These Small Cap Cancer Drugmakers Have Big Growth Potential 24 comments
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On July 7, the Lucky 13 Buys list was unleashed. Since that time, SuperGen (SUPG) and Ariad Pharamaceuticals (ARIA) have each topped the list with gains of 45% and 85%, respectively. In recent sessions, both SUPG and ARIA have pulled back.
On Monday August 3, Lucky 13 Buys was a mere four weeks old. So far, the results have been impressive and far exceeding prior expectations. Five have advanced more than 30%. Nine are up over 20%, and 12 of the Lucky 13 Buys have increased by more than 13%.
Lucky 13 Buys
Symbol | Last | % Gain / Loss |
ONTY | $6.56 | 104.36% |
FSYS | $26.25 | 40.98% |
SWC | $6.98 | 37.67% |
SUPG | $2.70 | 33.00% |
ARIA | $1.99 | 31.79% |
SPPI | $7.18 | 27.53% |
GTXI | $10.15 | 25.15% |
PRXL | $15.72 | 24.47% |
ONB | $11.42 | 21.88% |
CLNE | $10.02 | 16.38% |
UNG | $14.04 | 15.27% |
TOMO | $3.00 | 13.64% |
OSIR | $12.18 | -2.79% |
Oncothyreon (ONTY)
On top this week is a small-cap cancer drug maker, Oncothyreon (ONTY). In Monday trading, shares of ONTY leapt by a whopping 41.69% to close at $6.56.
ONTY announced interim trial data for Stimuvax®, the company’s cancer vaccine. The trial consists of a relatively small group of 16 patients with non-small-cell lung cancer (NSCLC). Of the 16 patients, who received Stimuvax, 10 are still living, progression free. Those treated with Stimuvax received an overall survival benefit of 30.3 months compared to 13.3 months for patients treated with the standard of care. Source: AP ONLINE.
NSCLC is a very difficult cancer to treat. A relative of mine, who was also a non-smoker, passed from this disease in 2005. From my understanding of NSCLC, the Stimuvax results reported yesterday are outstanding.
ONTY is collaborating with Merck (MRK) for the development of the Stimuvax.
ARIAD PHARMACEUTICALS (ARIA)
ARIA closed up 3.11% on Monday following last week’s rollercoaster ride before and after the company’s earnings announcement.
ARIA shareholders are awaiting the first interim analysis of Phase 3 data for ridaforolimus (rida), which is indicated for soft tissue and bone sarcomas. Like ONTY, ARIA is also collaborating with Merck (MRK) for the development of rida. The aforementioned Phase 3 interim results are due out on or before September 30, 2009.
Patient enrollment for the Phase 3 trial is expected to be completed by year-end and a second interim analysis is expected by Q1 2010. With positive Phase 3 data, ARIA plans to seek US approval for rida in 2010.
On Monday evening, the company announced CEO, Harvey J. Berger will acquire between $3 and $5 million worth of ARIA common stock during a public offering of 17 million shares. Oppenheimer and Co. will serve as the sole book runner and lead manager; and Lazard Capital Markets, LLC, will serve as the co-manager for the offering. Source: Company Press Release.
SPECTRUM PHARMACEUTICALS (SPPI)
On Monday, shares of SPPI closed up 7.16% on speculation that the company could be targeted for acquisition by either Bayer (BYERF.PK) or Bristol-Myers (BMY).
SPPI also announced Monday that they will present their business strategy to investors at the BMO Capital Markets 2009 Focus on Healthcare Conference. The presentation is scheduled for this Wednesday, August 5 at 3:00 PM ET. Interested investors access the live webcast here.
SPPI is on the outskirts of two supplemental biologic and drug approvals:
- Zevalin® on or before Monday, September 7, 2009 (Labor Day) and
- Fusilev® on October 8, 2008.
For more details, please reference my past articles on SPPI, Zevalin and its pipeline of other cancer drugs such as Fusilev and Eoquin® here.
CONCLUSION
I have received several questions about ARIA following last week’s action. For those, who have asked, I am providing my take on ARIA as well as some other relevant topics.
Be patient. I, generally, commit anywhere between 6 to 18 months for longer-term positions. ARIA has a number of upcoming catalysts within the next 18 months as I outlined above. For this reason, I consider ARIA a longer-term position.
Armed with a collaboration arrangement valued at $652 million with Merck (MRK), ARIA should – in my opinion – be viewed as a potential acquisition target. With positive Phase 3 data on ridaforolimus (rida) and a strong pipeline of cancer drugs, ARIA appears to be well-positioned for the future.
This is drug development, and anything can happen. Smart investors will take the appropriate steps to properly hedge their long positions just in case the unthinkable occurs.
I am optimistic about ARIA because I am optimistic about rida’s future. I was especially encouraged after reviewing Carolyn Boone’s story. For me, this is what it’s all about – people – folks like you and I. If at some point in the future I found myself in Carolyn’s position, I would want access to rida.
I like ARIA and will remain invested in the company. I hope this clears up any previously perceived ambiguity.
Disclosure: Long ARIA and SPPI.
ADDENDUM
A Word on Negative Nancy(s)
Unfortunately, naysayers come with investing in new drug development. In this area like no other, they seem to run rampant. If everyone listened to the negative folks, then lives would not be saved and improved with medicine. Negative, however, does not and should not be applied to those who objectively criticize and disagree.
Investors play a critical role in the development of new treatments. Most companies and their executives know and appreciate their investors. They have no interest in letting their investors down. Be reasonable. Give ‘em a little room and expect things will take time. Nothing innovative is created in a straight line. Investors should anticipate and prepare for challenges along the way.
Be Realistic
Those, who choose to invest in new drug development, should consider hedging ALL of their positions. As I have learned the hard way, losses do often occur. Personally, I purchase put options to hedge all of my long positions – calls or shares of common stock. Puts serve as insurance in case things don’t go my way.
Excellent Opportunities
Right now, the drug makers are in a unique position. With less venture capital available to fuel IPOs, ongoing industry consolidation, a shrinking pool of smaller companies, coupled with Baby Boomers ageing and retiring, innovative drug, device and diagnostic makers represent opportunity. And right now, there are some excellent investment opportunities out there.
From my view, companies like SPPI, ARIA, ONTY and GTXI have excellent growth potential over the next 6-18 months..
Bottom Line
To mitigate potential risk of loss, smart investors will aim to preserve and protect investment capital by hedging positions appropriately.
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$5.20 recouping a little more than half of my initial outlay.
I am looking to sell another 30% at $7 leaving me 40% which technical are free shares. Unfortunately due to some prior commitments i missed out on Tuesday. So from here on ill be holding on for the $7 dollar mark in my view it wont be to long.
Thanks for the advice though
Matthew Stone
On Aug 05 06:45 AM Justin M. Hall wrote:
> Matthew Stone:
>
> To clarify my statement above, I do not and have not held shares
> in ONTY.
>
> If, however, I did own own a position in ONTY, I might consider selling
> a portion of the position following the recent run-up in order to
> cover costs.
>
> Justin
MDRNA INC(MRNA) IS A PERFECT EXAMPLE. IT IS NEVER MENTIONED ON SEEKING ALPHA, AND PROBABLY RIGHTFULLY SO. YET YOU WRITE AN OUTSTANDING ARTICLE, AND THE RESULTS SPEAK FOR THEMSELVES.
QUICK RETURNS, FROM GREAT RESEARCH ON YOUR PART.
YET OTHERS FLOUNDER, AND MAKE PREDICTIONS ON THE MESSAGE BOARDS LIKE GURU'S AND WANNA BE
ANALYSTS. YOU HAVE CLEARLY SHOWN, THAT YOU ARE SOME WHAT OF AN EXPERT, AND DESERVE TO BE A WRITER, RESEARCHER, FOR SEEKING ALPHA.
KEEP UP THE MARVELOUS WORK, AND MAYBE SOME WILL WAKE UP AND SMELL THE COFFEE FOR A CHANGE.
In general, I only cover optionable drug makers with very few exceptions. While I am vaguely familiar with AGEN, I do not follow it closely, sufficient to have a qualified opinion.
Justin
I am familiar with HNAB, but the financials cannot be as bad as some others that are way up this year. You can probably guess which company or companies I am referring.
Good luck with you position in HNAB!
Justin
i sell WIGS
these guys have the cure for RADIATION DISEASE
On Aug 05 08:27 AM jimmy Turano wrote:
> Justin, 'OUTSTANDING'. THERE ARE SO MANY INVESTORS WHO REALLY NEED
> HELP. THESE ARE THE ONES WHO I CALL MARRIED TO A STOCK, NO MATTER
> WHAT THEY READ, NO MATTER HOW BAD THE STATS, THE RATINGS, THEY CONTINUE
> TO HOLD ON, AND IN SOME CASES BUY MORE.
> MDRNA INC(seekingalpha.com/symbo...) IS A PERFECT EXAMPLE.
> IT IS NEVER MENTIONED ON SEEKING ALPHA, AND PROBABLY RIGHTFULLY SO.
> YET YOU WRITE AN OUTSTANDING ARTICLE, AND THE RESULTS SPEAK FOR THEMSELVES.
>
> QUICK RETURNS, FROM GREAT RESEARCH ON YOUR PART.
> YET OTHERS FLOUNDER, AND MAKE PREDICTIONS ON THE MESSAGE BOARDS LIKE
> GURU'S AND WANNA BE
> ANALYSTS. YOU HAVE CLEARLY SHOWN, THAT YOU ARE SOME WHAT OF AN EXPERT,
> AND DESERVE TO BE A WRITER, RESEARCHER, FOR SEEKING ALPHA.
> KEEP UP THE MARVELOUS WORK, AND MAYBE SOME WILL WAKE UP AND SMELL
> THE COFFEE FOR A CHANGE.
you have not mentioned anything about Arca biopharma (ABIO), what happend to their pending decision.
This Lucky 14th stock has patents around sensitizing dendritic cells to recognize the Oncofetal Antigen (OFA) on the surface of cancer cells as a marker for diseased tissue. Similarly, Dendreon (DNDN) has patents around sensitizing dentretic cells to recognize the PAP protein on the surface of prostate cancer cells as a marker for diseased tissue. In the immunotherapy approach common to both companies, the sensitized dendritic cells direct certain white blood cells to seek out and attack the breast cancer (MNTR) or prostate cancer (DNDN) cells that are no longer invisible to the immune system.
The current MNTR / Quantum Phase I/II trial is an outgrowth of positive results from prior Eropean research studies. At a succesful Austrian trial, using the same OFA protein strand and a less refined immunotherapy treatment for Stage IV renal patients with a typical survival rate of 10 months, 45% of patients survived at least 40 months, with either complete remission or stable disease.
Because the MNTR / Quantum news is so new, 1% of pre-revenue DNDN for prostate cancer PAP immunotherapy, currently sells for approximately $25 Million or 500x the cost of 1% of Quantum's likewise patented breast cancer OFA immunotherapy, that can be purchased by acquiring $50,000 in MNTR stock. Although DNDN is approximately 18 months ahead of MNTR / Quantum in FDA trials, a 50,000% premium may not be justified nor continue for long. Additionally, it is expected that information on MNTR / Quantum will much more rapidly disseminate when MNTR rapidly completes its self registration to move up off the Pink Sheets now that this move is timely.
I would guess that the average returm of the Lucky 13 Buys will increase if MNTR is the 14th. I hope so, even if we were 3 days late in our public start. Or, I am always open to any gentleman's bet even with so fine a competitive line-up of comps.
Excellant work and a great comparative baseline that I will use at MentorCapital.com to pace our relative success.
> Stage I: 56%
> Stage 2: 34%
> Stage 3: 10%
> Stage 4: 2%"
This part does not make any sense. Early or later, we all will be dead.
Are you talking about PFS or OS?
What is the time-interval? Is it 1-yr overall surviving or what?
Merck KGaA is IMCL's partner (now LLY) for Erbitux.
I did not cover ABIO in this article because they are not a cancer drug maker.
Please understand that I cannot cover each and every company responsibly - thoroghly enough to form a well thought out opinion.
I am NOT a journalist or reporter - per se. I am an investor first and writer last. So, I will NOT write about companies just to write about them.
Unlike others, it is NOT my intent to obtain publicity in order to generate ad revenue. Again, I am an investor. I write to share my findings - about the companies I know best - with others.
I invest in companies for a number of reasons. I do NOT only rely on the opinions of others. I weigh credible opinions against the facts. Eventually, I make a determination on whether to invest in a particular company.
For the record, I do not read or subscribe to anything that Adam Feuerstein says or writes. While he has made a few good calls over the years, he has been dead wrong on far too many. For this reason, I believe Adam Feuerstein seriously lacks credibility. Investors would be wise NOT to base investment decisions based on his word alone. His motives are and should be seriously questioned.
DNDN
HGSI
VNDA
CTIC
IDEV
SPPI (TBA)
If you believe a strong case can be made for ABIO, then I certainly encourage you to write about the company!
I wish you the best of luck.
Justin
On Aug 05 09:47 PM navneet wrote:
Sir,
you have not mentioned anything about Arca biopharma.
what happend to their pending decision.
Re-read what I wrote again. Try checking the link I provided.
Justin.
On Aug 06 06:47 PM nova wrote:
> Hall wrote: "Below are the survival rates, by stage, for NSCLC.<br/>
Look at CTIC's performance YTD. It has had a remarkable year. The company as-is today is simply way overvalued. I do like the prospects for Pixantrone. However, the business has not been well preserved due to regulatory setbacks, inter alia.
For the record, I bought shares of CTIC at $0.07 and closed my positions in April and May. It far exceeded my expectations and ran too far, too fast.
I cannot responsibly recommend a company I would not even though I like their drugs. At some point, fundamentals trump speculation. That is the case with CTIC. It is too expensive and I would NOT touch it at this price.
Good luck.
Justin
I cannot responsibly recommend a company that I would not BUY, even though I like their drugs. At some point, fundamentals trump speculation. That is the case with CTIC. It is too expensive and I would NOT touch it at this price.