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Executive Summary

Syntex' sales of Naprosyn and Anaprox in the U.S. declined 2% during the company's fiscal second quarter ended Jan. 31 to $121.3 mil., the company reported Feb. 22. Worldwide Naprosyn/Anaprox sales grew 3% during rhe quarter to $178 mil., fueled by continued growth of the nonsteroidal anti-inflammatory products outside the U.S. Overseas sales of Naprosyn (naproxen) and Anaprox (naproxen sodium) increased 13% over the comparative period in fiscal 1988 to $56.7 mil. The 3% gain in worldwide naproxen sales compares with a 25% sales increase during the first quarter of fiscal 1989. The decline in naproxen sales during the second quarter is the product's first drop in U.S. sales in at least five years. The product was launched in 1976. Explaining the decline, Syntex pointed to increased competition in the U.S. NSAID market combined with a reorganization of the company's U.S. sales force. Syntex noted that there was "increased competition in the market for prescription antiarthritic drugs in the quarter, and very little market growth." Ciba-Geigy's nonsteroidal anti-inflammatory agent Voltaren (diclofenac) has reportedly shown steady market share gains since the product's launch last fall. Industry sources give Voltaren roughly 11% of the U.S. NSAID market after just six months. In addition, Upjohn's new nonsteroidal anti-inflammatory agent Ansaid (flurbiprofen) was launched in January and is understood to have won 2-3 percentage points in the $3 bil. U.S. NSAID market, which despite the new product entries, has flattened. "We believe that the sales force reorganization, coming at the same time that we faced two new competing prescription drugs in the anti-arthritic marketplace, caused some of the slowdown in our U.S. sales in the second quarter," Syntex Chairman and CO Albert Bowers said. "We expect, however, that the reorganization will place us in a much stronger position both to meet competition and to successfully introduce new pharmaceutical products in additional therapeutic areas." Syntex is currently in the midst of its U.S. launch of the recently approved calcium channel blocker Cardene (nicardipine), which will be available by March 1. The introduction of Cardene is the company's first step into the cardiovascular marketplace and paves the way for Syntex' highly acclaimed experimental drug for strokes, Ticlid (ticlopidine). Syntex is approaching an NDA submission for Ticlid in the U.S.; the company has predicted a filing in "early" 1989. Last October, Syntex divided its 700-person U.S. sales force along therapeutic lines in anticipation of the Cardene launch. The company also said it plans to expand its sales force by nearly 50% in the next year to about 1,000 reps in the U.S. ("The Pink Sheet" Nov. 14, T&G-4). In addition to Ticlid, Syntex has at least two other NDAs pending for significant new drugs, including the non-narcotic analgesic Toradol (ketorolac) and the prostaglandin anti-ulcer agent Gardrin (enprostil). Syntex reported a 6.7% increase in second quarter sales to $330.9 mil. while net earnings grew 4% to $83.5 mil. For the first six months of the company's fiscal year, net earnings were up 14.3% to $178 mil. on a 10.5% sales increase to $680.8 mil. Pharmaceutical sales were up 5% in the second quarter to $292.3 mil. Contraceptive and dermatological product sales were both up 5% to $27.3 mil. and $26.8 mil., respectively. Diagnostic sales during the second quarter grew 21% to $38.6 mil. Cal Bio announced plans to begin its own trials for recombinant fibroblast growth factor (FGF) for wound healing by the fourth quarter of this year. Noting that a reduction in operating losses is an "important goal" in 1989, Cal Bio President Richard Casey nevertheless predicted an operating loss in the coming year due "in part to the company's decision to begin its own clinical manufacturing and Phase I clinical trials of fibroblast growth factor for wound healing by the fourth quarter of the year." Cal Bio has outlicensed recombinant FBF to Organon for Alzheimer's and other degenerative diseases and to Kaken for development and marketing in Japan. Cal Bio also announced a licensing agreement with DuPont covering phospholipase A2, an enzyme involved in certain inflammatory processes. Under the agreement, DuPont will use PLA2 technology to develop potential inhibitors of the enzyme for use in arthritis and other inflammatory conditions. DuPont will have worldwide rights to products developed from the research. Cal Bio's Australian subsidiary, Pacific Bio, has rights to develop antibodies to PLA2 to treat septic shock. For 1988, Cal Bio reported revenues of $13.5 mil., up 85% over 1987, and investment and other income of $3.3 mil., down from $4.5 mil. in the previous year. The company's operating loss in 1988 was down to $8.4 mil., from $14.4 mil. in 1987, and net loss dropped to $7.9 mil., from $8.5 mil. "During 1988, Cal Bio began implementation of its new strategic plan, designed to focus research in a limited number of areas and bring resulting products to market as rapidly as possible," Casey said. "The company developed aggressive timelines for focus area projects, actively sought major new commercial partners and conserved cash resources through emphasis on cost containment." Chart omitted.

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