There are a few interesting drugs with FDA approval decision dates in Q2 2013. It's always positive to see new innovative drugs nearing market approval. Ultimately, these new compounds are good for the life of the patients. From an investment standpoint, these drugs have the potential to have a dramatic impact on the stock prices of the developing companies.
Allergan is in the process of acquiring MAP at a price of $25 per share. This deal is expected to close in Q1 or Q2 2013. MAP has resubmitted its drug Levadex for FDA approval for the acute treatment of migraine in adults. Last year, the FDA had concerns about the chemistry, manufacturing, and controls of Levadex which was spelled-out in a Complete Response letter. Currently, Levadex has been resubmitted with an FDA approval decision date of 4/15/2013.
MAP's stock should continue to trade closely to the $25 take-out price until the deal closes. Allergan may see a spike in its stock price if Levadex is approved. However, the spike should not be as drastic as the stocks of less established companies who have little to no drugs on the market. Allergan has an extensive array of products, which includes prescription drugs and over-the-counter products. The company is known for its Botox and eye-care products.
Allergan is currently a bit rich in valuation with a trailing PE ratio of 30, a forward PE of 22.57, and a PEG of 1.97. However, the company is expected to grow earnings annually at about 13% for the next five years. This growth is higher than the market's expected growth of about 8.6% annually. Allergan has a one-year target price of $115, up from its current price of $107.
Raptor Pharmaceuticals (RPTP)
Raptor has an FDA decision date on 4/30/2013 for RP103 (DR Cysteamine) for the treatment of nephropathic cystinosis. This condition is an inherited disorder of metabolism. Since nephropathic cystinosis only affects about 500 people in the U.S., RP103 is considered an orphan drug.
Raptor does not currently have any FDA approved products on the market, so the FDA decision should have a dramatic effect on the stock price. RP103 is also in clinical trials (Phase 2/3) to treat Huntington's disease. The company also has two other compounds in Phase 2 clinical trials: RP104 for non-alcoholic steatohepatitis and Convivia for ALDH2 deficiency.
The company has a one-year price target of $9.86 as compared to its current price of $4.80.
Navidea Biopharmaceuticals, Inc. (NAVB)
Navidea, the company formerly known as Neoprobe, has an FDA decision date on 4/30/2013 for Lymphoseek. Lymphoseek is to be used as a diagnostic tracing agent in lymphatic mapping procedures. Lymphoseek helps oncology surgeons to focus on high-risk lymph nodes and has been evaluated for use in patients with breast cancer and melanoma. The company was previously given a Complete Response Letter from the FDA for Lymphoseek as there were concerns about manufacturing deficiencies.
Navidea has another diagnostic candidate, known as AZD4694, which has been through Phase 2a trials as a precision imaging agent to aid in the diagnosis of Alzheimer's disease. The company is also developing RIGScan which may be used during surgery to detect cancerous tissue that is undetectable by traditional methods.
Navidea has a one-year price target of $5.71, up from its current price of $3.12.
Theravance, Inc. (THRX)
Theravance has an FDA decision date on 5/12/2013 for Fluticasone furoate/Vilanterol for chronic obstructive pulmonary disease (COPD). Theravance has partnered with GlaxoSmithKline (GSK) to develop this drug under the name Relvar, or Breo. COPD is the 3rd largest cause of death in the United States. It is estimated that there are 16 million people diagnosed with COPD in the U.S., with an additional 14 million undiagnosed people in the beginning stages of the disease.
Theravance has one FDA approved product on the market known as Vibativ. Vibativ has an indication for adults with complicated skin and skin structure infections (cSSSI) caused by Gram-positive microorganisms.
The company is also partnering with GSK to develop Anoro, a once-a-day inhaled medicine for COPD. A New Drug Application has been filed with the FDA for the approval of Anoro. Theravance also has four compounds in Phase 2 trials for the treatment of bacterial infections, CNS/pain, and gastrointestinal motility dysfunction.
Theravance has a one-year price target of $29.30, up from the current price of $22.
Raptor and Navidea offer the most risk reward for investors since much of their business is riding on their first FDA approved drugs. While an approval decision will most likely cause a spike in their stock prices, a rejection has the possibility of causing a dramatic drop in price. Theravance is in the middle for risk/reward as it already has one FDA approved drug on the market. Since Allergan is a well-established company with a vast array of marketed products, it will probably not see as dramatic a spike in stock price as the others upon approval of Levadex.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.