SOURCE: The Bedford Report

The Bedford Report

December 10, 2010 08:46 ET

Improved Guidance From FDA Reduces Risk in Biotech Stocks

The Bedford Report Provides Analyst Research on Vivus & Cyclacel Pharmaceuticals

NEW YORK, NY--(Marketwire - December 10, 2010) -  While by no means perfect, the Biotech Industry's relationship with the FDA is gradually improving. A recent survey from PricewaterhouseCoopers found that life sciences firms believe that industry-FDA relationships have bettered since Obama took office. In fact, 80% of the survey said in the last two years the FDA has provided better guidance about its expectations. Better guidance leads to fewer letdowns for biotech companies, and for speculative investors. The Bedford Report examines the outlook for companies in the Biotechnology Industry and provides research reports on Vivus, Inc. (NASDAQ: VVUS) and Cyclacel Pharmaceuticals, Inc. (NASDAQ: CYCC). Access to the full company reports can be found at:

Even with better guidance, the FDA still does provide the occasional surprise to investors. During the summer obesity drug makers were one of the more popular speculative plays. Due to the overwhelming percentage of overweight Americans, an effective and safe weight loss drug was seen to have astronomical earnings potential. However after an FDA advisory panel rejected obesity drugs from Vivus and Arena -- Arena's anti-obesity drug, Lorcaserin was considered the most likely drug to receive FDA approval due to its mild side effects -- speculation in obesity drugs all but disappeared, and shares were sent plummeting. Then on Tuesday, a Food and Drug Administration committee voted 13 to 7 that the benefits of Orexigen Therapeutics' new obesity drug Contrave outweigh the potential risks. The news created a significant rally for Vivus' stock as it renewed hope that the company's weight loss drug, Qnexa, may have a chance for approval given more information from further studies.

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According to PricewaterhouseCoopers' survey of the life sciences sector, most companies believe that- although getting better -- the FDA has plenty of room to improve. The majority of companies in the survey believe that the FDA is not keeping up with advances in technology. Moreover, 60 percent of companies surveyed expressed frustration that the FDA had changed its position during a review, while forty percent feel that some products were denied because of FDA's inadequate review resources.

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