Shares of Biotech Stock Cyclacel (CYCC) On the Move

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Cyclacel Pharmaceuticals, Inc. (CYCC) announced this morning that a recent study at the University of Texas has shown that its seliciclib drug may potentially treat breast cancer cells that are resistant to hormone therapy. The drug is currently in Phase 2 trials. The report has pushed Cyclacel shares up nearly 13% in early trading on very heavy volume.

Cyclacel is a relatively small player in a field of biotech giants that includes Amgen Inc. (AMGN), Gilead Sciences Inc. (GILD) and Celgene Corp. (CELG). And with a share price still below $3 and a market cap of about $70 million, Cyclacel could be a takeover target for one of the bigger players.

Seliciclib has been shown to kill breast cancer cells that are resistant to aromatase inhibitors such as letrozole, a drug manufactured by Novartis AG (NVS) and marketed under the trade name Femara.

The interesting thing here is that a new patentable drug has been shown to have promise. During the next few years, a large number of best-selling drugs will lose patent protection and the big pharmaceutical houses need to replenish their supply of patents.

If a drug is already developed and is proving to be useful, it is probably cheaper to buy the rights than it is to develop a competing drug from scratch. Certainly it is potentially faster, provided that no negative surprises surface during trials.

The other potential problem, at least from an investor’s point of view, is government intervention. The laws protecting patented drugs could be relaxed, allowing generics to enter the market more quickly and reducing profits to patent owners.

Big pharma needs to figure out a way to guard against such changes, and perhaps the simplest solution is to partner with or buy a smaller company that is well into the late stages of clinical trials.

Biotech firms will also be doing more than just creating new drugs. It is almost certain that some firms, and probably the smaller ones, will be identifying genetic markers that will help determine who is likely to get a certain disease and how that person will respond to a specific drug.

The positioning for the next five years begins now.

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Article printed from InvestorPlace Media, https://investorplace.com/2010/02/shares-of-biotech-stocks-cyclacel-cycc-on-the-move/.

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