When drug companies release information on the development of new drugs, investors pay close attention.

Genentech released Phase 3 Avastin data on March 15, 2005, and the stock rallied from $47 to more than $100 in just months… Pfizer patented Viagra in 1996. It ran from $10 in 1996 to more than $50 after FDA approval — a 500% gain in just three years…

And just this past July, when investors got word that Adeza Biomedical received priority review status, the stock spiked 13.3% in three hours…and that was just a press release!

So imagine what could happen to this $4 stock if it releases positive Phase 3 drug news for the prevention of preterm births in February…

As of late, Columbia Laboratories (CBRX: NASDAQ) wrapped up its enrollment in a 669-patient Phase 3 study to evaluate Prochieve 8% for the prevention of recurrent preterm birth. The trial is expected to conclude this month and results are due out mid-February 2007. Any positive news could draw a lot of investor attention to the stock. 

Our preterm birth discussions are nothing new. In fact, we’ve spoken in-depth about the issue with regard to Adeza Biomedical earlier this year. Unfortunately for Adeza, news that further FDA action was subject to the completion of more animal studies sank the stock. 

However, this is a positive for Columbia Laboratories, as it files “PROCHIEVE 8% for recurrent preterm birth based on results from the PROCHIEVE preterm study,” according to the company. It also lists another positive for CBRX… “In August, the FDA’s Reproductive Drug Advisory Committee voted 20 to 1 that a reduction in the incidence of preterm birth at 32 weeks gestation is an adequate surrogate for reduced infant mortality and morbidity. This also bodes well for Columbia, because the reduction of preterm birth at 32 weeks is the primary endpoint of its Phase III PROCHIEVE preterm study.”

Why a Solution Is Urgently Needed…

Unbelievably, there is still not an accurate test to assist doctors in determining an accurate induction date, resulting in an increase in preterm infants. But there is a large and growing demand from the medical community to find an accurate way to predict induction dates…and is precisely why a solution is needed now.

In August 1963, a pregnant Jacqueline Kennedy went into labor…five-and-a-half weeks too soon. Unfortunately, because of lung disease brought on by preterm complications, the child died just two days later, according to Patrick Bouvier Kennedy’s obituary.

By 2002, according to MSNBC, “the U.S. premature birth rate grew to 12 percent in 2002, a 29% jump over the previous two decades, according to the FDA. The rate has increased as older women get pregnant and the use of fertility treatments grows, the FDA said.”

By 2003, 28,000 babies died before their first birthday because of preterm labor complications, according to the National Center for Health Statistics. And, according to TradingMarkets.com, “It is estimated that over $18 billion in costs were associated with preterm or low birth-rate infants in 2003. According to The New England Journal of Medicine, preterm birth has historically accounted for up to 85% of all pregnancy complications and deaths in the U.S.”

Worse yet, by 2003, preterm births were major costs for the U.S. healthcare system. According to the March of Dimes, at this time “Hospital charges for all newborns in the U.S. was $36.7 billion. Nearly half of that — $18.1 billion — was for premature/low birth-weight babies.”

By 2005, according to the National Center for Health Statistics, preliminary numbers showed that the number of babies born before 37 weeks was more than 525,000. That now increases the preterm birth rate to 12.7% of all births, and marks the fifth straight year of increases. Even worse, according to the report, “Births: Preliminary Data for 2005,” 80,000 infants were born “very preterm, less than 32 completed weeks of gestation…”

By 2006, the reasons for preterm birth were still greatly shrouded in mystery, taxing the U.S. healthcare system and costing U.S. taxpayers up to $26.2 billion a year, or “$51,600 per infant,” according to Newsweek. Worse, according to The Washington Post, “scientists now say one-third of infant deaths are because of premature births — a much larger percentage than previously thought.” In fact, previous preterm statistics were listed in “fewer than 20 percent of newborn fatalities. But that rate should be 34 percent or more, said researchers at the U.S. Centers for Disease Control and Prevention.” 

Thankfully, Congress just approved the PREEMIE Act, which will increase federal support for pre-term research and education. The Act, according to Web site Chattanoogan.com, calls for: “Expansion of prematurity research at the Centers for Disease Control and Prevention (CDC); studies on the relationship between prematurity and birth defects and developmental disabilities; a grant program to educate health professionals and the public on signs of preterm labor and to provide support for parents with a premature baby in a neonatal intensive care unit; a Surgeon General’s conference on preterm birth which will establish an agenda for prematurity-related activities in both the public and private sectors.”

Demand Is Strong

Demand for a drug that could (at least) lower preterm birth numbers is there. Once a drug shows positive data, is approved, and goes to market, you can be sure that sales will skyrocket. Imagine what’ll happen to a small $4 company if it releases positive Phase 3 data in mid-February, gets FDA approval and goes to market. This could easily be a double-digit stock with those scenarios.

Columbia Laboratories looks like a solid buy under $5.50.

Take care,

Ian Cooper
December 26, 2006

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