Seeking Alpha
Profile| Send Message| ()  

The FDA will be very busy in February. Thus investors and traders will be given many opportunities for major profits. As you will see below, some of these companies are small biotechs hoping for a major approval to get the ship moving; and on the other hand there are major healthcare companies vying for another approval.

February 8

On February 8 an FDA Advisory Committee will convene in order to discuss Amgen's (AMGN) Xgeva for men with castration-resistant prostate cancer and are at high risk of developing bone metastases. Xgeva will not give Amgen an incredible boost to the share price, but it will give investors and traders a reason to send the stock slightly higher. Nevertheless, I am expecting a fairly simple positive recommendation from the Advisory Committee. With that said, investors should always be weary of an Advisory Committee because what seem like solid trials results may be picked apart by the specialized committee.

Xgeva was approved on November 18, 2010 for "skeletal related events (SREs) in patients with cancer that has spread and damaged bone." Combine this with the strong results seen in the trials and there should be a unanimous thumbs up from the Advisory Committee. Furthermore Xgeva accounted for roughly 2.2% of Amgen's 2011 revenue. Keep in mind Xgeva's revenue increased 31% from the third quarter to the fourth quarter of 2011; which means if Xgeva is approved in April for this second indication we may see total revenue for Xgeva reach about $250 million per quarter by the end of 2012.

February 9

The next day another FDA Advisory Committee will meet to discuss Astex (ASTX) and Eisai's (OTC:ESALY) Dacogen. Dacogen was approved in March of 2010 to treat myelodisplastic syndromes. Even though the treatment is already approved, I must present one warning about the Advisory Committee. The FDA has been very strict on cancer treatments lately and unless Dacogen is perfect we may not see a strong recommendation.

The stock to watch here is Astex. Over the past month the share price has grown 67%. This sets up an incredible opportunity for shorts to step in assuming the Advisory Committee rains on Dacogen's parade. Similarly, with the increased volume as the share price has increased, investors and traders should be expecting to see Astex's share price soar with a unanimously positive recommendation.


(Click to enlarge)

On the same day another Advisory Committee will convene to discuss NeurogesX's (OTC:NGSX) Qutenza Patch. Qutenza was approved for pain due to postherpetic neuralgia in November of 2009. Currently Qutenza has produced roughly $10 million since approval. Therefore any good news for the company will lead to a spike in the share price; which has dwindled to the 1.00 level. On a side note, if NeurogesX is unable to keep the share price above 1.00 over the next several months the company will be delisted by Nasdaq.

February 14

The first PDUFA date of the month is intended for Teva (TEVA) and BioSante's (BPAX) Bio-T-Gel. Bio-T-Gel is a transdermal testosterone gel intended to treat males with low testosterone levels. While Teva is responsible for marketing and regulatory matters, after BioSante's Libigel disaster the company needs Bio-T-Gel to get approved. Investors should not be fooled by BioSante's share price, it can easily slip lower on more bad news.

Fortunately Teva is in charge this time around and things are looking up. However, this should not be the sole reason to buy BioSante now before any type of last minute pre PDUFA rally begins. Looking at Teva's stock it appears an anticipation run has began because the stock has shown strength; but since volume has decreased as the share price has moved higher it indicates investors are cautious towards Bio-T-Gel. Will men, Teva and BioSante receive a Valentine's gift from the FDA? If BioSante was going at the FDA alone I would say no, but with Teva's experience and expertise at the reigns we may see an approval.

February 17

Three days later the FDA will decide upon Corcept's (CORT) Korlym. Korlym has been designed to treat Cushing's Syndrome. Cushing's syndrome is a very rare disease, but for a company with no revenue since a meager $30 thousand in 2009 this approval will be big. If Korlym is approved expect to see Corcept's share price trip circuit breakers throughout the day. One positive note to make going into the PDUFA is the FDA is not requiring Corcept to submit a REMS program.

February 22

One of the most anticipated Advisory Committees will take place on the 22nd. This Advisory Committee will convene to discuss Vivus's (VVUS) Qnexa. Qnexa is intended to treat patients whom are obese and may or already have type 2 diabetes, hypertension, and central adiposity. Qnexa is one of the most watched treatments for a couple reasons. First, the treatment has the potential to be a blockbuster drug because it treats obesity; which is becoming a global issue. Secondly, the treatment was rejected in late October 2010; which means shorts will be looking for more profits this time around.

By viewing the chart it is clear that Vivus has seen a substantial pre Advisory Committee rally. During the past month the share price has climbed roughly 40%, and almost 100% since August. This is outstanding for investors whom have held the stock during that time, but as we know with biotech companies any type of negative news causes 20-60% sell offs.


(Click to enlarge)

Will Vivus face this same disastrous fate? It is difficult to say, but one con surrounding Qnexa comes from the CRL. In the CRL the FDA requested Vivus to submit the complete Sequel study; which means the completed Sequel study was not included in the prior CRL. This is important because the FDA may have issues with the back end of this study. On the other hand, the FDA recently announced the label restriction for women of child bearing potential can be removed. Therefore traders have opportunities for long position gains and short position gains.

February 23

The following day the FDA Advisory Committee will meet to discuss Chelsea Therapeutics's (CHTP) Northera. Northera is intended to treat symptomatic neurogenic othostatic hypotension. Chelsea's share price is currently depressed from the announcement of a public offering a few weeks ago. This opens up the opportunity for Chelsea traders to pick up major profits if the Advisory Committee grants a positive recommendation. One positive for Northera is the FDA granted priority review; which means the FDA may grant approval unless their are overwhelming issues. But this should not be taken as a hard and fast rule.

The same day an Advisory Committee will convene to discuss Forest Laboratories (FRX) and Almirall's (ALM-MC) aclidinium bromide. Aclidinium bromide is intended to treat chronic obstructive pulmonary disease. The possible market for chronic pulmonary diseases will continue to grow over time because more patients are willing to go straight to doctors for medications. Therefore aclidinium bromide can possibly become a blockbuster drug over the next decade; assuming aclidinium bromide is approved.

Aclidinium bromide has shown fairly strong results throughout the trials phase. Therefore unless the Advisory Committee finds an underlying issue we will likely see a positive recommendation. If this happens we will see Forest's share price bump up a little bit because the market possibilities are and will continue to grow.

February 26

The final scheduled event is the PDUFA for Columbia's (CBRX) Procheive. There is not much to say about Procheive other than the fact that a CRL is headed to Columbia on or before February 26th. An Advisory Committee on January 20 voted 13-4 against recommending Procheive. In consequence the share price fell off a cliff roughly 65%. At this point investors should sell any holdings and buy after the CRL because another slight drop will occur. If, for some magical reason, the FDA approves Procheive, we may see a 3-4 bagger in day; but the chances of this are virtually zero.

As you can see, the FDA will be extremely busy in February. Because of this the biotech industry will be very volatile this month. Especially if the FDA hands down a few surprises; which is very common. Regardless of that, biotech traders will have their hands full keeping tabs on all the action.

Source: 12 Healthcare Companies Expecting Major February Catalysts