When Generex (GNBT: NASDAQ) was granted fast-track approval for its flu vaccine, the stock ran up 400%…

After Genentech (DNA: NYSE) released Phase III Avastin data on March 15, 2005, the stock rallied from a low of $47 to more than $100 in just months.

Just this past July, when investors got word that Adeza Biomedical (ADZA: NASDAQ) received priority review status, the stock spiked 13.3% in three hours…and that was just from a press release! If the stock did that when it was granted priority review status, imagine what it will do when its drug, Gestiva, is approved.

Gestiva would be the “only” commercially available drug approved by the American College of Obstetricians and Gynecologists and the FDA for the prevention of recurring pre-term birth problems that have plagued women for years.

Unfortunately, even today there’s not an accurate test to assist doctors in determining an accurate induction date, resulting in an increase of pre-term 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 the FDA granted one company priority review.

Note: Pre-term birth is defined as delivery before 37 completed weeks of gestation. And if a company is granted priority review designation, that’s a huge deal. You see, the FDA only grants priority review to products that are considered to have significant improvements in the treatment, diagnosis, or prevention of a disease as compared to products currently on the market.

Why a Solution Is Needed Urgently…

In August 1963, a pregnant Jacqueline Kennedy went into labor…five and a half weeks too soon. Unfortunately, because of respiratory distress syndrome brought on by pre-term 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 pre-term 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 pre-term or low birth-rate infants in 2003. According to The New England Journal of Medicine, pre-term birth has historically accounted for up to 85% of all pregnancy complications and deaths in the U.S.”

Worse yet, by 2003, pre-term 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 the time 2005 rolled around, one out of every eight babies was born prematurely.

By 2006, the reasons for pre-term 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 pre-term 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.”

If all goes according to plan, on October 20, 2006, that could all change when that much-anticipated drug gets FDA approval. The best part — all signs point to FDA approval after the FDA’s Reproductive Health Drugs Advisory Committee gave the green light for Gestiva. Data, according to the advisory committee, “is adequate and sufficiently reassuring to support marketing approval in women with a history of pre-term delivery.”

While the FDA is not bound by the panel recommendation, they oftentimes do follow them.  We’re confident of approval around October 20, 2006. When this happens, the drug could very well help save at least 350,000 babies a year…and that’s just in the U.S. I haven’t even mentioned the global market.

Take care,

Ian Cooper
October 10, 2006

Investing in Pre-Term Birth Medicine was originally featured in the Penny Sleuth.