3 Biotechs With Upcoming Product Launches

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 |  Includes: ALXA, TEVA, WINT
by: Markus Aarnio

Product launches are usually major catalysts for stock prices. A product launch can be both a positive catalyst and a negative catalyst for the company's stock price. One example of a positive product launch is Pacira Pharmaceuticals (NASDAQ:PCRX) with the launch of Exparel in April 2012. The stock was trading at $10.00 on April 2012 and is currently trading at $29.08.

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Another example -- one of a "failed" product launch -- is Curis (NASDAQ:CRIS) with the launch of Erivedge in February 2012. The stock was trading at $5.50 on February 2012 and is currently trading at $3.21.

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In this article, I will feature three stocks that have pending product launches scheduled for this year.

1. Discovery Laboratories (DSCO), a specialty biotechnology company, focuses on developing products for critical care patients with respiratory disease and care in pulmonary medicine.

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Product Launch

The company anticipates the availability of Surfaxin drug product in the second quarter this year. Surfaxin (lucinactant) intratracheal suspension is the first synthetic, peptide-containing surfactant approved by the Food and Drug Administration and provides healthcare practitioners an alternative to animal-derived surfactants to prevent respiratory distress syndrome [RDS] in premature infants.

Financials

The company reported the full year 2012 financial results on March 13 with the following highlights:

Revenue

$0.2 million

Net loss

$37.3 million

Cash

$26.9 million

Debt

$0.2 million

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In February 2013, Discovery Labs entered into two agreements that, collectively, may provide access to up to $55 million additional financing, a $30 million secured loan facility with Deerfield Management Company, and an at-the-market equity sales program with Stifel, Nicolaus & Company, under which Discovery Labs may, at its discretion, from time to time, sell up to a maximum of $25 million of its shares of common stock to support its business plans.

Outlook

For the first quarter of 2013, the company anticipates operating cash outflows of approximately $10.5 million, before taking into account financing activities. The company anticipates that revenues from the sales of Surfaxin in the first 12 months of sales will be approximately $8 million to $10 million, in the fourth year of sales, approximately $40 million to $50 million, and in the seventh year of sales, approximately $100 million. In addition, the company also anticipates that revenues from the sales of Afectair in the first 12 months of sales following completion of the user experience program will be approximately $0.5 million to $1.0 million.

Competition

Currently, the FDA has approved surfactants as replacement therapy only for the prevention and treatment of RDS in premature infants. Administration of these surfactants requires invasive intubation and mechanical ventilation. The most commonly used of these approved surfactants are Curosurf (poractant alfa), which is derived from a chemical extraction process of porcine (pig) lung, and Survanta (beractant), which is derived from a chemical extraction process of bovine [cow] lung. Curosurf is marketed in Europe by Chiesi Farmaceutici S.p.A. and in the U.S. by Cornerstone Therapeutics (NASDAQ:CRTX). Survanta historically has been marketed by Abbott Nutritionals (NYSE:ABT). ONY, Inc. markets Infasurf surfactant lavage in the U.S., a surfactant derived from calf lung.

My Analysis

The company anticipates the launch of Surfaxin drug product in the current quarter this year. There are four analyst buy ratings, zero neutral ratings, and zero sell ratings with an average target price of $5.50. I believe the stock could reach a $3.00-$4.00 target range during the next 12 months. The stock peaked at $5.39 after the FDA approval of Surfaxin in March, 2012.

2. Alexza Pharmaceuticals (NASDAQ:ALXA), a pharmaceutical company, focuses on the research, development, and commercialization of novel proprietary products for the acute treatment of central nervous system conditions worldwide.

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Product Launch

Adasuve (Staccato loxapine) is Alexza's first approved product, which was approved by the U.S. Food and Drug Administration in December 2012 and by the European Medicines Agency in February 2013. Grupo Ferrer Internacional, S.A. is Alexza's commercial partner for Adasuve in Europe, Latin America, Russia, and the Commonwealth of Independent States countries. The commercial launch of Adasuve is planned for the third quarter 2013 in the U.S. and Europe. Alexza is continuing to develop its U.S. commercial launch plans, which could include it commercializing Adasuve with a contract sales organization or licensing the U.S. commercialization rights to a third party.

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Financials

The company reported the full year 2012 financial results on March 26 with the following highlights:

Revenue

$4.1 million

Net loss

$28.0 million

Cash

$17.7 million

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Outlook

Alexza believes that, based on its cash, cash equivalents and marketable securities balance at December 31, 2012 and its current expected cash usage, it has sufficient capital resources to meet its anticipated cash needs into the second quarter of 2013.

Competition

Adasuve will compete with various injectable formulations of other antipsychotic drugs (products that are approved for the treatment of agitation) and orally disintegrating tablet and liquid formulations of other antipsychotic drugs (products that are not approved for the treatment of agitation).

My Analysis

Episodes of agitation afflict many people suffering from major psychiatric disorders, including schizophrenia and bipolar disorder. In the United States, approximately 2.4 million adults have schizophrenia and approximately 5.7 million adults have bipolar disorder. Of these patients, approximately 900,000 adult patients with schizophrenia and 5 million adult patients with bipolar disorder are currently receiving pharmaceutical treatment and are the target patient population for Adasuve.

The commercial launch of Adasuve is planned for the third quarter 2013 in the U.S. and Europe. There are two analyst buy ratings, two neutral ratings and zero sell ratings with an average target price of $9.00. I believe the stock could reach a $6.00-$8.00 price range after successful launch in the third quarter.

3. NuPathe (PATH), a specialty pharmaceutical company, focuses on the development and commercialization of branded therapeutics for neurological and psychiatric disorders.

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Product Launch

The company's lead product, Zecuity (sumatriptan iontophoretic transdermal system), was approved by the FDA on January 17, 2013 for the acute treatment of migraine, with or without aura, in adults.

Zecuity is a single-use, battery-powered patch that actively delivers sumatriptan, the most prescribed migraine medication in the U.S., through the skin. Zecuity is the first patch approved by the FDA for the acute treatment of migraine. NuPathe expects to make Zecuity available by prescription in the fourth quarter of 2013 and is actively seeking partnerships to maximize the commercial potential for Zecuity in the U.S. and territories throughout the world.

Financials

The company reported the full year 2012 financial results on March 26 with the following highlights:

Revenue

$0

Net loss

$37.8 million

Cash

$22.6 million

Debt

$8.1 million

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Outlook

The management estimates that the company's existing cash and cash equivalents will be sufficient to fund operations and debt service obligations into the fourth quarter of 2013. The additional capital that the company will require to launch Zecuity and to fund operations and debt service obligations beyond that point will depend largely upon the timing, scope, terms and structure of a commercial partnership for Zecuity.

Competition

Zecuity will compete with currently marketed triptans, including Imitrex (sumatriptan), Maxalt (rizatriptan), Zomig (zolmitriptan), Relpax (eletriptan), Axert (almotriptan), Frova (frovatriptan), Amerge (naratriptan), Treximet (sumatriptan/naproxen) and Sumavel DosePro (sumatriptan), as well as generic sumatriptan, the active ingredient in Imitrex, and generic versions of other branded triptans that have lost or will lose their patent exclusivity. Because of the low cost, health insurers may require or encourage use of, and consumers may use, a generic triptan prior to trying Zecuity. Zecuity will also compete with other approved products, including analgesic combinations, NSAIDs and ergotamines, including DHE.

NuPathe believes that Zecuity's features, including its convenient, non-oral route of administration, controlled delivery of medication and consistent dosing, differentiates it from other migraine treatments, particularly for migraine patients suffering from nausea or vomiting.

My analysis

NuPathe expects to make Zecuity available by prescription in the fourth quarter of 2013. The stock has a $6.75 price target from the Point and Figure chart. There are four analyst buy ratings, two neutral ratings and zero sell ratings with an average target price of $6.50. I believe the stock could be trading at $6 after the launch of Zecuity.

Disclosure: I am long ALXA. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.