Written by Scott Matusow
Today we highlight five companies with near-term catalysts along with positive sentiment that we feel could significantly see much higher stock prices in the short-term. As we move out of September and into October, the market historically sees increased in-flows of money into stocks. We feel the upcoming debt ceiling issue will see a resolution, either with a budget agreement and/or a delay/extension into next year. This should remove the headwinds the markets have been facing lately and allow many speculative stocks to rally into the end of the year while investors and traders feel confident taking on more risk.
Halozyme (HALO) will present data on PEGPH20 at a Poster Presentation at ECCO-ESMO-ESTRO on September 30th, 2013.
- A Phase 1b study of gemcitabine plus PEGPH20 (PEGylated recombinant human hyaluronidase) in patients with stage IV previously untreated pancreatic cancer" will be presented by Joy Zhu M.D., Ph.D., Vice President, Oncology Clinical Development, Halozyme on Monday, September 30 in Hall 4 at 14:00 CEST. (Abstract #2598)
A Phase II multicenter, randomized clinical trial evaluating PEGPH20 in combination with nab-paclitaxel and gemcitabine for the treatment of stage IV pancreatic cancer began in April 2013. Approximately 124 patients are expected to participate in the trial and receive gemcitabine and nab-paclitaxel either with or without PEGPH20. Halozyme is also developing an HA diagnostic tool for use in the Phase 2 study to evaluate potential treatment benefits based on tumor HA levels. This HA-diagnostic approach may also enable the testing of PEGPH20 in other HA-rich tumor types.
The above data are for Halozyme's proprietary PEGPH20, which if ultimately successful, could net the company billions in the years ahead as well as being the new standard of care in terms of platform technology.
Emerging data show that most pancreatic cancers surround themselves with a protective hyaluronan-rich matrix, which makes the disease difficult to treat and is an indicator of poor prognosis. PEGPH20 has been shown to deplete this matrix component from the tumor and rapidly changes the tumor microenvironment and metabolism, which may render it more vulnerable to therapy as well as inhibit tumor growth.
In most patients diagnosed with metastatic pancreatic adenocarcinoma, survival rates are the lowest of any cancer. In 2013, it is estimated that almost 45,000 new cases of pancreatic cancer will be diagnosed. About one-in-78 people in the U.S. will develop the disease, affecting equal numbers of men and women, almost always after the age of 45. Its tendency to spread prior to diagnosis makes it the fourth deadliest cancer with a less than a six percent five-year relative survival rate and more than 38,000 people succumbing to the disease each year.
Halozyme is our best small-cap investment pick of this year as we feel a stock price over $20 in the next year is likely, and potentially over $50 in the next three years or so. One biotech investor I have spoken with has indicated to me that he holds 2M shares of Halozyme and agrees with our assessment of Halozyme's future prospects. Additionally, company director Kathryn E. Falberg bought $681.6K of the company's stock in the open market, at an average cost of $6.82 a share. In 2009, Falberg bought 50,000 shares of Jazz Pharma (JAZZ) at an average price of $8.72 a share, and now Jazz trades for over $90 a share. Baker Brothers LLC also holds over 6M shares of Halozyme, which is also very bullish. The Bakers are well-known throughout the market as top-notch small -ap biotech investors. They have done very well over the last year, and their record is well documented.
Antares Pharma (ATRS) faces a Prescription Drug User Fee Act (PDUFA) decision from the Food and Drug Administration (FDA) for its subcutaneous ((NYSE:SC)) Otrexup injector by October 15th, 2013. Otrexup is designed to treat Rheumatoid Arthritis.
Otrexup employs a proprietary coil-spring power source to rapidly deliver Methotrexate (MTX). Oral MTX if ingested in large quantities can be very toxic to the liver. Antares' goal here is to allow more MTX into a patient's body subcutaneously, by-passing ingestion to allow better potency and safety in higher doses. This acts as a "pre-biologic" solution, which in turn should save insurance companies a considerable amount of money. With better potency and safety with Orexup, the much more expensive biologic drug doses can be cut down, or eliminated in some cases altogether.
Orexup's spring device is combined with a tiny hidden needle in a disposable, single-use injection system compatible with conventional syringes. After use, the device can be disposed of without the typical "sharps" disposal concerns.
Additionally we believe Antares will be acquired shortly after it receives approval for Orexup. FDA approval is so likely that we believe this probability is over 90%. Orexup could bring in peak sales of $200M +, so we feel Antares is undervalued now at around $400M, and should be valued at least $800M.
We are now in the middle of putting together our New Drug Application, our NDA, to submit to the FDA. That should happen later this quarter. We are also preparing to launch the product in the United States on the back of an FDA approval, which we hope would occur about a year after submitting our NDA. Assuming that the FDA approves Zalviso, we would then look to begin to commercialize in the last quarter of 2014 and into 2015.
If the company is able to produce in this accelerated fashion, there is a good chance it will equate to more gains for long investors.
The company also intends to file in the European Union (EU) shortly after the U.S. submission. The CEO also states:
Our filing in the EU will be sometime after the U.S. submission. We are in the process of presenting full data from all Phase 3 studies of Zalviso at major medical meetings in 2013 and 2014 with the goal of raising awareness for product physicians, surgeons, nurses and pharmacists both in the U.S. and in Europe.
News could also come regarding another one of its products ARX-04. AcelRx recently received a grant from the US Army Medical Research and Materiel Command (USAMRMC) for $5.6M. As this product moves further along, we can speculate more money could be on the way.
In March of this year, we wrote an article on AcelRx, which gave a one-year price target of $12/share. This was eclipsed in July when the stock briefly went above $13/share. It has now consolidated around $10/share and looks poised to move at least back toward yearly highs with additional clarity and positive signs regarding the company's future.
Furthermore, we have been hearing some buzz on a potential acquisition of AcelRx. The Board of Directors (BOD) of the company has combined to sell 13 companies for very good premiums. Based on the company's BOD make-up, and the rumors we have heard, we feel the acquisition buzz has merit.
Sarepta (SRPT) announced yesterday 96 week data from its 202 Study, which is a Phase IIb open-label extension study of eteplirsen in patients with Duchenne muscular dystrophy (DMD). Sarepta will be presenting the 96-week data at the World Muscle Society meeting next month.
At Week 48, eteplirsen met its primary endpoint of increased novel dystrophin as assessed by muscle biopsy and is now in the long-term extension phase. Patients will continue to be followed for safety and clinical outcomes. The company plans to meet with the FDA soon to discuss the path forward to an NDA filing for eteplirsen, which is likely by January of 2014. However, it's possible an NDA filing could come earlier, based on the 96 week data.
I have personally spoken with a person who has a child who is affected by DMD who has shown marked improvement with the disease while taking eteplirsen.
Prosensa (RNA), which was a potential competitor of Sarepta, received bad news last week as its DMD oligonucleotide therapeutic drisapersen failed in a Phase IIIm trial named DEMAND-III. The result of this failure saw Prosensa's stock plummet 70%. Based on Prosensa's failure, and the likeliness of Sarepta's success, Sarepta's stock has rallied to as high as $50 the other day. We feel it could rally even further if an NDA is filed sooner than expected, and we think there is a decent chance of this happening.
Keryx (KERX) is looking to use its Phosphate Binder drug Zerenex in patients with Chronic Kidney Disease and is awaiting Phase II results. The Phase II data is expected at the end of the current quarter, and could be a game changer for the company. Commenting on Keryx's last quarter, Ron Bentsur, the Company's Chief Executive Officer, said:
Following the announcement of top-line data, we are now focusing our efforts and resources toward the pending NDA and MAA submissions. We are also progressing with the U.S. Phase 2 CKD study, for which we expect to report top-line data in the third quarter of 2013.
Phosphate binders such as Zerenex, are taken at meal time when dietary phosphates enter the body after eating. Drugs within this class work by simply reducing absorption of these phosphates into the body. Phosphate binders chemically bind to the phosphates in the gastrointestinal tract. This renders them insoluble and therefore non absorbable.
It's early in Zerenex's clinical studies for Chronic Kidney Disease, but the market opportunity is large for this indication. It could be the first phosphate binder to be approved by the FDA for non-dialysis dependent chronic kidney disease (NDD-CKD). Keryx has rallied very hard this year, up over 200%. However, we feel the stock has a good shot over time to double from here, provided the data prove to be positive.
Disclosure: I am long HALO, ATRS. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
Additional disclosure: Disclaimer: This article is intended for informational and entertainment use only, and should not be construed as professional investment advice. They are my opinions only. Trading stocks is risky - always be sure to know and understand your risk tolerance. You can incur substantial financial losses in any trade or investment. Always do your own due diligence before buying and selling any stock, and/or consult with a licensed financial adviser.