As we move into the end of the calendar year, the biotech sector is fixing to present quite a few fireworks for investors. Actually, the last couple of months have set the stage for investors with some triumphs, tragedies, and unexpected events. Let’s see what investors can look for as we approach the end of the year.
BioSante Pharmaceuticals (BPAX) – BioSante Pharmaceuticals is a specialty pharmaceutical company developing products for female sexual health and oncology. Its lead product is LibiGel, for the treatment of female sexual dysfunction. BPAX is conducting three Phase III LibiGel clinical studies and a new drug application (NDA) is planned to be submitted to the FDA in 2012. As we wait for more word on that potential blockbuster, we look to November 14, 2011-- the PDUFA date for Bio-T-Gel. This is BPAX’s once-daily testosterone gel in development for the treatment of male low testosterone levels with a potential U.S. market of over $1.2 billion. The drug is licensed to Teva Pharmaceuticals (NASDAQ:TEVA), who will be responsible for all regulatory and marketing activities. Things will be starting to heat up at BioSante as the end of the year approaches.
If one is going to discuss BPAX, then there must also be mention of a company named Antares (AIS). Both of these companies are joined at the hip via LibiGel. If successful, AIS will retain commercialization rights to the rest of the world while BPAX will control the U. S. markets. As big as this deal might be, the real end of the year fireworks will revolve around a couple of events. The first one deals with the AIS’s overactive-bladder drug Anturol Gel, which is set to have a final FDA decision date in early December of 2011. Currently 33 million adults in the United States suffering from overactive bladders, and that makes for a market that exceeds $1.8 billion. It did not take long for Watson Pharmaceuticals (WPI) to license the potential treatment from Antares, and it will make a payment to AIS if the Food and Drug Administration approves the drug. Watson will also market the drug and make payments to AIS based on sales.
Antares has also had more good news in early October 2011, when the company announced it had been granted a patent covering technology used in the company’s VIBEX platform of needle-assisted jet injection devices. This platform is the basis for several products in development by AIS, including the first auto-injector in development to potentially enable rheumatoid arthritis patients to self-inject their needed drugs at home. As investors focus their attention on AIS and the drug side of the house, it is the advanced self-injection product side of the house that is going to make great strides in the future.
Since we are talking about companies joined at the hip, you can't miss the firework show currently surrounding Keryx (KERX) and AEterna Zentaris (AEZS). Both of these companies are counting on the drug Perifosine. This product is an oral anti-cancer drug that is designed to treat advanced colorectal cancer, but also is being tested on other forms of cancer as well. KERX has the rights to Perifosine for North America and the drug was derived from a commercial license agreement in 2002 with Zentaris AG, which is a wholly owned subsidiary of AEterna Zentaris Inc. In late August to early September 2011 the news for the drug and both companies was positive, with KERX receiving word from the independent Data Safety Monitoring Board that the company should carry on through the Phase 3 study that will cover 465 patients with advanced colorectal cancer. On the heels of this, KERX released Phase 1 / 2 clinical trial results of Perifosine in patients with multiple myeloma where they stated that the drug was well-tolerated and the survival data in this study is encouraging.
All seemed to be going well for both companies until early October 2011, when KERX traded well above normal volume. It was stated that the mutual fund Fidelity Management reduced its holdings by a substantial amount. Needless to say, when a major player leaves, the rest of the holders begin to get nervous. As a result the stock price for KERX started to fall. The final results though will be some fireworks for both companies as they make their way through the trials.
For another high intensity firework display, one has to look no farther than Advanced Cell Technology (ACTC.OB). To understand this stock you might consider reading the novel, A Tale of Two Cities by Charles Dickens. The most famous quote from its pages pretty much summarizes ACTC's current status. "It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness…." Currently ACTC is trapped between the epic struggles that plague most speculative biotech companies. On one side is the ground breaking science that ACTC is bringing to the table, in the form of a therapy made from embryonic stem cells to treat patients with macular degeneration.
In late September 2011, the independent Data and Safety Monitoring Board (DSMB) overseeing the Company’s two trials authorized ACTC to move forward with enrolling and treating the next set of patients in each of the trials. If that was not enough, in late September ACTC received clearance from the U.K. Medicines and Healthcare products Regulatory Agency (MHRA) to begin treating patients as part of a Phase 1/2 clinical trial for Stargardt’s Macular Dystrophy (SMD) in the U.K. So basically, ACTC received approval for the first human embryonic stem cell trial in Europe.
Another positive was the addition of Robert S. Langer, who is a professor at the Massachusetts Institute of Technology (MIT), as being appointed to the company’s Board of Directors and the Chair of the Board’s Science Advisory Committee. Dr. Langer is a world-renowned scientist and entrepreneur with a wide range of experience in the healthcare, biotechnology, and pharmaceutical industries. If all that was not enough positives, ACTC also was encouraged by a recent decision issued by the European Court of Justice. The ruling was that an invention must be regarded as “unpatentable”, if the invention requires the destruction of human embryos. Of course this plays right into ACTC's hands with the company's proprietary "single-cell blastomere" technique where human embryonic stem cell lines are derived without destroying embryos.
Unfortunately all this good news slams head on into ACTC continuing financial and legal woes. Though this is not the worst of times for the company when all things are considered, it is certainly giving investors much anxiety. With a second trial to fund (UK) and a dwindling cash reserve, the last thing the company needed was endless lawsuits brought against it dealing with terms of its warrants and convertible promissory note issues from the past. In the latest SEC filing, ACTC estimates that the number of shares of common stock such holders of convertible notes could demand would be approximately 8 million, and the number of additional warrants convertible into shares of common stock such holders of warrants could demand would be approximately 380 million. Such a radical increase in the share count would not bode well for the stock price. ACTC intends to seek a prompt global resolution of all such claims and potential claims by holders of convertible notes and warrants. So as the positive and negative aspects fight it out, investors and speculators will have an interesting time. The hope is that the science wins out, and past financial skeletons can be put to rest once and for all.
Galena Biopharma (RXII) – An unusual event happened in late September 2011, when RXi Pharmaceuticals Corp. changed its name to Galena Biopharma and announced it will be spinning off RXi Pharmaceuticals as a subsidiary later in 2011. The final result is that Galena will be focusing on cancer therapies, with Neuvax as its lead and most promising product. The other side of the house, RXi will focus on RNAi-based therapeutic development, including RXI-109 intended for anti-scarring and planned for clinical trials in 2012. Once the spinoff is complete, Galena is expected to trade under the ticker “GALE”. Prior to the announcement the stock was trading around the $1 mark, but since has become more volatile. How this will all play out is anyone’s guess, but as the end of the year approaches, it will be interesting to see how these two new entities play off each other as they try to bring their products to market.
Last, but not least is Transcept Pharmaceuticals (TSPT). This company focuses on the development and commercialization of proprietary products that address therapeutic needs in the field of neuroscience. The principal product is Intermezzo, a drug used as a sleep aid for use in the middle of the night when a patient awakens and has difficulty returning to sleep. A recent FDA rejection of Intermezzo put investors on edge, but with a new FDA review date in late November 2011 the excitement is building. If finally approved, the drug will be sold by Purdue Pharma in the United States under an exclusive commercialization agreement. TSPT will be eligible to receive royalties on net sales ranging from the mid-teen to mid-20 percentage level. Analysts have very different takes on the outcome if approved. Some have stated that, if approved, the drug will run into serious competition and the revenue stream will not be there to support higher equity prices. Others have a different take in that they see the demand for a drug will be high as it can be taken as needed, rather than falling into an automated regiment of taking a daily sleep aid based only on anticipated need. As we head for that pivotal decision date, it will be interesting to see the volatility return to the stock price.
In conclusion, several biotechs are heading towards their big pivotal events as the years draws to a close. Above are only a handful of companies that should provide investors some interesting opportunities. As always, be sure to remember the biotech sector is very volatile and the risks are very high so make sure to do your due diligence before placing your money down.