, the public may be weary of a vaccine that does not yet have long-term data and may have hidden side effects.

When it comes to boys, will parents choose to vaccinate them? Is the risk of genital warts high enough to warrant such an expensive vaccine? Merck is a marketing powerhouse, but preventing genital warts conveys a very different sentiment than preventing cervical cancer. The high cost and lack of long-term data are still issues. Competition from GlaxoSmithKline’s Cervarix will also present a challenge. For these reasons, I think it will be very difficult for Merck to capitalize on a label expansion for boys, especially relative to the amount they invested to carry out these studies and to go through the approval process. Time will tell if they are able to work some magic.

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Vertebroplasty: A Procedure Not for the Masses

Allison Hsieh
Wednesday, August 19th, 2009

The Wall Street Journal recently reported on a study published in the NEJM that showed no clinical benefit from vertebroplasty versus placebo. How much impact will it really have? Unlike Vioxx or Tysabri, it’s not like the procedure has been shown to cause harm or adverse events among patients. There is no risk of it being pulled from the market, and the major spine companies (Depuy/JNJ, Synthes, Medtronic/Kyphon) will still be permitted to market the technology. Surgeons and patients will testify to the benefits it provides for the pain associated with vertebral compression fractures, regardless of what the study showed. In the current environment, though, the focus is on eliminating unnecessary healthcare costs. If vertebroplasty is not shown to provide a medical benefit in a study like this, should Medicare pay for it?

Many cast doubt on the accuracy of the study. The sample size was too small, patient selection was biased, measurement of pain cannot be accurate… When it comes down to it, a definitive study that accounts for these errors will need to be conducted before drastic cuts in reimbursement are likely to be taken. That said, the attention the study has garnered will likely make surgeons think twice before choosing vertebroplasty for a patient.

A comparison can be made between this situation and the ENHANCE study that came out in January 2008. When the ENHANCE study was released showing that Vytorin was no more effective than simvastatin monotherapy, the same questions surfaced. What would happen to Vytorin’s formulary status and reimbursement? The PGR network indicated that the status would likely remain unchanged, but the biggest impact would be from a decrease in the number of new prescriptions written for the drug.

In the same way, the PGR network indicates that the number of vertebroplasty and kyphoplasty procedures will likely go down, regardless of reimbursement cuts. Physicians will be more careful when choosing patients for the procedure (some patient types do really benefit), especially given the increased scrutiny that comes with a procedure that they may be financially incentivized to do. While companies were once able to get away with marketing their products to the masses, they do not want to be hit with independent studies such as this. The shift is towards defining the patient profile more accurately and taking a more personalized approach to medicine. How this will play out is still a big question, but it will start with more narrowly defined patient populations in clinical studies and an increased emphasis on pharmacogenomics.

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