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Summary

  • PDUFA decisions have the potential to move share prices.
  • Through knowing when PDUFA decisions are going to be made, investors can benefit from the increased momentum and share price heading into the decision.
  • There are many upcoming decisions in the second half of September for investors to watch.
  • Each of the stocks mentioned in this article have the potential to move up ahead of their respective FDA decision dates.

Having previously updated the investment community in part 3 of my Biotechnology Catalysts series, the purpose of this article is to help give investors an idea of the upcoming biotechnology catalysts through the end of September. It can be hard for investors to be able to aggregate all of the different PDUFA dates for upcoming stocks. The purpose of my article series is to hopefully make the lives of investors a little bit easier. September appears to be a very busy month for the FDA this year.

As I detailed in a previous article, I typically trade these catalyst stocks looking for what I would call a runup. A runup is an increase in both price and volume typically heading into a binary event, in this case PDUFA dates. The purpose of this method is to benefit on the increased expectations and anticipations for companies as they get closer to their PDUFA dates. However, through this method we can also lower downside risk, as I typically sell two or three business days ahead of the PDUFA date. This helps to make sure that investors are able to minimize risk through not actually holding the stock heading into the FDA decision. FDA decisions are notoriously unpredictable, and while I have been on a little winning streak in my predictions, it is better for investors to sell in advance and limit their downside risk. Also of note is the fact that the FDA is not bound to the PDUFA date. It can come out early, so this method is by no means perfect. Without further ado, let's take a look at an upcoming PDUFA date.

Nektar Therapeutics

Nektar Therapeutics (NASDAQ:NKTR) has a PDUFA date of September 16th for its drug Naloxegol called Movantik. Nektar is seeking to have Naloxegol approved for use in patients with opioid induced constipation. Naloxegol, while created initially by Nektar, is partnered with AstraZeneca (NYSE:AZN). Through having a partner like AstraZeneca, the drug should be well positioned to achieve commercial success provided that it does successfully obtain FDA approval.

Nektar could use the funds provided by a successful Movantik launch. Last quarter the company lost $32.6 million. The company would get a royalty on net sales that is in the "significant double digits." Nektar would also be eligible for tiered milestones depending upon the drug hitting certain pre-defined targets. Additionally, helping sales is the fact that it would be the first oral drug approved for Opioid Induced Constipation. The unique oral delivery method should provide an ease of use benefit for patients. The drug looks poised to obtain FDA approval, as it received a positive advisory panel decision. Remember, that the FDA is not bound by the decisions of its advisory panels, however, typically they do follow the decisions.

Also remember that both companies are seeking approval for Movantik in Europe. While we do not have a specific date for European approval, we know that AstraZeneca is planning for European approval before the end of the year. Additionally, Nektar will receive large payments upon the initial commercial launch of Movantik. It will receive $100 million upon the US launch, and $40 million upon the EU launch, both of which are expected to occur in the first quarter of 2015. In regards to the runup potential for Nektar, I do see the potential for a runup. This decision will be very important for the company, and the market should continue to take notice. This drug has the potential to help turn Nektar's loss into a profit, and as such shareholders will be watching very closely regarding the decision that is rendered.

Auxilium and Vivus

Auxilium Pharmaceuticals (NASDAQ:AUXL) and Vivus Inc (NASDAQ:VVUS) have a PDUFA date of September 20th, for their drug Stendra. Stendra is already approved by the FDA for Erectile Dysfunction, and Auxilium and Vivus are seeking to have the FDA update the label to a more favorable label. The drug was created by Vivus, but is marketed in the US and Canada by Auxilium. The updating of the label is through a process called submitting a Supplemental New Drug Application (NASDAQ:SNDA). This allows for the companies to ask the FDA to update the label to either include new information or to even increase the indications in which the drug is approved for use. In Vivus and Auxilum's case, the companies are seeking an enhanced labeling.

The companies are asking the FDA to include additional efficacy information from their recently completed clinical trial. The companies believe that they should be able to gain a larger marketshare with the new efficacy information. Vivus is making rather substantial revenue off of Stendra. The company recognized 11 million in revenue from Stendra last quarter. The drug has also had a successful early launch for Auxilium, with the company recognizing $6.1 million in net revenue from the launch. This represents a 5.7% share of all PDE5 prescriptions, which suggests that there is definitely an opportunity to gain more revenue out of the drug. In terms of a runup, this event while relatively minor could trigger a runup at Vivus. Vivus shareholders will be watching closely to the Stendra news, and I believe that the company could see an increase in price heading into the FDA decision.

pSivida and Alimera

pSivida (NASDAQ:PSDV) has a PDUFA date of September 26th for its drug Iluvien. The company is seeking to have Iluvien approved for use in Diabetic Macular Edema. This will be the fourth time that pSivida is seeking to obtain FDA approval for Iluvien. The company previously received multiple CRLs when trying to have Iluvien approved in the United States. This decision will also be very important for pSivida's commercial partner Alimera Sciences (NASDAQ:ALIM). Alimera is in charge of marketing the drug in the United States and Europe, where Iluvien already has approval, and is on the market in certain countries. Alimera is in charge of working with the regulatory agencies as part of the approval process.

Iluvien is expected to generate substantial sales in the United States for both companies. The US is believed to be a bigger market for the drug/device combination, and therefore is believed to be the most important market. Having EU approval for the drug is great for Alimera and pSivida, however, they need to obtain US approval.I expect that there is a substantial chance for a runup in both stocks, however, especially in pSivida. During previous attempts to obtain FDA approval, both companies ran up significantly prior to the PDUFA date. This time I expect will be no different. pSivida seems to have the larger runup of the two, however, this decision will impact investors in both companies.

Progenics and Salix

Progenics Pharmaceuticals (NASDAQ:PGNX) and Salix Pharmaceuticals (NASDAQ:SLXP) have a PDUFA date of September 29th for their drug Relistor. Relistor is already approved in the United States for the treatment of Opioid induced constipation. The companies have filed an sNDA, asking for the FDA to expand the label to include patients with opioid induced constipation who are chronic non-cancer pain patients.

The expansion of the label should help to improve sales of Relistor. The drug appeared promising coming into its initial FDA approval, however, sales have not been great, coming in at a worldwide tally of $9.1 million last quarter. While this does represent some growth in sales, expanding the label would help both companies to be able to grow sales much quicker. I would expect to continue to see a runup heading into the PDUFA date for Progenics. Progenics is clearly the smaller of the two companies and has more of its future riding upon Relistor's success. The decision will be closely watched by shareholders in both companies.

Final Thoughts

September is rapidly shaping up to be a very busy month for biotech investors. With many different FDA decisions coming out in the second half of the month, there are opportunities for profits using the runup method. Each of the companies mentioned in this article I believe could see a runup. I have intentionally not included some companies that I feel are too large in the article, as they typically have so many drugs on the market that one drug is rather insignificant in the grand scheme of their pipeline. Investors should watch closely for news coming out in December regarding all of these important FDA decisions.

Source: 2nd Half Of 2014 Biotechnology Catalysts - Part 4