In this two part article, I comprise a list of Bio-Pharmas I am keeping an eye on. I will give a quick summary of each one, and a buy or sell opinion afterwards. I encourage everyone to do the DD on all of these companies.
Human Genome Sciences (HGSI), PPS: $8.52
Human Genome Sciences Inc. Operates as a biopharmaceutical company. Its principal products in development include BENLYSTA for systemic lupus erythematosus; and raxibacumab for inhalation anthrax.
Opinion; Buy HGSI for a swing trade.
HGSI is Coming off a recent 17% move up. 50 day MA is $7.74, 200 MA is $13. Chart suggests move up to near 200 day MA.
Arena Pharmaceuticals (ARNA), PPS: $1.63
Arena Pharmaceuticals is a clinical-stage biopharmaceutical company that engages in discovering, developing, and commercializing oral drugs in the therapeutic areas of cardiovascular, central nervous system, inflammatory, and metabolic diseases.
Opinion, Sell ARNA;
Arna is losing close to $1 a share and faces a big 2nd FDA decision on their drug Lorcaserin, which was rejected in 2009. The FDA gave a response letter back in 09 and ARNA resubmitted the drug application. Too risky to be buying this right now. Expect The FDA decision in June of this year. Consider a short term buy closer to The FDA decision.
Vivus Inc. (VVUS), PPS: $12.19
VIVUS Inc. Engages in the development and commercialization of therapeutic drugs for underserved markets worldwide. The company focuses on developing drug candidates for the treatment of obesity and related morbidities, such as sleep apnea, diabetes, and men's sexual health.
Opinion, Buy VVUS;
Revive, their drug in Phase 3 clinical, has recently shown to be effective in treating erectile dysfunction. In fact, it was so effective that men were getting erections inside of 15 minutes flat! This is a "big" thing (no pun intended), and if results continue to be good, VVUS will be sitting on a potential goldmine.
Idenix Pharmaceuticals (IDIX), PPS: $13.64
Idenix Pharmaceuticals Inc. Engages in the discovery and development of drugs for the treatment of human viral diseases in the United States and Europe. Its primary research and development focus is on the treatment of patients with hepatitis C virus.
Buy IDIX only if pps retraces back to the $8-9 level, otherwise stay away or short it.
IDIX on Jan 9, 2012, gaped up $2.73, opening at $9.77. The shares have more than doubled since Jan. 7 when Bristol-Myers Squibb Co. (BMY) said it would pay about $2.5 billion in cash for Inhibitex, a rival in a possible $20 billion hepatitis C market. Pharmasset (VRUS), the maker of another experimental treatment for the virus, agreed on Nov. 21 to be acquired by Gilead Sciences Inc. (GILD) for $10.8 billion.
Major pharmaceuticals, fearing patent expirations for their aging blockbusters, have been buying promising biotechs at a strong pace lately. IDIX is being speculated as one such biotech for a buy-out. It's never a good idea to buy a company simply on a possible buyout. If the rumor does not come to fruition, you will be left holding a heavy bag.
Inhibitex Inc. (INHX), PPS: $24.83
Inhibitex, Inc. Focuses on the development of differentiated anti-infective products to prevent or treat serious infections. It primarily focuses to treat shingles caused by the varicella zoster virus and chronic infections caused by hepatitis C virus.
Opinion, Sell INXH;
Bristol-Myers Squibb said it would pay about $2.5 billion in cash for Inhibitex. At $24.83 a share as of this writing, the pps is just too high. I look for shorts to come in here at these levels and bring the pps down to a more reasonable level to around $23.00, a 5 to 10 percent cut off premium buy out price.
In part 2 of this article, I will list the following companies;
Disclosure: I am long AIS.