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MINIMED — MiniMed Recovering From Delay in Product Testing

The mid-June catastrophe for high-flying biotech firm MiniMed Inc. appears to be blowing over nearly as quickly as it started, with Chief Executive Alfred E. Mann saying the research report that caused the company’s stock price to plummet was overblown and taken out of context. A research report released June 9 stated that the Food and Drug Administration would require an additional seven months of testing on a forthcoming diabetes product from MiniMed. Wall Street pummeled the stock in response; it fell 27 percent to $96.50 a share on June 12. But on the strength of continued recommendations from analysts, MiniMed has already won back much of the ground it had lost. As of late June, the stock was trading back up above $105 a share. Mann, founder of MiniMed and one of L.A.’s wealthiest residents, said the FDA will require the company to do minor additional tests, which could tack an additional month onto the approval process, not the seven or more months predicted by two analysts. “It was taken out of context,” Mann said. “There could be delays, but the company plans to move ahead and has gotten no word from the FDA that there will be major delays.” MiniMed, which makes external insulin infusion pumps for the treatment of diabetes, is developing a pre-filled insulin cartridge that ING Barings analyst Kevin Kotler said would be delayed until late 2001 or early 2002 because of additional clinical trials required by the FDA. That delay, in turn, will affect the company’s expected revenues for 2001, Kotler said. Approval had been expected in mid-2001. But Mann, who along with other company officials met with FDA officials June 9, said the new tests required by the agency are minor. The most cumbersome of the requirements is a three-day overnight study on patients to test delivery of the new insulin product. Mann said the company is hoping to complete the tests by early next year, with FDA approval coming later in 2001. Mann and Kotler actually don’t disagree on the timing of the approval process simply on when Wall Street was supposed to be expecting the new cartridge to get the nod. Mann said some analysts have been overly aggressive in their predictions that the product would be approved in early 2001. He said MiniMed has all along been expecting to put the product on the market in early 2002, and there are no expected changes in that time frame. Nonetheless, Kotler says that while MiniMed may have been targeting early 2002 for the product’s release, analysts had expected it earlier. Now that it is clear that won’t happen, it will change the revenue models used by Wall Street analysts, Kotler said. “What the Street was expecting and what Al Mann was expecting may be different, but what the Street expects is more important because it’s what investors were watching,” Kotler said. Yet many investors seem to have already gotten over the temporary shock caused by the June 9 report. With the stock price rising steadily ever since, many analysts agree MiniMed is a good buy.

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