With May in full swing and two major healthcare players already done reporting their earnings one might think May will be a bad month for biotech and healthcare companies. As with any sector that possibility is always there, however as I have mentioned before biotech and healthcare companies can rocket up, and down, more than most companies.
This is due to the fact that some of them, especially small cap companies, are reliant upon an approval from the FDA. Not only can approvals cause a share price surge, but also meetings with the FDA that go well can bring joy to investors. I will discuss 9 companies that have events scheduled this month that could cause a big increase or decrease in share price, which means investors need to be on their toes as usual.
On May 2nd Dendreon (DNDN) reported a loss of 77 cents per share and a loss of $111.8 million. However the most important number investors were watching was the sales of Provenge; which is a prostate cancer immunotherapy drug. The sales for Provenge were $28.1 million for the quarter, which was just under expectations. This number will exponentially grow throughout the year as more facilities are approved and Dendreon is able to get more patients on the drug. As you can see in their earnings report, Dendreon has applied for FDA approval of a Los Angeles and Atlanta facility. These are expected to be assessed in the Summer of this year. With two more facilities Provenge would begin to be the drug investors and Dendreon have been hoping for.
On May 3rd we saw Vertex Pharmaceuticals (VRTX) report a non-GAAP loss of 91 cents per share and $183.9 million. These numbers were larger than investors and analysts expected, but one cannot blame them as they are preparing for the launch of Incivek. Incivek is basically a Hepatitis C drug that has been shown to substantially reduce the debilitating problems that Hep C causes. Incivek has an FDA PDUFA date of May 23rd. The drug should be approved since the FDA advisory committee voted unanimously to approve the drug. Incivek has the potential to give long Vertex investors a very strong 2012; and as President and CEO Matthew Emmens stated, "as we prepare for the launch of INCIVEK and advance toward becoming a cash flow- and earning- positive company in 2012" Vertex will become a market giant.
Wednesday May 4th will be another day investors will be watching closely as Mannkind (MNKD) finally meets with the FDA to discuss what is needed to get Afrezza approved. Afrezza is an inhaled insulin that uses Mannkind's patented Technosphere technology to deliver an insulin powder through the respiratory tract which is then absorbed by the pulmonary system. Afrezza has already been rejected twice, but due to the advancement in the technology and the treatment possibilities for diabetes, Afrezza is closely watched by investors.
The last CRL was due to Mannkind using the old Medtone inhaler for the beginning trials, and in late stage trials changing to the newer Dreamboat model. The FDA has asked Mannkind to conduct head to head trials of the two inhalers to see if they are the same. We will know more about this after the FDA meeting. If the FDA informs Mannkind the only issue is the head to head comparison then we should see investors hop back on the Mannkind boat since Al Mann as already stated that they have begun these trials. Investors will have two opportunities for news about this meeting, since Mannkind reports earnings May 9th. Therefore if they do not announce the results of the FDA meeting on May 4th, they will surely discuss what happened in the conference call on May 9th.
Merck (MRK) has an FDA PDUFA date for Victrelis on May 7th. However it must be noted that this date is an estimate, as an exact date was not given by Merck or the FDA. Victrelis is also a Hepatitis C drug. This means that two new Hepatitis C drugs could be approved this month and marketed in 2011. It is tough to make any calls on Victrelis since the action date is not set in stone, but an approval should give a small boost to Merck shares as investors will want to take advantage of the possible market of a Hepatitis C drug.
On May 9th we will see Mannkind and Avanir Pharmaceuticals (AVNR) give first quarter earnings. Avanir is expected to report a loss of 15 cents per share. As with many small cap biotech companies, the main focus will be the update of a newly approved drug. In this case, Avanir received approval for Nuedexta on October 29, 2010. Nuedexta treats pseudobulbar affect (PBA); which is a neurological condition that causes patients to have no control over laughing and crying. If Avanir gives strong guidance for this drug then Avanir could take off this month.
On May 12th Biomimetic Therapeutics (BMTI) is scheduled to face an FDA advisory panel for their Augment Bone Graft. Basically the Augment Bone Graft is a much better replacement compared to autograft. If this is approved, there will no longer be a need for bone grafts off the body since Augment Bone Graft is a synthetic bone that essentially fulfills the same objective as the autograft. I am expecting the advisory panel to give the thumbs up for Augment Bone Graft.
Another FDA advisory panel is set to convene on May 19th to assess the safety of Trilipix which is a drug marketed by Abbot Labs (ABT). Since the drug is already approved and successfully selling, this meeting could only spell bad news for Abbot Labs if the FDA raises major concerns. The FDA may ask Abbot Labs to conduct a new trial to test if their are any cardiovascular problems., but they will most likely not take the drug off the market.
The next date that could be a strong catalyst is May 23rd. This is Johnson & Johnson's (JNJ) expected PDUFA for Rilpivirine. Rilpivirine is a once a day treatment for naive HIV-1 adults. Since Tibotec Pharmaceuticals is the issuer of the drug, Johnson & Johnson may not feel the full brunt of the approval; compared to some of the small cap stocks listed above after an approval. However it must remembered that on most approvals or CRLs, investors leave a mark on any company involved with the decision.
The final catalyst for the month of May is the PDUFA date for Dificid on May 30th. This drug is an antibiotic made by Optimer Pharmaceuticals (OPTR). Dificid is designed to treat clostridium difficile infection (CDI); which is essentially hospital acquired diarrhea. This drug has reached the required endpoints in the trials, yet it must be noted that despite the unanimous approval from the advisory committee, the label will play a crucial role for the stock. For instance, if the drug is allowed to inform patients that the drug helps with the risk of relapse for up to 31 days, then Dificile will be able to stand above the rest of the competition and give Optimer a huge stock boost.
Disclosure: I am long MNKD.