Several weeks ago, I published a special report on biotech stocks in Seeking Alpha that highlighted, among others, Savient Pharmaceuticals and Chelsea Therapeutics. Here is an important update.
Savient Pharmaceuticals (SVNT) is a classic “orphan drug” play on the treatment of severe gout. It did indeed receive its FDA approval for Krystexxa as I predicted. It also jumped from $14 to $20, again exactly as predicted.
The challenge for this company right now is finding a buyer that has the marketing and distribution channels that can sell the specialty drug. Companies that currently focus on gout drugs include Amgen (AMGN), Roche (RHHBY.PK), and Bristol-Myers Squibb (BMY).
If these or other companies get in a bidding war for SVNT, then the stock will have more room to run. However, because this is highly uncertain, I'm putting a SELL rating on the stock. You can either take your profits and run or, sell enough of the stock to return your initial capital, and maybe let the bet ride. Either way, hanging onto the whole enchilada is very risky right now.
As for Chelsea Therapeutics (CHTP), this company will have its own particular day with the FDA, likely within the next several weeks. Because of risk aversion at the FDA, it is always a crapshoot as to what decision may come out. That said, approval for Chelsea's neurogenic orthostatic hypertension drug – it's for dizziness when you stand up – should be as close to a slamdunk as you can get. The reason is simply that the company failed its previous test with data that should now easily fit within revised end points.
Already, the stock has begun to move off the four dollar mark. Roth Capital has a six dollar target with a 75% probability of FDA approval which should make this a stock well over seven dollars at fair value of that approval comes. So watch this one carefully over the next several weeks.
Finally, please contact me if you have any information about Senesco Technologies (SNT), which I am compiling research about and will soon have report about.
Disclosure: Long CHTP, SNT