On Wednesday, the FDA approved Arena Pharmaceuticals (ARNA) weight-loss drug, lorcaserin (aka Belviq), which was the first obesity drug in 13 years to win such an approval. According to the LA Times, "a clinical trial of lorcaserin published in the New England Journal of Medicine found that two-thirds of patients on the drug lost 5% of their body weight, while a third lost at least 10%, after one year taking the drug as a supplement to diet and exercise." In my opinion, those numbers are very impressive, and a position in ARNA should be established at these levels, especially since shares are off their highs of Wednesday's trading session. That being said there are two more, slightly riskier, pharmaceutical companies aggressive investors should consider in the coming weeks.
Supernus Pharmaceuticals (SUPN), which trades in a 52-week range of $4.30 (52-week low) to $15.09 (52-week high), was trading at about $9.30/share during the first hour of Friday's session. Shares had been rallying a considerable amount on the heels of Tuesday's news that the company won tentative regulatory approval from the FDA for its generic form of topiramate. Topiramate is one of the most widely used medications by patients battling epilepsy. The company noted that it would like to receive a final approval from the FDA. According to the Associated Press, "final approval, which will allow Supernus to sell the drug as an epilepsy treatment, depends on whether it can resolve 'a marking exclusivity issue' tied to a specific pediatric population." I'd remain cautious on Supernus for two reasons. First, even though the stock could experience a multi-session pop, as was the case after it announced the tentative approval, neither the FDA nor the company set a timetable to the resolve this issue. If the time frame does get dragged out over a considerable amount of time, there may be some short-term downside before the company and potential shareholders can experience the long-term upside. Second, earnings estimates are bit shaky, as only three analysts are covering the company and both the June quarter and full year estimates aren't too attractive. For the June quarter analysts expect SUPN to post a loss of -$0.51/share on revenue of just $100,000 and for the year a loss of -$3.57/share on revenue of $940,000. For potential shareholders looking to establish a position in Supernus, a small one would be appropriate if you have an appetite for risk, and then additional shares should be acquired as news is announced with regard to both earnings and developments regarding topiramate.
Pluristem Therapeutics (PSTI), which trades in a 52-week range of $1.98 (52-week low) to $3.66 (52-week high), was trading at about $2.39/share during the first hour of Friday's session. On June 19th, the company announced that their cell therapy solution demonstrates positive effectiveness when applied. "Cell therapies are traditionally delivered through intravenous, or IV, injections for systemic effect. However, Pluristem's latest findings show that its PLX cells can be effective when injected by needle, into the muscle. This opens far larger markets for treatments in a wide range of potential outpatient settings and local clinics." Not only do I think that the results were very promising for the company, but there are two more reasons I'm attracted to PSTI at these levels. First, let's examine the outlook for the company's upcoming quarter. For the June quarter analysts expect PSTI to post a loss of -$0.08/share on revenue of just $220,000 and for the year a loss of -$0.33/share on revenue of $830,000. If the company can acquire market share and sustain growth especially with their cell therapy solution, both the June quarter and full year estimations could be surpassed. Second, the company's first candidate, which is currently in Phase I/II trials, shows promise and if successful could enhance the company's bottom line as noted by PTSI. "Data from two Phase I/II studies indicate that Pluristem's first PLX product candidate, PLX-PAD, is safe and potentially effective for the treatment of end stage peripheral artery disease when given locally." For potential shareholders looking to establish a position in Pluristem, a small one would be appropriate if you have an appetite for risk, and then additional shares should be acquired as news is announced with regard to both earnings and developments regarding PLX-PAD.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.