Drug Treatment Patent Comes at Prime Time for Hythiam

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A patent for a cocaine treatment awarded last week to Hythiam Inc. couldn’t have come at a better time for certain shareholders, given announced plans for a $26 million private placement of the company’s common stock.


The Los Angeles-based provider of substance abuse treatment services said Dec. 13 that it had signed a definitive agreement to sell 3.6 million common shares at $7.30 each. After the news broke a few hours later about the U.S. Patent Office grant, shares jumped 11 percent to close at $9.35 on the Nasdaq. The unregistered shares were sold to funds affiliated with existing investors and other institutional investors.


While the following day saw some mild profit-taking, Caris & Co. analyst Gene Mannheimer noted that investors in the private placement are still likely to see a much better than initial expected return on their investment. The $7.30 price was calculated as an approximately 10 percent discount to the company’s volume weighted average share price over the last 15 trading days.


“And once those shares become registered, they would be able to sell, though that’s unlikely for the most part since these are long-term investors in the company,” Mannheimer said.


Mannheimer and other analysts covering the firm cheered the patent announcement as a substantial positive for Hythiam, whose stock had a hard time getting traction due to concerns that its innovative Prometa substance abuse treatment protocols for cocaine, alcohol and methamphetamine abuse could be replicated by copycats.


“We anticipate (the patent) will accelerate adoption of our Prometa protocols,” said Chief Executive Terren Peizer, noting that clinical trial data expected to start coming in next year should further drive revenue growth.


The protocols involve administering three generic medications, including flumanzenil, and prescribed nutritional supplements in a specific sequence over two weekends in an effort to stop the cravings and side effects of withdrawal long enough to enable traditional counseling and group therapy to take hold.


The company also has patents pending for its other protocols, with the alcohol treatment considered the most difficult to obtain as there is existing precedent for using flumanzenil in alcohol treatment. Around half of patients currently treated at company-owned or licensed Prometa centers are for alcohol abuse, with methamphetamine abusers a small but growing client base at 20 percent.



Vision Plan Gets License


The California Department of Managed Health Care last month granted a Knox-Keene license to Los Angeles-based vision care benefits provider March Vision Care Inc. that will enable the husband and wife ophthalmologists who founded the company to move forward with ambitious expansion plans.


Since its launch in 2001 under another name, March Vision Care has been limited to contracting directly with insurers to provide their services. The license enables them to contract directly with employer groups, unions and other associations. Chief Executive and co-founder Glen March said the company’s 260,000 member base in California alone will jump to 330,000 on Jan. 1 based on pending contracts that were awaiting the state’s decision.


The company, the only African-American owned and managed vision care plan in the country, serves 800,000 members in California and five other states. It battles Sacramento-based vision care benefit giant Vision Service Plan, relying on a proprietary eyeSynergy management software developed by March and his wife Cabrini March. The Marchs say the program improves communication among members, doctors and health plans to provide preventive and ongoing care.


“We needed to make sure that when a member goes for an exam, they got a complete exam,” Glen March said. “We also want to make sure that the patient gets easy access to their medical records and the information gets to their primary care facility and their HMO, so if you need to get into a chronic disease management program that gets done.”



Amgen Continues Buy-Back


Directors at biotech giant Amgen Inc. last week authorized an additional repurchase of up to $5 billion in its common stock, a vote of confidence in the company’s long-term prospects even as others are questioning the long-term profitability of its flagship product line.


The Thousand Oaks company, which had $1.5 billion remaining under its previous stock buyback authorization, has seen its Epogen-Aranesp anemia treatments come under fire in recent weeks. A congressional panel earlier this month discussed whether to change how dialysis centers and doctors are reimbursed for prescribing Epogen in conjunction with kidney dialysis, which often leads to anemia.



Staff reporter Deborah Crowe can be reached at (323) 549-5255, ext. 232, or at

[email protected]

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