2nd Half Of 2014 Biotechnology Catalysts - Part 3

| About: EXACT Sciences (EXAS)


NDA and advisory committee decisions have the potential to move stocks.

Through knowing when the FDA is going to make a decision, momentum investors are able to make gains with the buildup ahead of the decision.

Each of the companies mentioned in this article will be impacted by the FDA decision.

It can be very hard for investors to be able to keep track of all of the different events going on within the biotech world, with clinical trial results, and FDA decisions happening rather frequently. The purpose of this article is to hopefully make investor's lives a little bit easier through providing them with the dates of the next month and a half of PDUFA and advisory committee decisions. These decisions are extremely important for investors, and represent the culmination of years of hard work and millions of dollars in research and development costs for the companies involved.

These decisions are by their very nature, risky. That is why I frequently attempt to buy a stock well ahead of its PDUFA date and then sell the company a week or two ahead of the FDA decision. This helps to give investors the potential 'runup' that is caused when the investment community starts putting money into a biotech stock ahead of an FDA catalytic event, while limiting downside. I have previously written in depth about this method here. For a list of past PDUFA dates, please visit part 2 which can be found here. This article will update where part 2 left off.

The Medicines Company

The Medicines Company (NASDAQ:MDCO) will have a PDUFA decision date of August 6th for its antibiotic Oritavancin. The drug has been granted priority review by the FDA, which means that the FDA recognizes that there is a lack of treatment options for Oritavancin's indications and that Oritavancin may represent an enhancement to the current standard of care. Medicines is attempting to get Oritavancin approved for the treatment of acute bacterial skin and skin structure infections caused by susceptible gram-positive bacteria. It is also important to note that the FDA acknowledged the importance of this drug through the granting of a Qualified Infections Disease Product Status, which will help to give Oritavancin additional years of market exclusivity upon receipt of FDA approval.

It is clear that Oritavancin will be very important to the FDA, and could be very important to patients, however, it will also be crucial to the longterm success of Medicines. Sales projections for Oritavancin range as high as $400 million. This will be critical to help swinging Medicines into a profit, as the company lost $5.2 million last quarter. Through adding in Oritavancin sales, Medicines should have the revenue needed to swing to profitability and help to further develop their development pipeline. This will be a crucial FDA decision for investors to watch, unfortunately, it does appear to be too late for investors to take a position in Medicines and see any sort of runup.

Momenta Pharmaceuticals

Momenta Pharmaceuticals (NASDAQ:MNTA) should have a ruling on its ANDA product for a generic Copaxone shortly. Copaxone is currently marketed by Teva Pharmaceuticals (NASDAQ:TEVA). Investors are not sure of the exact time that Momenta and its partner Sandoz will be able to obtain FDA approval, but it appears as though the company is planning on approval by the end of 2014. I personally expect approval within the next few months, which is why I have included it in this article. There is a lot of speculation that Momenta may go for an at risk launch, in which it does not wait for all of the litigation surrounding the generic product to be resolved before launching the drug. This obviously has its risks, as if a court later comes back against Momenta, there could be a lot of damages. Regardless, the case is going before the Supreme Court on October 15, 2014 so it is likely that we will have a decision, and caveating a positive decision, a drug launch by the end of the year for Momenta.

I typically do not invest in ANDAs, as they are inherently risky. However, I believe that heading into ANDA approval we will see a increase in Momenta's stock, the same can be said for Momenta heading into its Supreme Court date. This decision will be very important for Momenta investors, and as such I expect for momentum traders to be able to come away with a tidy profit. Momenta could use the cash that will be provided by a generic Copaxone launch, as the company lost $28.8 million last quarter.

Exact Sciences

Exact Sciences (NASDAQ:EXAS) should have a PDUFA decision in mid to late August, for the company's PMA application for Cologuard. We do not know the exact date of the PMA decision, because the decision is made approximately 30-45 days after a facility inspection by the FDA. In its most recent quarterly report, Exact mentioned that the FDA completed its facility review 'recently'. Exact Sciences is seeking approval for the use of Cologuard as a correlectal cancer screening test.

The company appears to have a potentially very lucrative screening test on its hands, as the sales projections for Cologuard range as high as $1 billion, investors should note that there are some even higher sales projections out there, so it should be interesting to see what Exact is able to accomplish. This decision will impact Exact over the long term, as the company currently does not have any revenue and this will be Exact's first FDA approved device. It appears as though Exact is well on its way to obtaining FDA approval, having obtained a unanimous FDA advisory panel decision in their favor. The company plans on launching Cologuard on its own, after announing in its most recent quarterly report that it has hired an 80 person sales team to market Cologuard. Exact represents, in my opinion, one of the more exciting potential runups available and one of the largest runup potential companies in this article. Exact will have its future determined by the FDA decision, and it appears as though should the FDA come back with approval, Exact will have a bright future ahead.

Halozyme Therapeutics

Halozyme Therapeutics (NASDAQ:HALO) is projected to have a PDUFA decision for its drug Hyqvia in early September. Halozyme was not very clear on the exact date that the FDA was going to make a decision, regardless we know that the timeline for the application would put the PDUFA in early September. Hyqvia is being indicated for patients with Primary Immunodeficiency. Hyqvia is partnered with Baxter International (NYSE:BAX). The drug received approval in Europe in 2013 and is currently marketed in Europe.

It appears as though the approval of Hyqvia is little more than a mere formality at this point. The company received a positive recommendation from an FDA advisory panel, which voted 15-1 in favor of approval. When you combine the advisory panel recommendation and already having European approval, it appears as though the market has largely already priced in FDA approval to Halozyme's stock. As such I do not believe that it is a good runup opportunity. The drug will be very important to both Baxter and Halozyme, with a peak sales estimate of $800 million.

Keryx Biopharmaceuticals

Keryx Biopharmaceuticals (NASDAQ:KERX) has a PDUFA date of September 7th for its drug Zerenex. Keryx is seeking to have the FDA approve Zerenex for use in patients with Hyperphosphatemia. Investors should note that the FDA delayed making a decision on Zerenex until September 7th, changing the PDUFA date from June 7th.

While some investors may view the FDA delaying making a decision as a negative, it is not necessarily a negative. There are many legitimate reasons as to why the FDA could delay making a decision. In the case of Keryx, the company amended the CMC section of its application, and thus caused the delay. A delay is much better than a rejection, however, so Keryx may have saved itself from disappointing news. With this in mind, I do not believe the delay to be inherently negative for Keryx and believe that it helps to create another opportunity for a runup into FDA approval. US sales estimates of Zerenex are in excess of $300 million per year. Obtaining FDA approval will be very important for Keryx, which lost $13.5 million last quarter.

Orexigen Therapeutics

Orexigen Therapeutics (NASDAQ:OREX) has a PDUFA date of September 11th for its weight-loss drug Contrave. The FDA delayed making a decision for Contrave on June 11th. I have previously written about how I believe that Contrave will change the landscape of diabetes treatment and how Orexigen could beat its competitors Arena Pharmaceuticals (NASDAQ:ARNA) and Vivus Pharmaceuticals (NASDAQ:VVUS). Orexigen has partnered with Takeda Pharmaceuticals (OTCPK:TKPHF) to launch Contrave in the United States.

Contrave has the potential to meaningfully impact Orexigen for years to come. If approved, Contrave would be Orexigen's first FDA approved product, and as such it will be very important for Orexigen to get by the FDA. Peak sales estimates for Contrave vary widely, and go as high as $1.2 billion. Orexigen needs the revenue having reported a loss of $24.9 million last quarter. With the importance of the Contrave decision for Orexigen, I believe that the stock has room to run ahead of the FDA approval decision. This decision will also be very important for Vivus and Arena investors as an FDA rejection should send Vivus and Arena shares higher.

NPS Pharmaceuticals

NPS Pharmaceuticals (NASDAQ:NPSP) has an advisory committee date of September 12th for its drug Natpara. NPS is seeking approval for the use of Natpara in patients with Hypoparathyroidism. As a reminder, Advisory Committees are an important part, when used, of the FDA review process and help to give insight as to the views of the FDA towards a drug. However, the FDA does not have to follow the advice of its advisory committees, i.e. an advisory committee can recommend approval of a drug and the FDA can reject the drug. This advisory committee will nonetheless be important to investors as obtaining approval should help to raise the confidence of the market in Natpara being approved by the FDA.

The approval of Natpara should have an impact on NPS shares. While Natpara is not going to be a blockbuster drug by any stretch, some estimates have the peak sales as high as $250 million. If approved, NPS should not have a problem obtaining a rather high amount of sales as there is not any competing drug for the treatment of Hypoparathyroidism.

Bottom Line

Each of the companies (with the exception of Medicines given how close its PDUFA date is) mentioned in this article have the potential to move ahead of FDA approval. There are a lot of exciting FDA decisions upcoming, and investors should pay close attention to any sort of runup heading into the actual decision. Each of the companies in this article should be impacted by the FDA decision, and as such it is a very exciting time for investors.

Disclosure: The author is long OREX. 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.