Biotech Weekend Recap: Frustration And Disasters

by: Bio Insights

Here is a recap of some of the major events that moved the biotech stocks mentioned below in the trading week of November 12-16th 2012. This should brief you on the most important events that the market had its eye on as they occurred throughout the week. Whether you have any positions in the stocks mentioned in the article, or whether you are just trying to keep up to date, I hope this helps you:

First we have to discuss the interesting development and the big disappointment that Amarin Corp. (NASDAQ: AMRN) shareholders saw this week. As described in a recent article, Amarin got a big lift on Thursday (November 15th) in reaction to new information that Teva Pharmaceuticals (TEVA) was considering an acquisition of Amarin Pharmaceuticals', attempting to add the FDA-approved and soon-to-be marketed drug Vascepa into its stagnant drug pipeline. We also know that AstraZeneca (AZN) was considering an Amarin acqusition for the same exact reason.

As admitted by Amarin, the NCE status of Vascepa has been a major hindrance during M&A talks. Five years of drug exclusivity (with the FDA's NCE designation) versus three years (without) warrants a much higher valuation for Vascepa. Investors have been concerned with this specific designation ever since FDA approval in July, and many were expecting the FDA to finally provide a decision in its last monthly update to the Orange Book (which was on November 16th.) Unfortunately, no decision was made and the frustration continues.

Going forward, investors will have to consider two likely outcomes as the launch period for Vascepa approaches (Q1 2013.) Either Amarin will have to accept an offer with the assumption that Vascepa does not receive an NCE status (I find it unlikely that a company would buy Vascepa with a 5-year exclusivity assumption at this point), or the company will have to bring its pill to the market alone. The other option that was discussed by the company (the possibility of a partnership between them and another company) is also possible, although Amarin seems to be receiving more interest in an outright acquisition at this point. It's very frustrating for both Amarin and its shareholders, and even the companies that were interested in the deal to begin with.

Although Amarin buyers may seem to be unlucky lately, shareholders of Dynavax Technologies Corporation (DVAX) had it much worse last week. In reaction to an advisory committee meeting on the BLA that was submitted earlier in the year for its flagship biologic compound Heplislav (for Hepatitis B patients), shares got shaved for over 57% of their value on Thursday (November 15th.) The U.S. Food and Drug Administration (FDA) Vaccines and Related Biological Products Advisory Committee met between November 14-15 to discuss and vote on the BLA that has a PDUFA action date of February 24, 2013.

The recent phase III clinical trials (known as the "Booster" trials) were scrutinized for both efficacy and safety, which caused the general consensus that the drug had an extremely favorable efficacy profile with a questionable safety profile. This is supported by the vote of 13-1 in favor of the efficacy of Heplislav, and the vote of 8-5 (with one abstain) against the approval of the BLA in its current form. It's not clear whether the stock is finished with the reaction-based selling yet, but clearly Dynavax shareholders are anxious at this point due to the importance of Heplislav to the company's prospects.

We also saw a very unfortunate week for shareholders of ACADIA Pharmaceuticals (ACAD), who saw an orderly 16% decline since the start of the week that reflects increased skepticism over the upcoming phase III results for the company's flagship drug pimavanserin in the treatment of Parkinson's Disease Psychosis (PDP). The hype over ACADIA is based on pimavanserin's prospects, which could be astronomical given the large number of patients that have Parkinson's Disease that have no alternative treatment options. Unless the company delays the data release, we should see them before the end of the month - I'd expect the stock to react dramatically to the positive or negative results we may see due to a lot of pent-up anticipation.

Not every move was a disaster though. A relatively obscure name in the biotech equities market, AcelRX Pharmaceuticals (ACRX) posted strong phase III clinical trial for its pain-treating Sufentanil tabs, which demonstrated non-inferiority to morphine for patients that were on pain medications. Shares hit a new 52-week high of $4.55/share at the start of trading on Thursday, November 15th, but gave back most of the gains to end the week at $3.65/share. This correction can be attributed to profit-taking from the shareholders that bought into AcelRX earlier on, eager to capture the sizable gains that have been made.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.