Here's a quick look inside a number of biotech players that have seen serious action recently, or that are due for a closer look in the near term.
(TROV)
Stock in TrovaGene Inc. is getting a lot of attention these days, as the company's shares have been making new highs nearly every week for the last three and a half months. From lows set at the end of August just above $2.00, the stock has climbed rapidly to close at new highs of $6.25 this week. That's a full 25% higher than they were trading just three short sessions ago (see chart below).
So what's the news that's moving the stock?
It appears the market is getting excited about three separate issues, if, indeed, expanding volumes are indicative of excitement.
Take a look here:
(click to enlarge)
Trade on TROV jumped far above its average daily pace of 50,000 shares, registering three straight days of volume averaging 250,000 shares - a five fold increase, and the first time since July I have seen anything like this kind of interest in the stock (red box).
Those three issues, in no particular order, are:
The upcoming launch of the company's diagnostic for KRAS mutations, which offers advance warning on potential pancreatic carcinomas, is set for this January. Several other of the company's diagnostic products will advance to commercialization in the months that follow.
- Aegis Capital initiated coverage on the stock with a 'buy' recommendation, indicating a target price for the stock of $12.00.
- The market is coming to appreciate that the company possesses patents that may be tantamount to a virtual corner on the market for diagnostic screening of cancers and infectious diseases using urine samples. It's a market that's worth in excess of $15 billion annually, and TrovaGene has been aggressively building its patent base in an effort to develop a side licensing business for its own and related technologies.
All in all, a good week for TrovaGene.
(ALXA)
In what many are counting as a victory, Alexza Pharmaceuticals has been granted a go-ahead by the European Union's Committee for Medicinal Products for Human Use [CHMP] to begin marketing ADASUVE, its treatment for rapid control of agitation among sufferers of schizophrenia and bipolar disorder.
The advantage of the company's treatment is its method of administration, via inhalation direct to the lungs, offering relief that is nearly immediate. The only other treatment that's as fast-acting is injection, a delivery method that's less preferable because of its invasive nature, its need for medical staff and the risks associated with injections in general.
The only other methods of delivery, capsule and traditional inhalation, are not as quickly assimilated, the first because of the time delay involved in its absorption by the gastrointestinal tract, the second because traditional inhalators have not exploited the full absorptive abilities of the respiratory system.
Alexza's staccato inhalator apparently solves that problem by heating a dose of the drug immediately upon the patient's drawing a breath through the device. The drug is thereby vaporized and can be more effectively absorbed by the lungs. According to the company's testing, results are achieved within two to five minutes.
Potential Pitfalls
Though the stock has nearly doubled since August, questions remain about its safety. A year ago reports circulated that ADASUVE could prove fatal for people with asthma and might cause respiratory failure.
More recently, the short position on the stock increased; roughly 15% of the float is now shorted, possibly in anticipation of a negative FDA ruling expected at the end of the week on ADASUVE.
(SRPT)
Sarepta Therapeutics had a blockbuster trading session earlier this week, climbing close to 7% on Tuesday after closing a $125 million stock offering that the company intends to use for development of its headline drug, Eteplirsen, that helps enhance ambulatory function in patients with Duchenne Muscular Dystrophy [DMD].
Sarepta stock, you remember, shot higher by 1,700% in a mere nine weeks after the release of strong data on Eteplirsen at the beginning of October. It subsequently gave back a full 50% of that gain in the month that followed.
Have a look here:
(click to enlarge)
The market now awaits 60 week data, due to be released in January. If it's better than previous results, there could be another gap up in price. If it's the same or worse, it's anyone's guess as to where the shares will end up.
In the meantime, institutional investors are happy to own the stock. The 37% institutional holding on the stock will grow to 50% once the latest offering is digested. CEO says the company only wanted $75 million from the market, but the issue was so oversubscribed that they grew it by a full two thirds.
The company's balance sheet is now as healthy as it has ever been. Investors now await assessments on the clinical reliability of Eteplirsin.
(NBY)
Another company that's looking much better from a cash position is NovaBay Pharmaceuticals , which just priced a $7 million offering they plan to use to expand and accelerate their three clinical trials, all of which are currently in Phase II.
NBY's pipeline includes a treatment for viral conjunctivitis, another to treat impetigo and a third to remedy urinary catheter blockage and encrustation, otherwise known as UCBE.
With the new cash infusion, NBY is well enough financed to carry out all its trials for 2013. It's sitting on roughly $17 million in cash and cash equivalents.
As for the prospects of its treatments, sales projections provided by one independent analyst of all the company's products (assuming they receive FDA approval) see as much as $2 billion in annual revenues in five years. NBY's current market cap is $33 million.
NovaBay has actually earned revenues from its NeutroPhase non-antibiotic topical wound cleanser, a treatment for everything from minor cuts to diabetic foot ulcers, post surgical wounds and first and second degree burns. The company's experience in bringing that product through the regulatory process to commercialization should be viewed as a potential positive for the rest of the pipeline.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
