FDA catalysts can provide significant returns for investors.
The two primary FDA catalysts that we are looking for are FDA decision dates (PDUFA dates) and advisory panel dates.
PDUFA decisions include: Trimel Pharmaceuticals (TRLPF), Progenics (PGNX), AcelRX (ACRX), Anacor (ANAC), Omeros (OMER), Mannkind (MNKD), Eagle (EGRX), Biodelivery Sciences (BDSI), Navidea (NAVB), and Orexigen (OREX).
Attempting to make money in pharmaceutical stocks can be daunting. Inherently the companies are filled with large amounts of risk related to the potential approval of the drug that is being developed. In my previous article I mentioned some pharmaceutical stocks that were facing potential catalysts. I will update on the results of each of the stocks in the previous article in an upcoming article. However, the catalysts that I mentioned were largely for the first half of the year. With the first half of the year already almost gone, we must begin to look at stocks for the second half of the year with similar potential.
The idea of investing in biotechnology catalysts is that as a company gets closer to the PDUFA date (for those of you who are not familiar with what this is, it is the date by which the FDA announces that it will make a decision on a drug), there is significant momentum for the company seeking approval. Smart investors are able to time their trades to capitalize on the momentum while selling the company well ahead of the FDA decision, therefore limiting the downside in the possibility of the drug not being approved by the FDA. Through this method investors are able to obtain some of the upside in the momentum behind a stock while limiting downside. This trend also largely exists for companies facing FDA Advisory Committees, some Advisory Committee dates will also be mentioned in this article. Like last time if I forgot any company with a PDUFA date, it is just because there are so many and was not intentional. I have intentionally focused on smaller cap pharmaceutical companies as they are prone to follow the trend. As usual if I missed any companies that you can think of please let me know in the comments section.
Trimel Pharmaceuticals Corp May 28
Trimel Pharmaceuticals (OTCPK:TRLPF) will have a PDUFA decision on May 28 for its bioadhesive intranasal gel testosterone product, called CompleoTRT. The PDUFA date was originally set for February 28th, but the FDA extended the decision date by three months due to Trimel choosing to modify the proposed label for the drug. This was considered a major amendment by the FDA and hence the decision to extend the PDUFA date. While I am not typically bullish when I see the PDUFA date extended, it is very possible that this drug will be approved. If approved, it would be Trimel's first approved drug.
Trimel appears to have already undergone most of the runup that it was going to have heading into its PDUFA date, and this means that it is probably not worth it for investors to take a position in the company now. When looking at the Phase III data for Trimel, it appears as though the drug met all of its primary endpoints and did not have any serious side effects. My concern about this company lies with the labeling change, there was clearly something in the previous label that the FDA either objected to, or that the company believed would hinder the ability to be approved. It may have been smart to meaningfully change the label and just absorb the three month hit in order to avoid a CRL. It will be interesting to see where the FDA comes down on this company. With Trimel being a rather small company, this drug is very important to Trimel and will help to guide the future for the company. Should the drug be approved, we would probably see Trimel try to line up a partnership for the drug. On the flipside I would expect to see a huge drop in shareprice if the drug is ultimately not approved. I would personally stay away from the runup potential of Trimel because I believe that it has already happened, and also with the relatively low volume in regards to the trading of the stock I would be hesitant to take a position, for fear of not being able to exit that position in a timely manner.
Omeros Corporation June 1st
Omeros Corporation (NASDAQ:OMER) has a PDUFA date of June 1 for its drug OMS 302 designed to treat occular inflammation in patients undergoing intraocular lens replacement surgery. In terms of the potential for an increase in share price potential it appears as though this stock still has some room to run in the next week heading into its PDUFA date. However, it is important to note that investors need to be careful as the date June 1 is a Sunday. This means that the FDA could do two different things, it could release the decision on Friday the 30th, or it could release its decision on Monday June 2nd. While I view the Monday as being more likely, it should be noted for investors that there is a chance that the FDA would come out with its decision early.
OMS 302 is very important to the future of Omeros, and as such I believe that the stock still has some room to run. This drug would be Omeros' first approved drug, and as such if approved it would serve as a sort of validating drug for Omeros (proving that it can see a product through to approval). However, it is even more important for Omeros given its sales potential. Some analysts have the sales for the drug pegged in the $500 million range. While I would not be this optimistic about the peak sales of the drug, I do believe that the drug will provide substantial revenue for Omeros going forward and at least for the next few years it would be one of the primary drivers of growth in Omeros' stock price moving forward. In regards to the Phase III trials, they met all of their primary endpoints and did not show any significant safety issues, which means that I am expecting approval of the drug. This drug is very important to Omeros and as such we can expect to see more of a runup heading into the PDUFA decision in approximately a week.
Biodelivery Sciences June 7
Biodelivery Sciences International (NASDAQ:BDSI) will have a PDUFA date for its drug Bunavail. Bunavail is being developed for the treatment of opioid dependence. Bunavail is a combination of the drugs Buprenorphine and Nalaxone (this combination is currently marketed by a different company as Suboxone). What Biodelivery has done is they have formulated the combination into a buccal film using their proprietary BEMA delivery technology, which the company believes will provide better ease of use for patients, and thus be able to generate increased sales of the drug. It is important to note that Suboxone has been a widely used drug to treat opioid dependence, so if Biodelivery is right and their technology is just a better way of delivering the drug it should not be that hard to convince doctors to switch.
This drug would be Biodelivery's second approved drug. Their first Onsolis, did not achieve the sales that the company hoped for and this second time around the company is hoping that Bunavail will be the driver of future revenue growth. With this in mind, it makes the runup potential for the company heading into its PDUFA date even larger possibly due to the important nature of the drug to the company's overall growth strategy. The drug did very well in its Phase III trials and did not show any noteworthy adverse side effects that would deviate from what we already know about Buprenorphine. With this in mind, I expect to see the FDA approve Bunavail, and then expect to see Biodelivery try to partner the product. An interesting route would be to try to leverage one of its existing partnerships in order to get a current partner to market the drug. Biodelivery has a partnership with Endo Pharmaceuticals (NASDAQ:ENDP) for their BEMA Buprenorphine patch in the treatment of chronic pain, and has a partnership with Meda for Onsolis (its currently approved product). If Biodelivery is able to obtain approval for Bunavail it will be very important for the future of the company, and with room to run I would expect that there is potential left for a price increase even though we are relatively close to the PDUFA date.
Orexigen Therapeutics June 10
Orexigen Therapeutics (NASDAQ:OREX) will have a PDUFA date of June 10 for its anti-obesity drug Contrave. Contrave was the subject of a previous CRL in 2011 from the FDA in which the FDA asked for more safety information specifically related to the need to conduct a trial to exclude the excess of major cardiovascular events related to the use of Contrave. After a successful interim analysis of the Cardiovascular study, the company decided to resubmit the drug for approval. The drug is partnered with Takeda Pharmaceuticals (OTCPK:TKPYY) for commercialization in North America.
Contrave is composed of two already FDA approved drugs Buprion and Naltrexone. To be very clear, the efficacy of Contrave is not really under dispute, the only stumbling point for the FDA last time was the safety study. With the interim analysis completed, it appears as though Orexigen is well on its way to obtaining FDA approval for the drug. However, Orexigen will be entering a rather crowded marketplace with Vivus inc (VVUS) and its drug Qnexa and Arena Pharmaceuticals (NASDAQ:ARNA) (Belviq) having approved anti-obesity drugs that are already on the market. With this in mind, it might be hard for Orexigen to successfully penetrate the market. However, this is Orexigen's first drug, and given the importance of this drug to Orexigen's growth plan for the next few years, I would expect to see some room for Orexigen shares to increase heading into the final weeks before the FDA approval decision.
Progenics Pharmaceuticals June 11
Progenics Pharmaceuticals (NASDAQ:PGNX) has an advisory panel on June 11. The advisory panel is meeting regarding Progenics' drug Relistor. Relistor is partnered with Salix Pharmaceuticals (NASDAQ:SLXP) for everywhere in the world except for Japan, and is currently FDA approved for the treatment of Opioid Induced Constipation in patients with advanced illness. The committee will be providing the FDA on a recommendation as to whether or not it is appropriate to expand Relistor's label to include the treatment of Opioid induced constipation in patients with chronic pain. This expanded label would be important to Progenics as it would provide for additional revenue opportunities for the company through the expanded amount of patients who are eligible for treatment with the drug.
Approval for the indication would also be important for Salix as it would add to the ever growing amount of products marketed by Salix pharmaceuticals. In terms of runup potential, Progenics is the most immediate contributor to the long term success of the company and is vital to the company's growth strategy. The sales of Relistor is important to helping to finance the company's overall pipeline growth, so investors will be looking to see an expanded label and with that an increased amount of sales. This helps the potential for a runup due to the fact that although it is not the company's first time around for FDA approval, the drug is very important to the overall growth strategy of Progenics. It is important to note that the FDA documents to the advisory committee come out on average three days before the committee is set to meet. This means that any runup oriented investor should sell well in advance of these documents being released, as the documents could expose the investor to unintended downside. The clinical trials for Relistor were impressive and I do not believe that there will be any problems in terms of obtaining approval for the expanded use of Relistor.
Navidea Biosciences June 16
Navidea Biosciences (NYSEMKT:NAVB) has a June 16 PDUFA date for its drug Lymphoseek. Lymphoseek is currently FDA approved for use in lymphatic mapping procedures to assist with the location of lymph nodes in patients with breast cancer or melanoma. Navidea is attempting to expand the label for Lymphoseek to include use in sentinel lymph node detection in patients with head and neck cancer. Lymphoseek was granted priority review by the FDA, this is important because the FDA only grants priority review to compounds that the FDA believes may represent a significant improvement over existing treatment options. With this designation, Lymphoseek's time between their filing of an sNDA and the PDUFA date was substantially lowered. It can also be considered to be a good representation of the importance of Lymphoseek, as the FDA is acknowledging that Lymphoseek may provide a substantial benefit in terms of quality of care for patients. This would suggest that if approved Lymphoseek should be able to do very well in terms of sales. Lymphoseek is distributed by Cardinal Health, which will help to further drive sales of the drug.
Lymphoseek is the only approved drug for Navidea, and as such any sort of label expansion should be very important for Navidea. An expanded label would help for Navidea to be able to finance its impressive pipeline, and an expanded label would help to further validate Lymphoseek as an option for doctors. In terms of runup potential heading into the PDUFA date, it would appear as though Navidea still has room to run. I do not believe that Navidea will have any problems obtaining FDA approval for its new indication, as the clinical trials were very successful. Overall, it appears as though Navidea may be poised for a runup heading into its PDUFA date.
EnteroMedics Inc. Advisory June 17th
EnteroMedics Inc (NASDAQ:ETRM) will have an advisory panel on June 17th for its Maestro weight loss system. The Maestro weight loss system is designed to block the vagus nerves, and thus help to put people on a path towards weight loss. If approved, this would be EnteroMedics' first approved product. As such, this product is very important to the future growth of Entero and more importantly it would help to validate their technology platform.
Maestro appears to be the only product in Entero's pipeline, and as such will be important to investors. Heading into the panel investors should be able to see a runup, given that the panel will likely have a large influence on the decision that the FDA ultimately makes as to whether or not to approve the drug. For Entero's investors, almost everything hangs in the balance. Entero is currently conducting a long term safety and efficacy study for the Maestro system, and at month 18 the trial was still on target and well below where they predicted that it would be in terms of adverse effects. On the efficacy side it appears as though the system is efficacious. The panel will help to determine whether or not the system is efficacious enough in order to merit approval, given the rate of adverse effects. In terms of a potential for increase in shareprice, it appears as though Entero will be able to move upwards heading into its panel. This is due to the fact that Entero is trading relatively in the middle of its 52 week low and high, and we are slowly seeing an uptick in volume for the stock. The fact that this product is so important to the future of Entero only enhances the chance for an increase in price heading into the FDA Advisory Panel.
Mannkind Corp PDUFA July 15
Mannkind Corporation (NASDAQ:MNKD) has a PDUFA date of July 15 for Afrezza. The previous PDUFA date was April 15, however, the FDA extended the review time due to a request for additional information. Afrezza is an inhaled insulin powder for the treatment of both type one and type two diabetes. If approved, Afrezza would be Mannkind's first approved product and would be a significant driver of growth over the long term. Afrezza has been the subject of multiple Complete Response Letters from the FDA, and after conducting additional trials Mannkind is once again seeking FDA approval.
The most recent CRL was regarding the use of Mannkind's second generation inhaler, and whether or not it was equivalent to the first generation inhaler (upon which most of the clinical data for Afrezza rests). After conducting the two necessary clinical trials to prove that the inhalers are indeed equivalent, and that the second generation inhaler does seem to provide some benefit to patients. With that in mind, it appears as though Mannkind may finally be on the cusp of obtaining FDA approval for Afrezza. Regarding the runup potential, given the importance of FDA approval for Afrezza, and the fact that Mannkind now has the clinical data in hand to hopefully put to rest any fears that the FDA has, I still believe that the company has room to grow in terms of an increase in price. Mannkind is a company that I will be watching very closely heading into its PDUFA decision date.
Eagle Pharmaceuticals July 6 and July 22
Eagle Pharmaceuticals (NASDAQ:EGRX) has a PDUFA date of July 6 for its drug EP-3101. EP-3101 is a version of bendamustine [which is currently marketed as Treanda by Teva Pharmaceuticals (NYSE:TEVA)]. EP-3101 is a ready to dilute version of bendamustine and as such Eagle believes that it will offer significant advantages of Teva's current version of the drug. Eagle is seeking approval for EP-3101 for the indications of Chronic lymphocytic leukemia and indolent non-Hodgkin's lymphoma. Eagle also has a PDUFA date of July 22 for its drug Ryanodex. Ryanodex is indicated for the treatment of malignant hypothermia. Significantly, the FDA decided to grant Ryanodex priority review.
In regards to EP-3101, it is important to mention that Teva has filed a patent infringement lawsuit, seeking to stop Eagle from being able to market the drug. While this lawsuit would be a potential stumbling point for long term oriented investors, as people who are looking for a quick momentum play we are not all that concerned about the lawsuit. Given when the lawsuit was filed it is not at all likely that it will be resolved by the PDUFA date, but given that this will be an overhanging situation it is likely to not play into the momentum potential for the stock. EP-3101 could represent a significant improvement over Teva's Treanda. Treanda generated over $600 million in sales in 2012, and should Eagle be able to grab even a small portion of Teva's sales, it could be very lucrative for Eagle investors. As such this drug will be very important to the overall growth strategy for Eagle Pharmaceuticals. Eagle should be able to experience a significant increase in share price based upon EP-3101 alone.
Fortunately for Eagle investors, EP-3101 is not the only drug that is facing FDA approval. Eagle is also seeking FDA approval for Ryanodex. Eagle currently has orphan drug status for Ryanodex, which will help to give Eagle marketing exclusivity for a period of time should it ultimately obtain FDA approval. This enhances the sales potential for Eagle and helps investors to realize why this drug could represent a significant potential for growth. Further enhancing the importance of Ryanodex approval is that Eagle was just granted a patent for Ryanodex for the treatment of Heat stroke. This means that Eagle likely plans on attempting to get Ryanodex approved for other indications. This is significant because it puts added pressure on Eagle to get Ryanodex approved, as it would help to validate the drug and then Eagle can embark on its plan to help expand the label of the drug further. Ryanodex performed well in clinical trials, so I do not have very many concerns regarding the potential for the FDA to approve the drug. Regarding the potential for an increase in shareprice, I would guess that Ryanodex is going to be the bigger driver of a runup (if we were able to split a runup by drugs, however, we are not able to do that). Eagle is just coming off of its 52 week low, and I would look to add shares hoping for a runup as Eagle heads towards its PDUFA dates. Look for days where the stock is almost flat in terms of gains or losses, but that the stock was significantly over its average in terms of volume. Eagle is a stock that I will probably take a position in as we head closer to the PDUFA dates.
AcelRX Pharmaceuticals July 27
AcelRX Pharmaceuticals (NASDAQ:ACRX) has a PDUFA date of July 27 for its drug-device combination Zalviso for post-operative pain. Zalviso would be AcelRX's first approved product. AcelRX plans to market the device in the United States, and recently signed an agreement for a partner to market the drug in Europe (upon European approval). Zalviso is important to AcelRX as its approval should help to finance the rest of AcelRX's pipeline.
Zalviso appears to have a promising chance of obtaining FDA approval. Zalviso met the primary endpoints in both of its double-blinded Phase III studies, and showed in an open-label comparative study that it has a faster onset of pain reduction compared to IV PCA morphine. This means that the device could offer significant advantages to patients over currently approved treatments, and as such upon FDA approval the device should be able to garner a significant amount of the market. When looking at the potential for the stock to increase heading into its PDUFA date, AcelRX is roughly in the middle of its 52 week low, and 52 week high. Given how important this drug is to the overall development and growth strategy at AcelRX I would expect to see the share price increase heading into the PDUFA date.
Anacor Pharmaceuticals July 29 PDUFA
Anacor Pharmaceuticals (NASDAQ:ANAC) has a PDUFA date of July 29 for its antifungal drug Kerydin. Anacor is attempting to obtain approval for the treatment of Onychomycosis (a fungal infection of the nail and nail bed). Kerydin would be Anacor's first FDA approved drug. Anacor is already running additional clinical trials of Kerydin in combination with debridement as needed, in order to help know how Kerydin performs when Podiatrists incorporate it into their standard onychomycosis treatment regimen.
Kerydin has the potential to generate significant sales for Anacor, and has demonstrated its efficacy in multiple Phase III trials, and the safety profile for Kerydin appears to be clean. For a more in depth look at the Phase III results, please look at this article. I expect to see Kerydin approved on July 29, as the trials were conducted under an SPA with the FDA and the product according to the company had a clean safety profile. Also, the rapid absorption time compared with other treatments should help Anacor make the case to doctors that this is a treatment that ought to be incorporated into their regiment. In terms of the potential to see an increase in share price heading into the PDUFA date, we once again see that Anacor is trading relatively in the middle of its 52 week low and 52 week high. This is good as it suggests that the stock could be pushed much higher if the market catches onto Anacor. I have previously owned stock in Anacor and may take a position again heading closer to the PDUFA date.
There are many exciting opportunities for momentum oriented investors to try to take advantage of multiple FDA related catalysts. I have tried to focus this article upon the companies that I believe have the potential to grow, and the potential to see significant increases in share price heading into their respective catalytic events. When evaluating the potential for a share price increase it is important to look for an uptick above the average volume, as well as to look to make sure that the company is not trading too close to its 52 week high (which would suggest that it might not have room to run). It is important to note, however, that while I made opinions as to the potential for the FDA to approve some companies, that we are not concerned all that much on whether or not the company ultimately obtains FDA approval. A prudent momentum trader will have sold well in advance of any FDA approval decision, or in such cases any Advisory Committee decisions. There are many promising catalysts coming up for biotechnology companies that have the potential to allow for significant returns for investors.
Disclosure: I am long PGNX, OREX. 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. I have previously owned stock in Anacor.