Four promising companies to watch

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Based on strong product pipelines, positive clinical data and impressive partnerships with big drug companies, The Motley Fool profiles four small biopharm companies that could emerge as major players--and good investments.

Array BioPharma - Array BioPharma is developing small molecule drugs to treat cancer and inflammatory disease. The company has five Phase I drugs and two more in preclinical trails. It also counts Amgen, Genentech, Takeda, Eli Lilly, and AstraZeneca among the companies that fund its drug development machine, and Array has raked in a number of milestone payments over the last few years. Because of an overabundance of early-stage assets, the company says it will out-license them to other developers over the next three years, which could help the company earn some serious cash. "Even though it is burning cash and has no compounds on the market, Array clearly has the potential to become a biotech-research powerhouse with so many novel drugs in development," notes Brian Lawler of The Motley Fool.

ViroPharma - ViroPharma and Wyeth are working on a new class of hepatitis C drug that is in Phase II testing. Early-stage testing of the drug was impressive: After 14 days of doses of HCV-796 with another therapy patients had an average viral reduction close to 100 percent. And following a rough patch a few years back, ViroPharma engineered a turn-around by acquiring profitable drug Vancocin and hiking its price; Wall Street loved the move and awarded ViroPharma accordingly. In addition to the hepatitis C program, ViroPharma is developing Maribavir, an antiviral for transplant patients that was fast-tracked last year.

Alexza - Alexza is taking a different approach to drug development. Rather than creating new drugs from scratch, the company is developing inhalable versions of generic drugs for use with its Staccato System, a device that atomizes therapeutics for inhalation. The company is formulating inhalable versions Xanax (for panic attacks), fentanyl (for pain), Loxapine (for schizophrenia) and Prochlorperazine (for migraines). The company says 200 drug compounds have been identified that may work with the Staccato System. As The Motley Fool observes, Alexza's pipeline is limited only by its budget. But the has certainly caught the attention of investors: late last year Symphony Capital Partners gave Alexza $50 million for the development of two of its drugs.

Progenics Pharmaceuticals - Progenics and its development partner Wyeth are waiting on an FDA approval for a subcutaneous version of the company's methylnaltrexone compound to treat opioid-induced constipation. An oral version--which is likely to be a blockbuster--is in Phase I trials and could hit the market as early as 2009 if all goes well. Another promising candidate is the HIV drug PRO 140; the FDA fast tracked the drug early last year. PRO 140 is a monoclonal antibody in the same class of drugs as Pfizer's newly-approved Maraviroc.

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