Today, I list 5 bio pharmas I believe could be on the move this week. Investors and traders might want to keep a close eye on these stocks for consideration to either trade in and out of, or buy and hold for the longer term. Also, the battle of which weight loss drug will be approved and to market first is coming to a short term apex. This should also make for an interesting week ahead in the bio pharma segment as I expect both of these companies stocks to see a lot of volatility this week. Traders and investors might consider using option trading to hedge/lever their positions accordingly.
GlaxoSmithKline plc (GSK) announced last Friday that the U.S. FDA has approved the vaccine MenHibrix® [Meningococcal Groups C and Y and Haemophilus b Tetanus Toxoid Conjugate Vaccine].
MenHibrix is a vaccine indicated to prevent invasive disease caused by Neisseria meningitidis serogroups C and Y and Haemophilus influenzae type b. MenHibrix is approved for use in children aged six weeks through 18 months.
The vaccination schedule for MenHibrix is a four-dose series given at two, four, six, and 12 through 15 months of age. The first dose can be given as early as six weeks of age and the last as late as 18 months of age. MenHibrix was developed to align with the Centers for Disease Control and Prevention's recommended infant immunization schedule for Hib vaccination and to allow for vaccination against meningococcal groups C & Y without adding additional shots. GSK said it will provide additional details on when MenHibrix will be available in the near future.
Human Genome Sciences, Inc. (HGSI) announced Friday that in connection with its ongoing strategic alternative review process, it has set a bid date of July 16, 2012 for the submission of definitive proposals to acquire all outstanding shares of the company's stock. GlaxoSmithKline said on Friday it has declined a renewed invitation from HGSI to participate in its ongoing strategic alternative review.
GlaxoSmithKline announced on June 8th that it extended its tender offer to acquire all of the outstanding shares of HGSI for $13.00 per share in cash to 5:00 p.m. New York City time on Friday, 29 June 2012. The HGSI Board of Directors responded not too long after, rejecting GSK's unsolicited $13.00 per share tender offer after determining in consultation with financial and legal advisors, that the GSK offer price was inadequate and did not reflect the value inherent in HGSI. I agree with the HGSI board here and feel the company has a speculative worth much higher, more in line with $15 to $20 a share, or roughly $3.5B to $4.0B. Also on Friday, GlaxoSmithKlinei declined a renewed invitation from HGSI to participate in its ongoing strategic alternative review.
It is only a matter of time before HGSI is acquired by a larger pharma in my strong opinion.
Antares Pharma (ATRS) finished its first day of trading on the Nasdaq Friday after its move from the NYSE AMEX which was first announced about 2 weeks ago. The buzz I am hearing is that company is ahead of schedule with its Vibex MTX NDA filing with the FDA, which was originally expected to occur in February of 2013. Antares recently filed a comparison of Methotrexate (MTX) and the VIBEX™ MTX Device. This is another clue to me that the NDA (new drug application) filing for Vibex MTX will happen sooner than later, as I have been hearing the NDA filing could occur as early as late July of this year.
I am also hearing that there has been considerable progress on a major deal for Nestragel, Antares's Phase 2 completed Female Gel contraception formula. Company CEO Paul Wotton recently remarked on these developments in the company's last investor presentation. If what I am hearing is true, I expect the Antares stock to be on the move upwards in the next few weeks, possibly closing in on the $4.50 a share range.
Arena Pharma (ARNA) is expecting an FDA approval decision for the weight-loss drug Lorcaserin anytime between now and June 27, 2012. The stock has seen one heck of a wild ride lately, moving up in price from the low $2 dollar range, to where it sits currently, in the mid $8 dollar range. The first large move upwards occured on the news that an FDA advisory panel, by a vote of 17-4, recommended Arena's controversial weight loss drug, Lorcaserin for approval on May 10th, 2012. I am relatively convinced that the FDA will accept the advisory panel recommendation, and approve the drug in short order. A recent Motley Fool article seems to erroneously state (in my opinion) that,
For one thing, I wouldn't be surprised to see an FDA delay (on Lorcaserin approval), helping Qnexa beat lorcaserin to market.
On April 4, 2012, following the FDA's request, VIVUS (VVUS) submitted a Qnexa Risk Evaluation and Mitigation Strategy (REMS), which was considered a major amendment to the NDA. Since the receipt date was within three months of the PDUFA, the FDA has extended this date by three months to provide time for a full review of the submission. The final decision on Qnexa is now due by July 17th, 2012.
The FDA has not requested a REM from Arena concerning Lorcaserin as it did with Qnexa. The author goes on to state that,
I'm worried about those post-approval safety studies. The FDA has brow-beaten diabetes-drug makers into submission with safety testing and that could be the same fate of the obesity drug industry. When the FDA makes its ruling on lorcaserin we'll have a better idea of where it stands on the issue of drug safety.
The author fails to take into consideration the political landscape surrounding the ever growing obesity issue in America these days. Furthermore, Locarserin's safety data has never really been the major issue with the drug in my opinion, but rather efficacy. Qnexa is the weight loss drug that concerns me safety wise, consisting of a chemical makeup of a stimulant called Phentermine and an anticonvulsant called Topiramate.
Currently, many obesity doctors prescribe these two separate drugs that when taken together, are basically the same medicine.
In 1997, after 24 years on the market, Phentermine was recalled after consumers began experiencing heart disease and other pulmonary problems. it was reported that more than 50,000 Phentermine users filed suits against the drug's maker Wyeth, and legal expenses combined with awards may have exceeded $21 billion. The drug has since been reinstated by the FDA.
Topiramate is the generic form of the drug Topamax, which the FDA recently warned may cause birth defects. The FDA has said that the drug, if taken during pregnancy, increases the likelihood of the child being born with either a cleft palate or cleft lip by 1.4%. The FDA has even placed the drug into the category "Pregnancy D", which is for drugs that health care providers should consider avoiding when prescribing medication to a pregnant woman or woman of childbearing age (FDA). Still, there is no news if the agency will issue a recall.
Considering the above factors, I strongly believe Lorcaserin is better suited at this time for FDA approval, while I believe Qnexa should be rejected.
Disclosure: I am long ATRS.