Seeking Alpha
Special situations, micro-cap, biotech, healthcare
Profile| Send Message|
( followers)  

I'm not sure what everyone's New Year resolutions are for 2013, but I assume that a good number of biotech traders are looking for outsized profits this year.

Since biotech events (also referred to as catalysts) generally lead to large movements in stock prices for their respective companies, there is certainly opportunity for outsized gains for those that are on the right side of a trade. Here are two events to start speculation on now:

1.) January 17, 2013 - NuPathe PDUFA Date For Zecurity

After taking a few nasty tumbles in the second half of 2012, NuPathe Inc. (PATH) seems to be on the recovery as the PDUFA date approaches for its migraine patch. Zecurity (sumatriptan iontophoretic patch) is a very nifty and easy to use patch that will treat one of the most debilitating and hard to treat common illnesses in the United States.

Roughly 1/10 Americans suffer from migraines. Existing treatments only treat other effects induced by migraines, and don't address the pain and extreme discomfort for migraine victims. NuPathe realized the obvious unmet need and now has a drug that is close to FDA approval, although there are some concerns that investors should hold on to.

First is the prior FDA rejection of sumatriptan iontophoretic patches in August 2011. The complete response letter expressed concerns about the drug's safety and manufacturing.

In the CRL, the Agency acknowledged that NuPathe established the efficacy of the migraine patch in the overall migraine population. The CRL primarily contained chemistry, manufacturing and safety questions, which the Company believes it has, or shortly will have, sufficient data to address."

(source: NuPathe company press release August 30, 2011)

Second is the fact that sumatriptan is not a new compound and is already heavily prescribed for migraine victims. Although the patch might turn out to be a superior method of delivery, it is not going to be the miracle that migraine users have been hoping for. Nonetheless, it seems to be a valid improvement over the current standard of care (sumatriptan as an oral tablet).

NuPathe trades at $3.37/share with a market capitalization just under $50 million and could approach the likes of $5/share with an FDA approval.

2.) January 21, 2013 - Impax PDUFA Date For IPX066

On February 23rd, 2012, the FDA accepted the NDA that Impax Laboratories (NASDAQ:IPXL) submitted for its Parkinson's Disease drug which has been named Rytary. Although a PDUFA date of October 21st was originally set for Rytary, the FDA requested some extra information on one of the inactive ingredients in Rytary in September. This was classified as a "major amendment" to the original NDA submission and pushed the FDA decision to January 21st, 2013.

Impax has another compound in development called IPX159 for restless leg syndrome, and it has a small but highly diversified generic pharmaceutical business that is keeping the company profitable as it develops its proprietary molecules. Still, the focus remains on the Parkinson's drug.

Although Impax isn't completely reliant on Rytary's fate, it's worth noting that Parkinson's Disease drugs have become extremely popular targets of speculation. Recall 2012, where Acadia Pharmaceuticals (NASDAQ:ACAD) rocketed 140% higher after great phase III data for its Parkinson's Disease Psychosis drug, Pimavanserin.

Although FDA approvals can often lead to paradoxical reactions in the short term, it's safe to say that Impax would probably break its old 52-week high of $27.25/share upon approval at the very least. IPXL is currently trading just above $21/share, which implies at least 30% upside after an FDA approval (if it happens).

Source: 2 Impending Biotech Catalysts To Start Off 2013