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Speaker 1: This is a Bloomberg Business Flash Strom, Bloomberg World Headquarters.
Speaker 1: I'm Charlie Pelota. A mixed picture for stocks. The SMP
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Speaker 1: cents for barrel of West Texas Intermediate crude. I'm Charlie
Speaker 1: Palett and that's a Bloomberg Business Flash. You're listening to
Speaker 1: Taking Stock with Kathleen and pin Box on Bloomberg Radio.
Speaker 1: Dr Philip Frost is a physician a dermatologist who has
Speaker 1: become a billionaire investor as the chairman and CEO of
Speaker 1: UPco Health, one of the most respected entrepreneurs in healthcare.
Speaker 1: He sat down with taking Stock to discuss his company's
Speaker 1: product pipeline, his views on drug pricing, and what his
Speaker 1: current outlook is for the pharmaceutical industry. I think we're
Speaker 1: living in a very special time in the history of
Speaker 1: the pharmaceutical industry and then the history of man for
Speaker 1: that matter. For the less one years, we've been accumulating
Speaker 1: the technological infrastructure that has permitted the stepwise the helpment
Speaker 1: of more and more specific, more and more effective drugs.
Speaker 1: And we're at the point now where there's enough critical
Speaker 1: mass of technology with enough people working in the field
Speaker 1: so that they can bring together these new resources to
Speaker 1: create all kinds of therapy. So within the next ten
Speaker 1: twenty years, I imagine that a lot of the conditions
Speaker 1: that were not approachable will all of a sudden be
Speaker 1: treatable and curable. We see little by little that happening.
Speaker 1: So from our point of view, we are very excited
Speaker 1: to be able to participate that in whatever way we can,
Speaker 1: even if it's a small part, but there is a
Speaker 1: lot to be done and we're excited. Well, give us
Speaker 1: an update on some of the drugs that you have developed,
Speaker 1: and I'd like to start with four key score because
Speaker 1: is potentially a game changer for anyone who is unfortunate
Speaker 1: to come down with aggressive prostate cancer. You're absolutely right.
Speaker 1: The four case square was developed in large measure right
Speaker 1: here in New York at Memorial Slumpcuttering Hospital by Peter
Speaker 1: Scardino and his team. Peter was at the time the
Speaker 1: head of the urology section. Now he's the head of surgery,
Speaker 1: but he, working with a team in Finland who had
Speaker 1: been added for at least a dozen years, perfected the test,
Speaker 1: which involves using four different enzymes that a man produces
Speaker 1: in his g US system, one of which is the
Speaker 1: p s A, a test that has been maligned recently,
Speaker 1: but the other three are in the same category called
Speaker 1: calicrons as the p s A. Two of them are
Speaker 1: proprietary to OpCo and occur in the blood primarily when
Speaker 1: there is a serious prostate cancer present, unlike the p
Speaker 1: s A, which is more associated with a benign conditions.
Speaker 1: So the bottom line is that the four case score,
Speaker 1: a simple blood test that we can perform in our laboratories,
Speaker 1: will permit you to identify a man who has a
Speaker 1: serious cancer in the making, a serious press cancer, and
Speaker 1: so that that's the man that you want to watch
Speaker 1: carefully and possibly treat. And the problem, of course is
Speaker 1: that the p s A results in over seventy false
Speaker 1: positives in the sense that they either have no disease
Speaker 1: on biopsy or a benign indolent form that doesn't need
Speaker 1: to be treated. So this net effective. This is that
Speaker 1: we can avoid more than fifty of the biopsies that
Speaker 1: are now done. And I'm told that this is one
Speaker 1: of the most unpleasant experiences a man will ever go through,
Speaker 1: and at the same time pick up the important cancers
Speaker 1: if they're present, and at the same time save the
Speaker 1: health system a lot of money from the needless biopsies
Speaker 1: and the consequences of bleeding and infection and so forth.
Speaker 1: So there's the physician talking, the scientists talking. What about
Speaker 1: the businessman. Because you can have the best drug, the
Speaker 1: best test in the world, and if you can't get
Speaker 1: something like a local coverage determination, if you can't get
Speaker 1: Medicare to say we'll pay for this so that other
Speaker 1: physicians and hospitals will pay for it, it's tough to
Speaker 1: get it to the people who need it, and it's
Speaker 1: tough to make money. So that's very, very true. But
Speaker 1: we're extremely confident because the data is so compelling. There
Speaker 1: are over a dozen UH publications in peer review journals
Speaker 1: from all over the world. It's been given the stamp
Speaker 1: of approval by the A m A, by the NCC
Speaker 1: and the National Cancer Board that determines these matyrs and
Speaker 1: other prestigious groups. The data is so overwhelming that we've
Speaker 1: think that the re that the payers will up for reapprosement,
Speaker 1: and we are already getting payment for many of the
Speaker 1: important payers. Just recently, there were a few missteps one
Speaker 1: of the so called max of which there is more.
Speaker 1: There are perhapsimately a dozen around the country. These are
Speaker 1: the agents that are contracted by Medicare to evaluate new tests.
Speaker 1: One of them came up with a positive opinion A
Speaker 1: AN L C D, and the next day another one
Speaker 1: came with a negative, after which the first positive one
Speaker 1: was withdrawn. This is what I consider a misstep or
Speaker 1: not necessarily in our part, because we never really submitted
Speaker 1: the data for them to consider. So everyone is aware
Speaker 1: of this and we're in the process of dealing with that. Eventually,
Speaker 1: it has the opportunity, I think, to become, from an
Speaker 1: economic point of view, one of the more important tests
Speaker 1: in the history of the diagnostics business. So what does
Speaker 1: it do for your bottom line? Eventually? I think it
Speaker 1: will be a very important contributor, a very important acquisition
Speaker 1: for you. Last year, bio Reference the third largest full
Speaker 1: service reference laboratory in the United States. How it's doing
Speaker 1: since you acquired it, and how it fits into the
Speaker 1: overall strategy and growth plan for OpCo Health. Well, this
Speaker 1: is a perfect example of the type of acquisition that
Speaker 1: we're interested in doing any day of the week. It
Speaker 1: added over a billion dollars of annual sales and it's
Speaker 1: going to add a lot of profit. But even more important,
Speaker 1: from a strategic point of view, it's going to permit
Speaker 1: the more rapid marketing and sales and uptake of the
Speaker 1: four case score, which, as I had mentioned, has the
Speaker 1: opportunity for being one of the most important tests in
Speaker 1: the history of the industry. And it will become an
Speaker 1: outlet for many of the new diagnostic products that we have.
Speaker 1: While on its own, it's growing with their normal business,
Speaker 1: one part of which is particularly exciting, and that's genomic testing.
Speaker 1: They are probably doing more gene sequencing than any company
Speaker 1: in the industry right now, and that part of the
Speaker 1: business is growing more quickly, and it's a more profitable
Speaker 1: part of the business than the rest of it. In retrospect,
Speaker 1: was a tremendous acquisition, both from a straight economic point
Speaker 1: of view as well as a long term strategic point
Speaker 1: of view. Revenue of two fifty million dollars in the
Speaker 1: first quarter of this year, you say, if you get
Speaker 1: much bigger, well we're going hours. We anticipate that it
Speaker 1: will be well over a billion dollars for the calendar year.
Speaker 1: Just switching gears a bit, but certainly pricing, selling, marketing.
Speaker 1: Valiant Pharmaceuticals a poster child now for a predatory pricing
Speaker 1: model using that to boost growth. Has that hurt the industry?
Speaker 1: Has it? How does it affect what you do or
Speaker 1: don't do? You know, I've been giving that a lot
Speaker 1: of thought lately because there's so much discussion about pricing
Speaker 1: in the industry, and you know that there are always
Speaker 1: opportunities to exploit a given a situation to the disadvantage
Speaker 1: of the patient and and payers. My experience and observation
Speaker 1: is that in general the industry is highly ethical and
Speaker 1: very very much sensitive to the needs of patients and
Speaker 1: the players and the health system in general. But my
Speaker 1: thought was that looking at our product, for example, it
Speaker 1: costs a hell of a lot to develop a drug,
Speaker 1: both in human terms the time and energy of a
Speaker 1: large number of people and a lot of money, and
Speaker 1: there's a lot of risk associated with it. We all
Speaker 1: know that of the drugs that are started in development,
Speaker 1: a tiny percentage point up coming to market. So taking
Speaker 1: all that into account, if the companies are to be
Speaker 1: profitable so that they can continue to do the research
Speaker 1: and turn out these good products that are going to
Speaker 1: be breakthroughs in medicine and future, they need to make
Speaker 1: a profit. So the prices that I'll admit seemed very
Speaker 1: high for many products most often have a tremendous justification
Speaker 1: behind him. That was Dr Philip Frosty is the chairman
Speaker 1: and the chief executive of up Go Health. Up Go
Speaker 1: Health that shares down a little bit more than seven
Speaker 1: and a half percent so far this year. And Kathleen,
Speaker 1: I know in speaking with the Dr Frost, he's got,
Speaker 1: of course, of major interest in the success of the
Speaker 1: company because he owns nearly thirty percent of the stock
Speaker 1: of UPco Health. You know him. He is such an
Speaker 1: impressive man, uh well along in life and so focused
Speaker 1: and so innovative and and looking for the next successful,
Speaker 1: profitable and very helpful to mankind treatment and drug whatever
Speaker 1: it is. He's well, very interesting conversation about the new
Speaker 1: test for prostate cancer and his thoughts on drug some issues.
Speaker 1: You're listening to taking Stock. I'm Pim Fox my co
Speaker 1: host Kathleen Hayes, and you're listening to Bloomberg Radio.