By Kyle Dennis
In the developmental biopharma segment of the market that we follow daily, stock prices sometimes experience volatile moves, especially as a near-term catalyst event approaches. Today we look at five developmental biopharmas that should see significant upward price movements due to these companies having significant catalysts coming up in the near future.
Synergy Pharmaceuticals (SGYP) is a biopharmacetuical company that focuses on developing drugs to treat gastrointestinal (GI) disorders and diseases. The company's two leading products are Plecanatide (SP-304) and SP-333. The company is expecting to release topline data from its Phase IIb IBS-C trial in the first quarter 2014. In a September 30 press release the company stated:
Plecanatide has been validated in a phase 2b study evaluating safety and efficacy in CIC patients and Synergy plans to initiate the pivotal phase 3 CIC program in the fourth quarter of 2013. Synergy is also developing plecanatide for irritable bowel syndrome with constipation (IBS-C) and plans to announce topline data from its ongoing phase 2b IBS-C trial in the first quarter of 2014.
Insiders have also been buying Synergy stock this year with the most recent buy on October 29, 2013. Most of the purchases were above the current level of the stock. As insiders, they have the best indication of where the stock will be going in the future and it is encouraging to see them start to put their money behind the company before data release.
The Baker Brothers also have a position in Synergy at about $4.23 a share. They have about 2.7M shares, or about $12M worth. This is bullish for the company, since the Baker Brothers have an excellent track record in biotech investments.
Based on upcoming catalysts and bullish sentiment by insiders and the Baker Brothers, we expect Synergy to reach at least $6 before data release.
Progenics Pharmaceuticals (PGNX) is a biopharmaceutical company that focuses on developing oncology drugs. Progenics has two upcoming catalysts:
Progenics is expecting to announce data from its Phase II PSMA ADC trial at the American Society of Clinical Oncology meeting in January 2014. As well, Progenics has scheduled a tentative advisory panel meeting (ADCOM) in March (10th - 11th) to review an sNDA for Relistor expanded usage in OIC (opioid induced constipation) chronic pain.
In a December 6 press release Progenics Executive Vice President Prober Israel stated:
PSMA ADC is the most advanced antibody drug conjugate in clinical development to treat prostate cancer. Based on the data seen with PSMA ADC in chemotherapy experienced patients, we have decided to explore whether this compound can also benefit men in the less clinically advanced chemotherapy naïve setting.
In an October 1 press release the company also stated:
Salix Pharmaceuticals, Ltd. and Progenics Pharmaceuticals today announced that the FDA will convene an Advisory Committee on March 10-11, 2014 at which time Salix's Supplemental New Drug Application (SNDA) for RELISTOR® (methylnaltrexone bromide) Subcutaneous Injection, for opioid-induced constipation, or OIC, in patients with chronic pain will be considered. The date and agenda for the Advisory Committee will not be definitive until publication in the Federal Register.
Progenics did a secondary offering in June of 8.5M shares at $4.40 a share. This raised approximately $3.48M. The underwriters also chose to purchase an additional 1.3M shares, resulting in an extra $5.2M. The company has about $75M in cash, which should be sufficient cash to fund operations.
The Baker Brothers also hold a position in Progenics at $4.93 a share. They have a little over 4.2M shares.
We believe Progenics is undervalued and could run to $6 before data release. Progenics is working on drugs that if eventually FDA approved, the company could rake in billions.
Inovio Pharmaceuticals (INO) is a biopharmaceutical company that focuses on developing synthetic vaccines and immune therapies for cancer and infectious disease. Inovio's pipeline aims to treat cervical dysplasia, cervical cancer, head and neck cancer, prostate cancer, Hepatitis, HIV and many other major indications. Invovio is planning to release data from its Phase II study of VGX-3100 against HPV-caused cervical cancer and head and neck cancer. In a November 12 press release the company stated:
In this quarter, Inovio completed enrollment of its double-blinded, placebo-controlled, randomized phase II clinical trial (HPV-003) focused on cervical dysplasia and expects to report unblinded efficacy data in mid-2014. Inovio has initiated preparatory activities for a potential phase III study and also plans to initiate phase II studies of VGX-3100 against HPV-caused cervical cancer and head and neck cancer in 2014.
So far, insiders have been buying the stock with the most recent buy coming on November 13, 2013, right after the press release. We are going to keep an eye on these insider buys to get a sense of what they are expecting as we get closer to data release.
Due to the indications that Inovio is working to develop treatments for, we see the company as one of the biggest risk to reward companies in the biotechnology sector. Whether or not the company will present great data is huge risk, but if the company's platform does prove to be successful, Inovio could be a huge winner for investors.
As we get a little closer to the catalyst date, we will get a better idea of what to expect on a run up.
AcelRx Pharmaceuticals (ACRX) is a biopharmaceutical company that focuses on developing treatments for acute and breakthrough pain. Acel's lead product is Zalviso for post-operative pain following open abdominal surgery and hip or knee replacement surgery. The company has announced that the FDA accepted the NDA for Zalviso and set PDUFA data for July 27, 2014. In a December 16 press release the company stated:
AcelRx announced today that the U.S. Food and Drug Administration (FDA) has established a Prescription Drug User Fee Act (PDUFA) action date of July 27, 2014, for AcelRx's New Drug Application (NDA) for Zalviso. AcelRx announced on December 2, 2013 that FDA accepted for filing the Zalviso NDA.
We expect AcelRx to run into the PDUFA data and get approval that day for Zalviso. In the middle of this year the company had an unwarranted sell off on no fundamental news. The stock hit a high of $13.50 in July and dipped to about $6 in November. On that dip, Perceptive Advisors bought almost $5M worth of stock.
Since those buys, AcelRx has released positive news. On December 16, the company announced they have agreed on a commercial agreement for Zalviso with Grunenthal in the European Union and Australia. Under the agreement AcelRx will receive an upfront cash payment of $30M and is eligible to receive up to $220M in milestone payments. On December 19, the company announced they will receive $40M in new loans for Hercules Technology. This is non-dilutive for the shareholders and gives the company a strong position of working capital.
We also believe AcelRx has a strong management team that has a successful track record of developing biotechnology companies. Given that the insiders own a large portion of the company, the management's goals are aligned with investors. The management also has a history of getting the companies they develop sold to bigger pharmaceutical companies. We think this possibility gives AcelRx additional upside.
All things considered, we believe AcelRx is currently undervalued and could run to $15 or more before the PDUFA date in July.
Ariad Pharmaceuticals (ARIA) is a biopharmaceutical company that focuses on the development of treatments for cancer patients. The company's leading product is called Iclusig (ponatinib). Ariad received accelerated approval from the FDA in late 2012 to sell Iclusig for patients with Chronic myeloid leukemia (CML) and Philadelphia chromosome positive acute lymphoblastic leukemia (Ph+ ALL). However, on October 9, 2013 the stock took a huge hit as the FDA placed a hold because some patients in trials were getting blood clots.
On October 20, 2013, Ariad announced that the FDA approved the revised U.S. Prescribing Information and a Risk Evaluation and Mitigation for Iclusig. In a press release the company stated:
The FDA has approved revised U.S. Prescribing Information (USPI) and a Risk Evaluation and Mitigation Strategy (:REMS) for Iclusig (ponatinib) that allows immediate resumption of its marketing and commercial distribution. The USPI includes a revised indication statement and boxed warning, updated safety information and recommendations regarding dosing considerations for prescribers.
On the day that the company first announced a hold on the product, the stock was trading in the $18 range. As of December 20, the stock traded in the $6 range. Although not without risk, we believe the company is currently undervalued and could trend higher as people begin to again speculate on the company's future.
We believe the company's next earnings call will serve as a catalyst date. The company will be able to discuss how successful the resumption of Iclusig sales was and give additional guidance about future sales and trials.
We expect Ariad to rally over the coming months into the large gap created by the October 9 news.
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.