For many biotechnology stocks, clinical trial results are one of the biggest catalysts available. They represent the culmination of years of hard work and millions of dollars in research and development costs. For investors, these events can be seen as key catalyst events which have the potential to substantially move the company in question. There are a few clinical trial results that I am particularly looking forward to before the end of September.
Alcobra LTD (NASDAQ:ADHD) is expecting clinical trial results for its Metadoxine Extended Release (MDX) drug. The company is testing MDX in phase III trials for adults with Attention Deficit Hyperactive Disorder. The company about a month ago announced that it has finished patient enrollment in the clinical trial. This would put the company on track to release the results towards the end of September.
The results in adult ADHD patients will be very important for the company. Not just from a regulatory standpoint but also from a future value standpoint. The company is also planning on testing the drug in pediatric ADHD patients, and the success in adult ADHD patients should help to make investors more confident in the ability of the drug to successfully treat pediatric patients.
Further enhancing the likelihood of clinical trial success are the impressive Phase IIb results for the drug. The drug demonstrated a statistically significant change in the TOVA ADHD score. The results also found that the 1400mg dosage of the drug demonstrated better results than the 700 mg dosage, which should help to justify the company's decision to run the phase III tests from the 1400 mg dosage point. A lack of serious adverse side effects should also help to make investors confident of the upcoming clinical trial results, that the safety profile will come back clean.
If successful, this trial would set Alcobra up to apply for FDA approval. This could potentially be Alcobra's first FDA approved drug on the market, so I would expect for investors to pay close attention to the results upon release. Alcobra is a very interesting investment ahead of its clinical trial results.
Threshold Pharmaceuticals (NASDAQ:THLD) is expecting phase III trial results for its drug TH-302. The company is seeking to have the drug approved for use in soft tissue sarcoma. The drug is partnered globally with Merck KGaA. Under the terms of the agreement, Threshold will have the ability to co-promote the drug in the United States, allowing for the company to receive up to 50% of the revenue. In other areas, the company will receive a royalty. This drug will therefore, be very important to the long term potential of Threshold.
The company is expecting to have an interim analysis of the phase III data including both efficacy and safety at the end of September. This will be a very important moment for shareholders, if the board recommends allowing the trial to proceed as planned it should help to send the stock higher. This event would suggest that the drug is performing as predicted and may pass Phase III trials. Whereas an extension could be viewed as negative for the stock. I do not expect an extension, the phase II trials were rather robust. Some of the highlights are that there was a median progression free survival of 6.7 months, and a median survival of 21.7 months. Soft Tissue Sarcomas are an extremely aggressive type of cancer, so to have data like this would help to give doctors another tool in their toolbox and help extend patient's lives. Given the lucrative partnership agreement, I expect for Threshold investors to closely watch this decision, and as such I would expect to see a slight increase heading into the interim analysis.
ZS Pharma (NASDAQ:ZSPH) is expecting clinical trial results for its drug ZS-9, indicated to treat hyperkalamia. The company has provided guidance that it is expecting the results of its ongoing phase III trial in either late third quarter or early fourth quarter. These results will have a long term impact on the company, and as such I believe that we will see the stock continue to move ahead of the results.
ZS Pharma has conducted multiple phase III trials around ZS-9. To date, the clinical trials have been successful in reducing the amount of potassium in the blood stream. In a previous trial, the drug was shown to be effective in both the 5 and 10mg dosages at lowering the amount of potassium. The results of the upcoming trial will be very important for the company, as it will require the drug to continue its performance over a long time period. This would allow for the potential use of ZS-9 as a maintenance treatment, instead of just an emergency treatment in hyperkalamia patients. This would substantially increase the market potential for ZS-9 and should correspondingly increase the stock price. If you are interested in learning more about ZS Pharma, please look at my article here.
As with any investment, investing solely in catalytic events comes with its share of risk. The major risk would be not getting out of the stock before the event happens. What I mean by this is that as catalyst investors we do not ideally want to be holding a stock when the catalyst happens, we just want to benefit from the company's increase ahead of the catalyst. Holding through the catalyst comes with its own risks, such as the trial failing which would negatively impact the stock. Finally, another risk would be that something unrelated to the catalyst impacts the stock, which for example could be the results of a competitor's drug. If this happens, the stock is no longer trading based solely on the catalyst in question. Each investment has its downside risk, please invest accordingly.
All of the companies mentioned in this article have the potential to increase in share price based upon the clinical trial results. Betting on clinical trial results, however, is not for the risk averse investor. I have mentioned hints in my article that lead me to believe in a positive conclusion, but ultimately investors do not know how the results will turn out until they are announced by their respective companies. I expect for each of these stocks to move based on their clinical trial results, and as such investors should pay close attention to how these results impact the long term potential of each company.
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.