In this article, I will focus on three pharmaceutical companies that are seeing new growth catalysts which could push their share prices higher in the coming weeks and months. PROLOR Biotech (PBTH) engages in the development of proprietary versions of already-approved therapeutic proteins. Commencement of its Phase III study of hGH-CTP by the end of 2012 for adult growth hormone deficiency (GHD) and its focus on hGH-CTP in an ongoing Phase II study for GHD in children could prove to be significant growth catalysts. Opko Health's (OPK) next-generation prostate cancer test, 4kScore, could prove to be a significant growth catalyst. Lastly, I will focus on Regeneron Pharmaceuticals (REGN) and its Eylea (aflibercept) Injection, which has recently been approved by the European Commission for the treatment of patients with neovascular (wet) age-related macular degeneration (wet AMD).
PROLOR Biotech is a clinical-stage biopharmaceutical company applying unique technologies, including patented carboxyl terminal peptide, or CTP technology, to develop longer-acting proprietary versions of already approved therapeutic proteins that currently generate billions of dollars in annual global sales. Following an IPO earlier this year, the company has sufficient cash resources of $39.32 million to conduct late-stage studies of its product, known as hGH-CTP, in adults with growth-hormone deficiency as well as mid-stage testing on children with the ailment. PROLOR plans to cater to a $3 billion human growth hormone market as it attempts to become the first company to offer a longer lasting version of human growth hormone that could be injected once weekly. Currently, small children and adults with growth-hormone deficiency currently take daily injections of treatments such as Pfizer's (PFE) Genotropin, Novo Nordisk's (NVO) Norditropin, and Eli Lilly's (LLY) Humatrope. Earlier this year, the company's mid-stage study of hGH-CTP in adults showed that a single injection has the potential to replace seven consecutive daily injections of commercially available human growth hormone therapies.
PROLOR's technology would be a major improvement for existing treatments, and obviously a very attractive change for patients and physicians. It could be a potential acquisition candidate for any company that is in the business of providing short-acting hormone treatments. There is also a good chance that a number of larger companies would be interested in partnering with PROLOR. Phillip Frost, chairman of generic-drug maker Teva Pharmaceutical Industries (TEVA), currently owns about 20 percent of PROLOR.
According to the Human Growth Foundation, more than 50,000 adults in the U.S. are growth-deficient and 6,000 new cases are reported each year. The side effects of hormone deficiency can include increased fat mass, diminished muscle strength, physical energy and stamina. The company's CTP technology can be attached to a large range of existing therapeutic proteins resulting in stabilizing the therapy in the bloodstream and extending its lifespan without additional toxicity or loss of desired biological activity. It's GLP-1/Glucagon dual receptor agonist for Diabetes Type II has a potential market opportunity of $2 billion. It can be injected once a week and has the potential to have a dramatically better weight-loss profile than current GLP-1 therapies. PROLOR is also developing Factor VIIa and Factor IX for Hemophilia, which also has a potential market opportunity of $2 billion.
The U.S. Patent and Trademark Office issued a notice of allowance for a patent application covering the company's long-acting reversible-pegylation technology (RPeg). Upon issuance, the new patent will provide added intellectual property protection, including additional compositions and configurations of long-acting drug product, in addition to the already-issued U.S. patent covering the RPeg platform.
The Follicle Stimulating Hormone ("FSH") occurs naturally in women. Women with fertility problems have to be injected with FSH for seven days around the time of ovulation. This market is estimated to be in excess of $1 billion. There is no long-lasting FSH available on the market which would involve less frequent injections other than on a daily basis. However, the leading pharmaceutical company Merck (MRK) has used the CTP technology to extend the life of FSH. This would suggest that the technology has a lot of promise. Merck and Prolor hold the exclusive license from Washington University to utilize CTP technology. The Phase III clinical trials conducted by Merck with FSH-CTP have shown no adverse effects of toxicity or immunogenicity and require only one injection, compared to the seven injections required for the regular FSH. Merck has received marketing approval from the European Commission.
Because of the number of products in the development pipeline, there are a large number of upcoming catalysts that could have a positive impact on the stock price. The company expects to commence a Phase III study of hGH-CTP by the end of 2012 for adult growth hormone deficiency (GHD) and is looking at hGH-CTP in an ongoing Phase II study for GHD in children. If successful, hGH-CTP could be successful in the $2.5 to $3 billion hGH replacement market and substitute once-daily painful hGH injection with once-weekly injections of hGH-CTP.
PROLOR Biotech has managed to limit risk in two different ways. First, it is working with already approved therapeutic proteins. Second, it has spread its bets to optimize the chances of success. The company is currently trading around $4.78, between a 52-week range of $3.75 and $6.69. Investors should closely watch for any new developments surrounding the company's ongoing Phase II study of hGH-CTP for GHD in children.
Opko Health is a multi-national pharmaceutical and diagnostics company that aims to establish industry leading positions in large and rapidly growing medical markets. It intends to achieve this by leveraging discovery, development, and commercialization expertise combined with novel and proprietary technologies. It also intends to leverage its global commercialization expertise to capitalize on acquisitions of commercial businesses that will act as drivers for growth while providing geographically diverse sales and distribution opportunities. It has invested and will continue to invest in other early stage companies that possess valuable proprietary technology and have the potential to create significant value for OPKO Health as a stockholder.
The company focuses in particular on Point-of-Care Diagnostics Novel Molecular Diagnostics and Proprietary Pharmaceuticals and Vaccines. Since 2009, OPKO Health has accomplished national and cross-border acquisitions. OPKO Diagnostics develops innovative point-of-care diagnostics technology that transition in-vitro medical diagnostics tests from the laboratory to the physician's office. This technology allows the performance of complex laboratory quality assays in minutes with no training and at minimal cost. OPKO Chile markets, sells, and distributes pharmaceutical and nutraceutical products to private, hospital, and institutional markets in Chile. OPKO EU develops, manufactures and sells pharmaceutical, nutraceutical, and veterinary products throughout Europe. OPKO FineTech develops specialty active pharmaceutical ingredients (APIs) in Israel. OPKO Mexico manufactures, markets, sells, and distributes ophthalmic and other pharmaceutical products to private and public customers in Mexico. OPKO has a highly regarded management team and impeccable credentials that have successfully demonstrated a track record to build and manage pharmaceutical businesses. The Chairman and Chief Executive Officer, Dr. Phillip Frost, founded and served as Chairman and Chief Executive Officer of IVAX Corporation, a multi-national pharmaceutical company, from 1987 until the acquisition of IVAX by Teva Pharmaceutical Industries Limited and currently serves as Chairman of the Board of Teva.
Some of the company's other investments are described below. BioZone Pharmaceuticals is a publicly-traded company engaged in the manufacture and sale of several pharmaceutical and cosmetic products for a variety of conditions. In addition to holding convertible promissory notes from Biozone, OPKO holds a world-wide license for the development and commercialization of products utilizing Biozone's proprietary drug delivery technology. ChromaDex, a publicly traded entity, is a leading provider of proprietary ingredients and products for the dietary supplement, nutraceutical, food and beverage, functional food, pharmaceutical, and cosmetic markets. In 2011, ChromaDex launched BluScience, a line of dietary supplements based on pterostilbene, an antioxidant compound found in blueberries.
Cocrystal Discovery is a privately held biopharmaceutical company focused on the discovery and development of novel small molecule antiviral therapeutics tailored for the treatment of serious and chronic viral diseases, It is currently developing oral, small molecule, antiviral therapeutics for Hepatitis C and influenza. In 2011, Cocrystal and Teva Pharmaceutical Industries, Ltd. signed a Research Collaboration Agreement, an Exclusive License Option Agreement.
One of Opko's most promising treatments is called 4Kscore. Opko's next-generation prostate cancer test aims to reduce the incidence of biopsies by something like 50% through its new prostate cancer diagnostic test (called the 4KScore) which has just launched in Europe and should begin selling in the U.S. later this year. This test is being launched in the U.S. as a Laboratory Developed Test ("LDT") under FDA guidelines, and no additional FDA approvals are necessary. Urologists are in a difficult position now because, if a patient has a slightly high PSA score (a test for prostate cancer, the urologist is more or less compelled to recommend a biopsy which is painful and expensive and has recently become associated with a fourfold increase in serious infections. The biopsies themselves are costing insurance companies about $2,000 per procedure, and if the patient develops complications, hospitalization is expensive. Around 75% of these biopsies show negative results and are therefore unnecessary in the first place. Opko's new diagnostic test gives urologists a more accurate tool for predicting prostate cancer. The revenue potential for this test is huge and even if Opko can capture a substantial portion of the market (a not unreasonable assumption); we are looking at potential multibillion-dollar revenues. While some of Opko's businesses are profitable, the company is still burning cash though the cash on hand should be sufficient for at least one year's operations.
Opko Health is an unusual company in that it concentrates on investing in other promising companies instead of developing new drugs and treatments under its own umbrella. I believe there is a great deal of potential for success because so many of these investments could pay off big. Opko Health has been trading around $4.83, between a 52-week range of $4.00 and $5.53. Investors should watch for new developments surrounding the release of the company's 4Kscore prostate cancer test in the U.S. The U.S. market presents a significant sales opportunity for this treatment, and the release will positively impact Opko Health's share value.
Regeneron Pharmaceuticals has recently announced that its Eylea (aflibercept) Injection has been approved by the European Commission for the treatment of patients with neovascular (wet) age-related macular degeneration (wet AMD). Eylea treatment is to be initiated with one 2 milligram injection per month for three consecutive months, followed by one injection every two months and there is no requirement for monitoring by the physician between injections. After the first twelve months of treatment with Eylea, the treatment interval may be extended based on visual and anatomic outcomes. Eylea was approved for the treatment of neovascular (wet) AMD in the United States in November 2011 and in Japan, Australia, Switzerland, and other countries this year. Bayer HealthCare and Regeneron are collaborating on the global development of Eylea, and Regeneron maintains exclusive rights to Eylea in the United States. Bayer HealthCare has licensed the exclusive marketing rights outside the United States. Bayer HealthCare plans to launch Eylea in these countries later in 2012 and into 2013. In the United States, Eylea was also approved for the treatment of Macular Edema following Central Retinal Vein Occlusion (CRVO) in September 2012.
Vascular Endothelial Growth Factor (VEGF) is a naturally occurring protein in the body. In a normal healthy organism, its role is the formation of new blood vessels supporting the growth of the body's tissues and organs. However, in certain diseases, such as wet age-related macular degeneration, it is also associated with the growth of abnormal new blood vessels in the eye and often results in scarring and loss of fine-resolution central vision. Eylea is a recombinant fusion protein that binds VEGF-A and placental growth factor (PlGF) and thereby can inhibit the binding and activation of these cognate VEGF receptors.
Regeneron Pharmaceuticals has been reiterated by TheStreet Ratings as a buy. The strengths of this company can be seen in many areas such as its robust revenue growth, solid stock price performance, impressive growth in net income and earnings per share and largely solid financial position with reasonable debt levels by most measures. I believe these strengths outweigh the fact that the company shows weak operating cash flow. Regeneron should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year. The net income growth from the same quarter one year ago is significantly in excess of the S&P 500 and the Biotechnology industry. The net income increased by 222.8% when compared to the same quarter in 2011, rising from -$62.51 million to $76.74 million. The company is now forecasting 2012 U.S. Eylea net product sales of $790 to $815 million.
In addition to the Eylea (aflibercept) Injection, Regeneron markets two other products in the United States Zaltrap (ziv-aflibercept) Injection for Intravenous Infusion, and Arcalyst (rilonacept) Injection For Subcutaneous Use; Zaltrap is co-commercialized with Sanofi while Phase III studies are in progress with EYLEA in two more indications and with product candidates sarilumab and Regn727. Regeneron has an aggressive research and development programs in many areas of diseases, including ophthalmology, inflammation, cancer, and hypercholesterolemia. Zaltrap is a treatment that is used in conjunction with the chemotherapeutic agent Folfiri in patients with metastatic colorecal cancer who have already received an oxaliplatin-containing regimen. Sales in the United States have been modest, but experts are expecting the number to explode in coming quarters because of the benefits of the partnership with Sanofi (SNY).
Regeneron has been trading around $176.55, toward the top of a 52-week range of $50.27 and $188.95. While Regeneron stock may seem overpriced, it has the benefits of its partnership with the two pharmaceutical giants Bayer and Sanofi. This is a highly promising growth stock, and investors should consider buying now.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.