2nd Half Of 2014 Biotechnology Catalysts - Part 2

Jun.25.14 | About: Halozyme Therapeutics, (HALO)


NDA decisions can represent significant catalysts for investors.

By knowing when the FDA is going to make a decision, astute investors are able to benefit from the price increase heading into the decision.

Each of the companies in this article have the potential to be meaningfully impacted by their respective FDA decisions.

It can be a daunting task for investors attempting to put together exactly when various companies will have their FDA approval decisions. For investors within the biotechnology industry, few catalysts match the FDA making a decision on a company's drug. For the companies involved, to reach this point means millions of dollars in development and years in terms of research and development. To not receive FDA approval can ruin a company, and cause them to have to run additional clinical trials at a very high cost to investors.

That is why I try to avoid the actual decision. The easiest way to do this is to invest in a company well in advance of its PDUFA date and then to sell before the FDA decision (or advisory panel), my typical goal is to sell a week before the decision, which allows some buffer time should the FDA come out with the decision early. This helps to minimize risk, as investors are investing in the momentum of the stock and not necessarily the actual underlying approval. For more information about this method of trading, please click here. In my previous article, I wrote about upcoming FDA Advisory Panels and FDA approval decisions through July 29th. The purpose of this article is to update the investment community about important decisions coming out after July 29th. This article will help to update the calendar for investors through the first week of August. There will be subsequent articles further updating investors for the rest of the year.

July 31 Halozyme FDA Advisory Panel

Halozyme Therapeutics (NASDAQ:HALO) will face an FDA advisory panel on July 31. This panel will be over Halozyme's drug HyQvia, and will make a recommendation on whether or not the FDA should approve the drug for commercial sale in the United States. It is important to note, however, that the panel vote is nonbinding, so the FDA is in no way bound to follow the advice of its panels. Still, the FDA very rarely overrules the advice of its panels, so this will be a crucial step for Halozyme.

Halozyme is attempting to obtain approval for HyQvia as a primary replacement therapy in patients with primary immunodeficiency. If approved, this drug would add to Halozyme's growing drug portfolio and add another revenue pathway for the company. Halozyme needs this revenue, as the company lost $26.5 million last quarter on $12 million in revenue. The product is partnered with Baxter International (NYSE:BAX), and is approved for use in multiple European countries. Should HyQvia obtain FDA approval, it would allow for Halozyme to obtain much needed revenue in order to continue advancing the other parts of its development pipeline. Halozyme is entitled to mid-single digit royalties on net sales of the drug. HyQvia is already approved in a variety of European countries which, although the FDA is not bound to follow the decisions of other countries, should help to make investors confident in the approvability of HyQvia. We are not exactly sure of the approval date for HyQvia after the FDA panel. I project the PDUFA date to be August 21, 2014, as the letter was dated 5/21/2014 announcing that the FDA was choosing to extend the drug review time. The typical extension time is a three-month extension, which is how I arrived at the August 21, 2014 PDUFA date. This decision will be important to both Halozyme and Baxter moving forward, as it has the potential to provide both companies with significant revenue. Investors should get a good idea of how the FDA views the treatment through the briefing documents released before the panel, and a panel vote in favor of HyQvia should go a long way towards obtaining FDA approval for the drug. I do expect a slight run-up in share price before the FDA advisory panel, as this decision will be very important to Halozyme shareholders. However, in my opinion after the panel's decision we will not likely see a large run-up due to the fact that approval or denial will likely be baked into the share price of the stock at that point.

Flamel Technologies August 6th

Flamel Technologies (NASDAQ:FLML) will have a PDUFA decision date of August 6th for its unknown drug. The company has been secretive about what this drug is designed to treat for competitive reasons. With this in mind, we do know a few things about the drug. We know that this is the second time that Flamel has attempted to gain FDA approval for the drug, with the first time ending with the issuing of a CRL by the FDA. The FDA apparently feels rather confident about the ability to review the drug quickly, as it classified the CRL response as a class one response allowing for Flamel to be able to have the drug reviewed on August 6th. The class one response designation should help to make investors in Flamel Technologies more confident that the drug will ultimately be approved by the FDA. The CRL mentioned relatively minor issues with the facility that is being used to manufacture the drug, and on labeling for the drug. Flamel believes that it has addressed these rather minor problems, and will attempt to obtain FDA approval. This brings up the question, what is the drug?

We know that this drug, if approved, would be Flamel's second FDA approved drug that is an unapproved marketed drug. Flamel has been very successful in terms of reformulating current drugs that are on the market, and are widely used by patients but never obtained FDA approval. What Flamel does is that it reformulates the existing drug and runs the trials necessary in order to obtain approval by the FDA. Once Flamel has its version of the drug approved, it then petitions the FDA to remove the unapproved products from the market. This is actually a very lucrative business model for Flamel, and helps to create safer outcomes for patients. Should Flamel obtain FDA approval this time around, it would help the company to continue its development projects and would allow for investors to be more confident in Flamel's technology pipeline. Flamel has an interesting concept in getting unapproved marketed drugs approved by the FDA; should the company obtain approval, they will then disclose to the public what the drug is, and the marketing plans. In terms of run-up potential, I still see room to grow in Flamel's share price. Upon the news of the FDA classifying the CRL response as a class one response, the shares skyrocketed. I still believe that there is room to run given the importance of this drug to Flamel's growth strategies and given that it will help to further validate Flamel's technology platform.

The Medicines Company August 6th

Like Flamel Technologies, The Medicines Company (NASDAQ:MDCO) has a PDUFA decision date of August 6th. Medicines is seeking FDA approval for its drug Oritavancin. Oritavancin was granted FDA priority review designation, which helped to substantially lower the amount of time in between the FDA filing and the actual approval decision for Medicines. Medicines is trying to obtain FDA approval for Oritavancin in Acute Bacterial Skin and Skin Structure Infections. Oritavancin, if approved, would represent a significant step forward for patients with this infection, and as such will be very significant to Medicine's growth moving forward. When looking at the Phase III results, the only thing that The Medicines Company had to do was prove non-inferiority of Oritavancin to the current standard of care, Vancomycin. It should be noted that on many metrics, but not to a statistical significance, Oritavancin was able to beat Vancomycin for patients. With the success of Oritavancin versus the current standard of care, the FDA should approve Oritavancin, as this would allow for another option for patients. It is very important in the world of antibiotics to get multiple antibiotics approved for the same indication, as if the bacteria builds up resistance to one of the antibiotics, there is another that doctors are able to rapidly switch to in order to treat patients. Oritavancin will be very important to the growth strategy of The Medicines Company.

Oritavancin has the potential to generate substantial sales for The Medicines Company. Oritavancin has peak sales estimates of $400 million. With this in mind, the drug has the potential to substantially impact the earnings for Medicines, which reported net revenue of $177 million last quarter. The addition of over $100 million per quarter in revenue should be substantial for shareholders and should allow for Medicines to substantially increase its net income. Medicines is in a great position to be able to launch Oritavancin upon FDA approval, and obtaining the additional revenue from Oritavancin's launch should help to further the company's existing pipeline. From a run-up perspective, I expect a rather large run-up heading into the FDA decision, given the importance of the drug to The Medicines Company. Oritavancin should provide the revenue needed in order to continue to advance the company's development pipeline.


As with any investment, investing in catalytic events carries with it an element of risk. The principal risk is the timing of the FDA. While the PDUFA date is a guideline, it is by no means set in stone. It is possible for the FDA to come out with a decision before the PDUFA date. This would be a risk for our method, as our goal is to sell before the FDA makes a decision in order to hopefully limit the downside in the stock. The other major risk is that we cannot invest simply in one drug. What I mean by this is that these companies have multiple drugs under development, and unexpected negative results on a different drug in the development pipeline could still impact shares.


Each of the companies mentioned in this article will be substantially impacted by the FDA's decisions regarding their New Drug Applications. Each of these drugs has the potential to contribute much needed revenue to each company, and to more importantly contribute to the net growth of the company for years to come. These companies will provide interesting catalysts for shareholders heading into their FDA approval decisions.

Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.