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Regulatory Fast Track and Merger Make GPC Biotech AG (GPCB) ADR an Attractive Investment

The United States Food and Drug Administration (FDA) has put an experimental drug from one of the company’s key research programs on a fast track for approval. The European Commission has taken similar action by granting one of this company’s discoveries special status. Discounted values of future cash flows from this ADR have improved considerably as a result of the rapid progress the company has made in the new drug development and approval processes. The Biotechnology & Drugs Industry is normally beset with investment risks, since regulators refuse approvals for so many candidate drugs. The chances of this company making it to market with its pioneering approaches appear to be very good.

Heavy metals have been used in medicine for decades, but this company is the first to develop an oral formulation of a platinum-based compound for chemotherapy. The company also has a novel monoclonal antibody under test. This drug has the potential to treat lymphomas and leukemia, which take so many lives today. The management has taken a route of testing its candidate products along with other cancer therapies. This approach has both technological and business benefits. Patients and investors both stand to gain if the company’s new technologies combine well with other routes to the successful management of serious diseases.

There are two financial reasons to support this ADR, apart from its attractions in promising better healthcare. One relates to its base in the Euro zone of Germany. The ADR is a relatively safe hedge against continued deterioration of dollar values. Secondly, the company is close to a merger. The latter will take this company into the kidney cancer space, where it has been absent until now. Short term cash flows are also expected to improve as a result of this merger.

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