5 Potential Big Movers In Pharma For 2012

by: VFC's Stock House

As 2011 rolls to an end, here's a few companies developing or commercializing novel or unique technologies whose stocks could make a splash in 2012...

Lpath Inc. (LPTN.OB), the industry leader in lipidomics-based antibody therapeutics, has announced the initial dosings of two proof-of-concept trials over the past few months, with results from both trials due to be announced in 2012.

The two trials, PEDigree and Nexus, will measure Lpath's iSONEP as a treatment for retinal pigment epithelium detachment ("RPE detachment" or "PED") and Wet AMD, respectively. Phase I trials have already proven that treatment with iSONEP was well tolerated in all subjects, while demonstrations of efficacy were also noted.

It's not only the unique approach of bioactive lipid technology that Lpath brings to the table that is quickly attracting investor attention, but a high-profile partnership with powerhouse Pfizer (NYSE:PFE) has also put this company and its stock on the radar of late.

Pfizer has already come on board as a partner for the development of iSONEP and was also granted a 'first right of refusal' for ASONEP in the treatment of cancer as well. The partnership agreement came with a significant up-front payment and could be worth as much as nearly half a billion dollars to Lpath, should certain milestones be met and should Pfizer decide to continue the relationship following the completion of the Phase II portion of development.

Additionally, if Pfizer decides to stay on for the duration of iSONEP commercialization, Lpath would be due double digit royalties on sales.

Beyond iSONEP and ASONEP, Lpath is continuing to build a solid pipeline of product candidates based on its ImmuneY2 platform. ImmuneY2 contains the ability to generate therapeutic antibodies that bind to and inhibit bioactive lipids that contribute to the spreading and growth of various diseases and inflammatory/auto-immune disorders.

Earlier this month Lpath announced a stock offering to raise money to fund Lpathomab, designed to target Lysophosphatidic Acids (LPA) and being developed for the treatment of CNS Disorders, Pain, and Fibrosis.

Lpath is the first company to have brought the technology of targeting bioactive lipids so far in development, and given the multiple billion-dollar markets targeted by this technology, it's safe to assume that this company might make some noise in 2012 - especially with high-profile Pfizer partnership to boast and multiple trial results coming due.

Israel's Prolor Biotech (NYSEMKT:PBTH) is another company with some milestone clinical events coming due in 2012 that will be worth keeping an eye on. Prolor possesses world wide rights to the naturally-occurring Carboxyl Terminal Peptide (CTP), which - when attached to already-existing therapeutic proteins - stabilizes the proteins in the bloodstream and slows the process in which the protein is removed from the body. This creates an extended life span for the therapeutic treatment without adding toxicity or sacrificing the desired biological activity.

How this benefits a patient is that it effectively reduces the amount of injections needed for a particular treatment.

HGH-CTP, for example, is being developed as a long-lasting substitute for the once-daily injection of hGH that is currently prescribed for patients with hormone deficiencies. An already-completed Phase II trial in adults demonstrated that one weekly injection of hGH-CTP could replace seven daily injections. No safety concerns were noted in this trial and the positive results justified a quick move into a Phase III, which is planned for 2012, marking one of a couple of pipeline events planned for next year.

Another trial, a Phase II to test hGH-CTP in hormone deficient children, is also slated to start next year.

Only two companies currently hold licenses to the CTP technology, with Merck (NYSE:MRK) being the other. Merck holds a license for four fertility-related proteins, and has already successfully implemented this technology on the European market, but Prolor holds the license for "all other human therapeutics of natural or non-natural sequence," according to a recent company presentation.

The hormone-deficiency market, combined for both children and adults, reaches an estimated three billion dollars, noting some significant market potential, should Prolor fully commercialize hGH-CTP.

Analysts started taking notice of Prolor in 2011, as did some high-profile investors - notably by Dr. Philip Frost of Teva Pharmaceutical Industries (NYSE:TEVA) - so 2012 could shape up to be the year that PBTH makes some noise in the sector.

Although Siga Technologies (NASDAQ:SIGA) received news last week that a Delaware court will not reconsider its verdict relating to a lawsuit filed by PharmAthene (NYSEMKT:PIP), this company still stands in line for a 2012 rebound as cash starts rolling in from a significant BARDA contract awarded earlier this year for Siga's antiviral, ST-246.

The BARDA contract award is intended to provide the nation's biodefense stockpile with a treatment to combat the risk of a potential bioterror attack, but some ongoing congressional inquiries into the contract award have given the shorts ample opportunity to wreak havoc on the SIGA stock. With the short interest remaining so high, it's likely that SIGA will be in line to rebound in 2012 as the appeals process relating to the PIP lawsuit plays out.

There could be distractions, however, that could still weigh heavily on SIGA trading.

Notable conflicts of interest have come to light in relation to the Siga contract award, and in another example of how 'journalism' is no longer considered 'journalism', the Los Angeles Times has published some heavily biased anti-Siga articles over the past few weeks. It's no wonder that the newspaper business is in the hurt locker with such shoddy, one-sided "reporting" hitting the presses.

Regardless, any quick spark of short covering could have SIGA on the move in a hurry. Additionally, with significant amounts of cash already rolling in from the BARDA contract, Siga may find itself on firm footing as it develops its pipeline of antivirals.

A rebound play to watch in 2012.

Honorable Mention:

2011 proved to be a blood bath for Dendreon (NASDAQ:DNDN) when sales of Provenge failed to even remotely live up to expectations, but with issues of reimbursement solved during the later parts of this year, 2012 could prove to be a rebound year for the company that ushered in a new generation of cancer treating technology.

The company cut expenses and streamlined operations, so now all attention can be concentrated on growing the momentum of Provenge sales.

A volatile week leading into the Christmas holiday had shares of Cytosorbents (NASDAQ:CTSO) trading higher by over twenty percent at one point, marking some noteworthy action moving into 2012.

The milestone events of 2011 culminated in the approval of CytoSorb in Europe for the treatment of conditions where high cytokines are present, and a grant awarded by the US Army highlighted the military and government applications of this company's blood purification technology.

As sales of CytoSorb pick up in Europe, and a potential partner for HemoDefend is landed, 2012 could shape up to be another milestone year for Cytosorbents.

Disclosure: Long SIGA, CTSO.