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Small capitalization late-stage pharmaceuticals can often escape the interest of the investor masses due to a host of reasons ranging from lack of public awareness, difficult to comprehend product models, small targeted markets, previous clinical failures or a multitude of other reasons. However, as key catalyst dates approach investor interest may quickly appear/return with sharp share price increases benefiting those with the foresight or luck to have long positions well before the masses. I wish to present what I believe to be three late-stage (having Phase 3, pivotal studies underway) pharmaceuticals that could offer substantial upside in the days, weeks or months ahead in anticipation of data release. There are many ways to invest in such catalysts ranging from a "biorunup" approach which consists of a complete or partial exit just before the data are presented (eliminating much of the risk associated with a possible clinical failure) to the long positions in which shares are held through the data presentations but then exited upon share spikes after positive data (hopefully) are presented. Some investors may even opt to hold all or part of the original shares through New Drug Applications (NDAs), FDA advisory committees or even regulatory decisions in the form of FDA decisions. Regardless of the investment strategy utilized, solid (and early) entry levels help to maximize the potential gains and guard against more substantial losses than later entries when share prices have started trending higher.

PLC Systems (OTCQB:PLCSF) is the smallest market capitalization company I wish to present. With a market capitalization of $5.4 million and a 52-week range of $0.11-$0.34, the company is currently flying under the radar. Is PLC Systems trading at these levels due to it only having early stage clinicals with no marketed product? Actually, it is quite the opposite. On December of 2007, the company received the European CE Mark for its RenalGuard System™. The product is a medical device that helps to address Contrast Induced Nephropathy (CIN), a side effect of cardiovascular imaging in which the radiographic contrast media (dyes that enable imaging of the patient's circulatory system) utilized can cause permanent damage to the patient's kidneys, particularly those with pre-existing renal (kidney) problems. According to the company, 15-20% of all patients undergoing imaging during radiology or cardiology treatments can suffer from CIN, with an estimated death rate of roughly 35% for those developing CIN. RenalGuard is a matched fluid replacement apparatus with a novel but effective design. It is an active fluid replacement device that monitors urine output and matches the volume of that output by infusing that amount of fluid back into the patient's body in real-time via catheter.

Existing clinical data indicate that high urine output before, during and after imaging techniques is vital to preventing CIN, and RenalGuard's design helps to maximize fluid levels flushing the imaging toxins from the treated patients' kidneys. The real-time displacement concept utilized ensures that the patients are neither over nor under hydrated, maximizing the flushing process while keeping the volumes optimized. Since its 2008 debut in the European markets, RenalGuard sales have been steadily growing. However, sales seem to now be gaining momentum with Q3 2012 revenue up 685% to $212,000 for the quarter. During Q3, 2012, PLC saw revenue of $43,000 for single-use RenalGuard disposable sets and $169,000 for RenalGuard consoles shipped internationally, compared to sales of $7,000 in single-use disposable sets and $20,000 in consoles shipped in the same quarter in 2011.

As sales will likely continue to grow in the European markets, the huge unmet need in the U.S. is already being targeted with the company now in a pivotal late-stage Phase 3 clinical. Currently, there is no FDA-approved treatment available to either prevent or cure CIN. In its Q3 filing, PLC noted that there were 9 sites actively enrolling for the trial with plans to increase this in 2013 to a maximum of 30 with an initial target of 163 patients enrolled. Once that enrollment target is attained, a sample size re-estimation will be made to determine what number of patients ultimately enrolled would be required to have statistically significant results at the trial's conclusion, with a range of 326-652 patients expected. Updates on trial enrollment numbers and the number of centers enrolling should be forthcoming, most likely next in the Q4 or 2012 10-K filings in the near future. PLC epitomizes the "early entry" concept as it is still trading with low volume, a low market capitalization and near its 52-week lows. Although huge share-price moving catalysts in terms of Phase 3 data are not likely in the short term, the Q4 and 2012 10-K updates could provide interested investors with information on the Phase 3 enrollment, additional earnings growth of RenalGuard in the European markets, an update on possible initiation of a pivotal trial in Japan in the near future, and more information on the company's cash position.

A February 13th press release by the company appeared to go unnoticed, although it was significant. The company announced that it had secured an additional $4 million in financing with an issuance of stocks and warrants that helped to shore up the company's financials. Just as importantly, the press release also noted that a $5.25 million loan through GPC IV, LLC had its maturity date extended from the initial February of 2014 to now maturing on June 30, 2015. This move helps to free up the company's current cash position to more fully focus on increasing enrollment, complete the Phase 3 trial and file the necessary regulatory paperwork for marketing approval if data are positive.

Also of note is PLC System's Schedule 13G filing posted yesterday showing Barry Honig, president of GRQ Consultants, reporting his position of almost 6.5 million shares. Honig filed a 13G for another company I have followed closely, Neuralstem (CUR), on August 15th, 2012 when the stock was trading at $0.52. Neuralstem's stock has since traded to a high of $1.96 before settling at its current price of $1.12. I believe PLC System presents the potential for "following the smart money," another reason for near-term consideration of an investment in the company.

Interested investors should perform additional research on PLC and ascertain entry level price and time as Q4 results are expected soon, which will likely be the next significant catalyst for PLC. For the more risk averse, entry after the filings are released should be closely scrutinized to determine if the investment is suitable for them. I recommend the company's September 2012 investor presentation as a good starting point that describes the technology, targeted markets and gives a bit more detail on earlier stage clinical data as a good starting point. Please remember, this is a low market capitalization and low share price company and there are inherent risks associated with it such as less liquidity, more potential for share price manipulation and less current revenue, which may make it an unsuitable holding for some investors.

Rigel Pharmaceuticals (RIGL) has three Phase 3 trials expecting data release in 1H 2013 by partner AstraZeneca (AZN) for its lead product candidate, fostamatinib, as a treatment for patients with rheumatoid arthritis (RA). Termed the OSKIRA trials, OSKIRA-1 and OSKIRA-2 are independent 12-month trials evaluating the drug on RA patients with inadequate responses to DMARDs, including commonly used methotrexate, while OSKIRA-3 is evaluating fostamatinib via a 6-month study assessing the effect of the drug on RA patients who have previously responded poorly to a single anti-TNF therapy. In a deal that could net Rigel up to $1.2 billion in total payments including milestone payments based on sales if approved, positive upcoming data could catapult shares of the $606 million market capitalization company toward its 52-week high of over $11 per share, a gain of more than 55% from its current $6.95 level.

So, why are the company's common shares trading at the lower end of its 52-week range of $5.37-$11.44? On December 13th, 2012 AstraZeneca released Phase 2 data evaluating fostamatinib via a Phase 2b trial in 280 RA patients who had never previously used a disease-modifying anti-rheumatic drug (DMARD), were DMARD intolerant or had an inadequate response to DMARDs and were randomized to receive fostamatinib as a monotherapy, adalimumab as a monotherapy, or placebo. The trial was designed with two goals in mind, superiority to placebo at 6 weeks and a non-inferiority analysis against adalimumab monotherapy at 24 weeks as measured by change from baseline in DAS28 score (an analysis assessing signs and symptoms of RA). While fostamatinib proved to be statistically significant as a monotherapy relative to the placebo at the two higher dosages, the lowest dose did not prove to be statistically significant. Even more disappointing, however, was that fostamatinib was statistically inferior to adalimumab at 24 weeks at each of the three dosage levels. News sent Rigel's shares plummeting from the previous day's close of $8.43 to open at $5.69 for a loss of over 33%. Shares recovered somewhat on the following day as investors digested the information and realized that the three pivotal Phase 3 trials already underway were for a different patient set, those with inadequate responses to DMARDs and those who have previously responded poorly to a single anti-TNF therapy.

Worldwide, more than $13 billion is spent annually on RA drugs. If fostamatinib Phase 3 data prove to be promising with good efficacy and safety profiles, both Rigel and AstraZeneca could have a large revenue generator in their partnership. The three different Phase 3 trials underway give the companies a better chance of regulatory success with fostamatinib by providing a larger patient size for safety studies and at least two different targeted RA patient groups that could be marketed to. There is a bit of downside protection built into Rigel's common stock as failure of the OSKIRA-3 trial does not necessarily mean failure of the OSKIRA-1 and OSKIRA-2 trials. If one of the trials fails to meet the desired endpoints, this would be taken into consideration for the NDA that would be submitted to the FDA with the failed patient set simply omitted from the targeted market group. Interested investors should more closely evaluate all pertinent data from earlier stage clinicals in order to more fully ascertain the drug's chances at regulatory success.

On March 5th, Rigel released its Q4 2012 and 2012 10-K filings. In the press release, the company noted that AstraZeneca would release the Phase 3 data in Q2 2013 with the NDA filed in the 2H of this year. Also pertinent in the release, Rigel's impressive cash position was disclosed with the company having just over $33 million as of December 31st - enough to carry the company into 2015. Since the disappointing data release in mid-December 2012, Rigel's common shares have been trading in a fairly narrow range considering the ensuing catalyst with a 2013 low of $6.35 on January 31st and 2013 high of $7.57 on March 6th. Current share price levels could provide for solid entry in anticipation of the imminent data release, while investors should certainly consider the risks associated with any poor data released. I may wait for OSKIRA-1/2 data and ascertain a quick entry if data are positive or an entry in the event share price drops because of failed data and then hold in anticipation of the OSKIRA-3 data with a different patient set targeted. In either case, careful vigilance is necessary, and I will be closely monitoring AstraZeneca's and Rigel's press releases for a well-timed entry in early market trading if the opportunity presents itself in the coming days.

Venaxis, Inc. (APPY), like PLC Systems, has a very near-term catalyst in the form of its 2012 10-K and Q4 10-Q financials and corporate update. Unlike PLC Systems whose filings are "imminent," Venaxis has a definitive release of the updates on this Tuesday, March 26th at 4:30 pm. At the accompanying conference call, investors will likely be looking for updates on its pivotal Phase 3 trial evaluating its blood-based diagnostic test "APPY1" to be used in emergency situations to rule out appendicitis as a possible issue in emergency-room admitted patients. The diagnostic test uses two biomarkers - Venaxis' patented MRP 8/14 biomarker and C-Reactive Protein (CRP), along with White Blood Cell Count (WBC). These components are quantified in blood or plasma and the results analyzed using an algorithm from advanced proprietary and commercial software programs that optimize the interactions and outcomes to produce the test results. Venaxis announced enrollment initiation on January 13th of this year and noted that enrollment should complete in six to eight months with a regulatory filing for marketing expected in Q4. Enrollment is occurring at 28 hospitals "each of which are enthusiastic to assist us in completing the study as expeditiously as possible" according to the press release.

According to the company's website, 22.2 million people were admitted in 2010 to emergency rooms in the U.S. experiencing abdominal pain. A quick means to check these patients for appendicitis would be not only a huge time savings if diagnosed correctly, but it would also save money usually spent on other diagnostic tests including computed tomography (CT) scans used for screening purposes. In addition, such a blood-based diagnostic test would also prevent patients from being exposed to harmful radiation unless they were deemed necessary. According to the FDA, a typical abdominal CT scan exposes a patient to the equivalent of 400 chest x-rays of radiation exposure, an absurd level that can be avoided if possible. Although CT scans may still be necessary to more further evaluate the appendix if appendicitis is implicated via APPY1, elimination of appendicitis as the problem would be beneficial to further narrow down the probable issue.

Venaxis has a pivotal year ahead in 2013. However, it already started off with a tremendous catalyst in obtaining the European CE Marking for APPY1 as announced on January 7th. In the announcement, the company noted that it would begin its commercialization focus in such key territories, as the UK, Italy, France, Germany and Benelux countries. Venaxis also noted that it planned on announcing agreements with "top EU distributors" in Q1 as well. It has already announced two such agreements, one on February 7th and the other on March 18th. If this Tuesday's company update indicates an impressive number of sales, although possibly too early to be very significant, investors looking for longer-term gains via the company's revenue growth should take note of those as well as the Phase 3 data release and regulatory filings in 2013 and a possible FDA decision in late 2013 or early 2014, depending on enrollment rate. Investors should also view enrollment rates and use those numbers as a type of indication of actual market needs with rapid enrollment rates possibly indicating a large market need and slow enrollment rates possibly indicating less market need.

Venaxis's current market capitalization is about $22.5 million as of markets close on Monday, March 25th with a share price of $2.20. With a 52-week range of $1.18-$4.68, the upside could be substantial with positive news coming from this Tuesday's company update or other independent press releases on partnerships, enrollment rates and commercialization expansion in Europe. With strong technical support at $2.00, the company's current share price could provide for a solid current entry price with little reason for downside risk in the immediate future. In its third quarter 2012 10-Q, Venaxis noted that it had $9.8 million in cash and equivalents with an additional $3.7 million added via a stock offering that closed on November 12, pretty much eliminating the need for additional financing in the near future. Interested investors should view the upcoming company update as an opportunity to evaluate its cash burn rate expected for 2013, and use that rate to gauge any midterm cash need with Phase 3 clinical expenses, regulatory filing expenses in Q3/Q4 and scale up of sales/marketing personnel in the coming months.

Each of the three companies presented look to have exciting times ahead for themselves, investors and the healthcare sector. Having strong Phase 2 data behind each, there is no guarantee of positive Phase 3 data ahead. With each of the noted Phase 3 trials being construed as "pivotal," failure at these late stages of development could be catastrophic for these development stage companies and their common share prices. However, I believe the upside potential in share prices for each of these is significant and merits closer consideration for investors, such as myself, who are more risk averse than most. Even those investors who are considered to be more conservative in nature may take into consideration the time frames involved for each Phase 3 trial and consider an investment for short to mid-term gains and then exiting well before data releases are expected in order to secure gains and minimize risks associated with possible poor data. Regardless of risk tolerance, all investors should perform additional research via company press releases, SEC filings, clinical data and also consider targeted patient market sizes and competing products. Carefully planned entry and exit prices are advised before positions are opened, with close monitoring of future data releases and other press releases to ascertain longer-term holdings.

Source: Pivotal Phase III Trial Data Ahead For 3 Development-Stage Small Pharma Companies