The following companies have important Food and Drug Administration (FDA) and European Medicines Agency (EMA) decisions this week. These binary event decisions might provide for a good trading opportunity to the upside as we typically see buyers line up in advance of these decisions. Some traders like to hold through biopharma binary events and use the option chain to hedge their long positions in anticipation of positive outcomes from these decisions.
NPS Pharmaceuticals, Inc. (NASDAQ:NPSP)
On 1/31/12, the FDA accepted the company's drug Gattex's (teduglutide) NDA for the indication of adults with short bowel syndrome (SBS).
The FDA's Gastrointestinal Drugs Advisory Committee (ADCOM) will discuss Gattex at a meeting on Tuesday, 10/16/12, and will make a recommendation on whether to approve the drug to the FDA.
Gattex is a novel, recombinant analog of human glucagon-like peptide 2, a protein involved in the rehabilitation of the intestinal lining. NPS has reported findings from completed studies in which Gattex significantly reduced parenteral nutrition (NYSE:PN) and intravenous (IV) fluid volumes in adult subjects with short bowel syndrome with no significant difference in withdrawal rates due to adverse events as compared to placebo. Given Gattex's mechanism of action, NPS believes it has the potential to treat gastrointestinal conditions associated with intestinal failure.
There are an estimated 10,000 to 15,000 patients with SBS in the United States who are dependent on PN/IV fluids. Market research conducted for NPS has confirmed the need for new treatments for SBS patients, with nearly 80 percent of physicians interviewed indicating that reducing patients' reliance on PN/IV fluids is an important treatment goal. Patients with SBS are also highly motivated to potentially reduce the amount of time spent on, and the complications associated with, chronic PN/IV fluids.
Given the nature of the questions the panel posted in a PDF from last Friday, and looking at data which has shown Gattex to have excellent efficacy and safety, I would say it's more than an 85% chance the drug will receive a positive recommendation from the panel for FDA approval.
NPS closed last Friday's trading session at $10.86.
Isis Pharmaceuticals, Inc. (ISIS)
The FDA has a scheduled meeting of the Endocrinologic and Metabolic Drugs Advisory Committee on Thursday October 18, 2012, to review the NDA for Kynamro (mipomersen) in the treatment of adult patients with Homozygous Familial Hypercholesterolemia.
Kynamro is the most advanced drug in the ISIS pipeline. The company, along with Genzyme, is developing Kynamro to treat patients with severe forms of FH, at high cardiovascular risk and who cannot reduce their LDL-C sufficiently with currently available lipid-lowering therapies. Kynamro is a novel, first-in-class, apo-B synthesis inhibitor in development for the reduction of LDL cholesterol, or LDL-C. It is a second-generation antisense drug the company discovered and licensed to Genzyme in 2008. Kynamro acts by decreasing the production of apolipoprotein-B, or apo-B. Apo-B provides the structural core for atherogenic lipids, including LDL-C, which carry cholesterol through the bloodstream. Kynamro is designed to reduce LDL-C and other key atherogenic lipids linked to cardiovascular disease by preventing their formation.
Kynamro has shown to cause fat buildup in the liver, which can lead to long-term damage. However, HoFH patients suffer from clogged arteries from cholesterol plaques that cause many to be at risk of heart attacks and/or strokes at an early age. I believe since the reward of this drug out-weighs the risk, the committee should recommend the drug for approval -- Kynamro is being developed with the help of Sanofi (NYSE:SNY).
ISIS closed last Friday's trading session at $12.64.
Aegerion Pharmaceuticals, Inc. (NASDAQ:AEGR)
The FDA has a scheduled meeting of the Endocrinologic and Metabolic Drugs Advisory Committee on October 17, 2012, to review the Company's New Drug Application for lomitapide in the treatment of adult patients with Homozygous Familial Hypercholesterolemia (HoFH).
Lomitapide is a small molecule microsomal triglyceride transfer protein inhibitor, or MTP-I that Aegerion is developing as an oral, once-a-day treatment for patients with severe lipid disorders. Lomitapide is being evaluated for its ability to reduce low density lipoprotein (LDL-C) or bad cholesterol levels in patients with HoFH and reduce triglyceride (TG) levels in patients with a severe form of hypertriglyceridemia called FC. The mechanism of action of lomitapide is to reduce lipid levels in the blood by preventing the liver and intestines from secreting lipids into the blood stream. Lomitapide has been evaluated in over 900 patients in one Phase III study, eight Phase II studies and fourteen Phase I studies. This drug should also see a positive recommendation from ADCOM for the same reasons Isis's drug should be.
Aegerion closed last Friday's session at $15.96.
Sucampo Pharmaceuticals, Inc. (NASDAQ:SCMP)
In August 2011, Sucampo submitted a Marketing Authorization Application (MAA) to the EMA seeking U.K. approval for Amitiza, indicated for the treatment of chronic idiopathic constipation (CIC), which will be followed by an application for approval to the rest of the EU. In the United Kingdom, Sucampo awaits a final regulatory decision from the Medicines and Healthcare products Regulatory Agency (MHRA) for the short-term use of Amitiza for the treatment of CIC. This decision was originally expected in Q3, 2012, with the new decision expected by this Friday.
Chronic idiopathic constipation is similar to constipation-predominant irritable bowel syndrome (IBS-C); however, people with CIC do not have other symptoms of IBS, such as abdominal pain. Diagnosing CIC can be difficult as other syndromes must be ruled out as there is no physiological cause for CIC. Doctors will typically look for other symptoms, such as blood in stool, weight loss, low blood count, or other symptoms.
Since Amitiza is already FDA approved for this indication, an EMA approval here is very likely. Sucampo also has an upcoming supplemental new drug (sNDA) decision from the FDA in regards to its priority review of its sNDA for Amitiza, seeking approval for an additional indication using the drug to treat OIC in patients with chronic non-cancer pain.
Sucampo closed last Friday's trading session at $6.07.
Disclosure: I am long SCMP. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Disclaimer: This article is intended for informational and entertainment use only, and should not be construed as professional investment advice. They are my opinions only. Trading stocks is risky -- always be sure to know and understand your risk tolerance. You can incur substantial financial losses in any trade or investment. Always do your own due diligence before buying and selling any stock, and/or consult with a licensed financial adviser.