In this article, I will spotlight five companies with data announcements in the coming weeks/months. These are all small-cap biotechnology companies that are relying highly on these upcoming data announcements to maintain current valuations, or to breakout into new levels. These announcements will all create movement, but the question is in which direction?
NewLink Genetics Corp. (NLNK) is involved with the discovery, development, and commercialization of immunotherapeutic products to improve cancer treatment options. The company has a diversified pipeline with its HyperAcute immunotherapies for the treatment of non-small cell lung cancer, pancreatic cancer, melanoma, prostate cancer, and breast cancer. The company uses genetically modified human cancer cells to create a natural immune response, and will be closely watched in 2013.
In early studies, NewLink's HyperAcute platform has been successful, and it currently has three ongoing late-stage studies: Pancreatic (Phase 3), non-small cell carcinoma (Phase 1/2), and melanoma (Phase 2). Last year, data from its melanoma study showed that the vaccine created a median overall survival of 29 months and produced an overall survival of 42% at three years in the pancreatic cancer study. Now the company is preparing to announce interim Phase 3 randomized data for its pancreatic treatment sometime in the next month. The final data will not be available until next year; however, the upside for this one product makes it a very important data set for investors.
Assuming that NewLink's data for pancreatic cancer is positive and it goes on to earn regulatory approval, analysts project peak sales of more than $800 million worldwide. If the interim results are positive for the treatment of pancreatic cancer, then investors may assume that the platform will be effective in treating other cancers. It can be inferred that this data could add a great amount of value to this company. The stock is currently trading at $12.09 with a company market cap of $309 million. If interim data are positive, watch for a quick 30-40% move higher, and then watch for additional gains during the following year as investors await final data release.
OncoSec Medical (OTC:ONCS) is another small biotech company, one that has developed a platform called the OncoSec Medical System (OMS), utilizing the company's proprietary electroporation technology. OMS uses quick bursts of electricity to increase the uptake of whatever agent is injected, which allows more of the agent to be delivered effectively into the tumor(s). The company uses this approach for both immunotherapy (ImmunoPulse) and chemotherapy (NeoPulse) agents.
In early studies, the company's OMS has been highly effective. The company is currently testing its ImmunoPulse platform on three different cancers: melanoma, Merkel cell carcinoma (MCC), and cutaneous T cell lymphoma. In these studies it was found that just 1/20 of the traditional dose was needed, as the uptake of the agents used was increased by 4,000 fold. Resultantly, patients experienced fewer side effects and tumors were destroyed more effectively because the entire agent was reaching the targeted tumor (due to the electrical pulses creating temporary pores in the cancer cells' walls). The company has also found that OMS, through the ImmunoPulse treatment, not only treats targeted tumors, but also indirectly affected distant tumors. The interim results from ImmunoPulse show that OMS had a significantly greater local and distant response compared to the promising therapies Allovectin-7 and OncoVex, giving it a higher probability of success.
OncoSec is a small company that has traded almost flat over the last year, with periods of large gains prior to data announcements. Most recently, the stock more than doubled in just one month when interim data for MCC and metastatic melanoma were announced last year. This year, the company has more important data announcements, on all three of its Phase 2 trials. The most important is for the treatment of metastatic melanoma, which is its largest indication, and the company is expected to be presenting data at this year's ASCO in late May and early June. Seeing as how this stock rallies in anticipation, but then falls during the dead periods between data, we might very well see consistent gains as the company has a data-packed year of enrolling patients, presenting data, and then starting new studies.
Raptor Pharmaceuticals (RPTP) is a clinical stage biopharmaceutical company developing therapies to counteract neurodegenerative disorders. The company's lead product is Procysbi, which is a delayed release cysteamine bitartrate oral therapy for nephropathic cystinosis. The disease affects just 2,000 patients worldwide, with about 500 of those in the U.S. Consequently, this is not a high revenue-producing product, as analysts project peak global sales around $100 million.
Raptor Pharmaceuticals has lost more than 35% of its value over the last year, and currently has a market capitalization of $262 million. The company has no approved drugs, but is probably close to an approval with Procysbi. The Orphan Drug is also being tested in a Phase 2/3 clinical trial to treat Huntington's disease, meaning there is potential beyond the one indication. Investors are now waiting for an FDA decision (4/30) on the approval status of Procysbi. The decision on this drug was extended back in December, and if approved it could create movement in the stock.
ArQule, Inc. (ARQL) is a clinical stage biotechnology company developing cancer therapeutics. The stock has lost almost 70% of its value in the last year, mostly due to a recently failed study for its lead product, tivantinib. Much like NewLink, ArQule has evaluated its product on several different cancers, and is yet to experience success. In October, tivantinib failed to increase overall survival in a Phase 3 lung cancer trial, but investors believe it was due to a variety of "Met" expressions.
There are a number of potential catalysts for this stock. The company's shares should rebound nicely if tivantinib can be proven effective in treating cancer. In the next month the company will announce Phase 2 data for tivantinib used to treat colorectal cancer. The company will also begin a Phase 3 liver cancer trial, enrolling only high Met expressions (some believe this strategy will be successful). With expectations being so low, it is very possible that the $158 million company's share price could rise significantly with a successful Phase 2 trial, and the initiation of the Phase 3 trial.
Zogenix, Inc. (ZGNX) is a $141 million clinical stage biotechnology company that is developing therapies for the treatment of central nervous system disorders and pain. The company's lead product is Zohydro, an extended-release hydrocodone, that has completed Phase 3 trials for patients needing constant opioid therapy. The company has other products in the pipeline, including Relday for treating schizophrenia; however, its immediate valuation is tied to Zohydro.
Last December, an FDA panel voted against Zohydro due to it being a stronger version of the commonly abused hydrocodone, and the stock lost 50% of its value. However, investors are hanging onto hope that the FDA will ignore the panel's risk concerns, which is uncommon but not impossible. With Zohyro being a stronger version of hydrocodone, there is no doubt that it does work and is effective, and we will learn on March 1 if the FDA believes the risk is worth the reward. If approved, the stock would climb greatly higher; though if approved, the company will most likely have very strict regulations on the drug, making its marketing more restricted and difficult.
Each of the companies covered in this article have product-related catalysts in the coming weeks. There are some with a number of catalysts throughout the year. It's safe to assume that each company will be greatly altered in terms of valuation in 2013, and investors should appropriately value this risk. The stocks with low expectations, such as Zogenix and ArQule, might not fall to a large degree on bad news. And those with larger pipelines, such as NewLink and OncoSec, might be better protected if one product is unsuccessful. My suggestion is to watch each stock closely and expect large movement, one way or the other, in the coming weeks/months.