Hana Biosciences: Primed for a Major Comeback

Jan.21.10 | About: Hana Biosciences (HNAB)

It looks like the perfect storm is brewing for Hana Biosciences (HNAB).

In December, the stock took a major hit for no reason other than possibly some impatient investors selling off. Going into what should be a very positive year with a new drug application (NDA) filing for their drug Marquibo after successful trial results, this stock is primed for some major movement in the near future; first a reset to the 60-80 cent level, then a move higher as the NDA is filed.

The December publication of results from the rALLy trial in acute lymphoblastic leukemia (ALL) in second relapse shows that the drug was highly efficient as a single-agent in a very sick patient population who have few other options. There are no safety concerns beyond what is expected for this type of drug. The FDA has a history of approving ALL treatments based on phase II single-arm clinical trials, and Hana intents to use the results of the rALLy trial in their NDA filing later on this year. Accelerated approvals have already been given for the drugs Clolar and Arranon for other ALL indications based on single-arm phase II studies.

The company released a corporate presentation last week. Click the link for a pdf version of the presentation.

Marquibo is a new form of a trusted cancer drug, vincristine sulfate, in a liposome delivery vehicle. This delivery mechanism enables higher doses of the drug to be used while reducing the side effects. In the long run, Hana hopes to replace the use of generic vincristine with Marquibo in the R-CHOP leukemia treatment regimen across the board, a predicted market potential of $2.5 billion annually. The 2nd relapsed adult ALL market alone is $100 million with 65% penetration, see the company's slide number 23. The choice of second relapse adult ALL is a good strategy to enter the market. The drug was previously scrutinized by the FDA's oncology drug advisory committee in December of 2004 for another indication,aggressive non-Hodgkin's lymphoma previously treated with at least two combination chemotherapy regimens. At the time, the drug was owned by Inex Pharmacuticals. The NDA in 2004 was also based on phase II clinical trials, and although it showed equivalence, it did not show superiority to other current treatments - Inex had chosen the wrong pathway for approval. It is important to note that the committee members were otherwise very positive to the drug and no safety questions were raised. This time around, the rALLy trial has shown a major advantage to the patients over historical data, and the primary investigator for the rALLy trial is none other than Dr. Susan O'Brien, a leading expert on leukemia treatment with strong clinical trial experience.
For those who enjoy reading stock charts, the consensus is that HNAB is currently due for a major reset, unrelated to other upcoming events. This annotated chart was prepared by user EpicStocks on InvestorsHub, and tells the tale very nicely. It is rare to come across a biopharma stock with upcoming drug submissions and a perfect chart situation, this is the first in some time. The company has cash to last until the NDA submission, and more on tap through Deerfield Management, who has a seat on the board of directors. Some minor dilution is expected as we move forward, but this is still a company with a low float, currently at only 92 million shares outstanding with a float of 81 million shares.

Disclosure: Long HNAB