Brian L. Wilson's  Instablog

Celgene Reports First Quarter 2013 Operating and Financial Results (press release, 4/25/2013)

- Net Product Sales of $1.43 Billion, Increased 15 Percent Y/Y

- Total Revenue of $1.46 Billion, Increased 15 Percent Y/Y

- Adjusted Diluted Earnings Per Share of $1.37, Increased 27 Percent Y/Y

-2013 Adjusted Diluted EPS Guidance Raised; Net Product Sales Guidance Affirmed

Celgene stock is only slightly higher after the company reported results for Q1 2013. Investors seem a little bit worried about the slip in net income, which came in at $385 M versus $402 M in Q1 2012 (GAAP). Using adjusted net income, Q1 2013 was $592 M versus $484 M in Q1 2012 (non-GAAP). Expenses rose, although one-time events dragged down the non-adjusted data and may be distorting the market's perspective Celgene's fundamentals.

"The adjusted operating expenses presented below exclude share-based employee compensation expense, IPR&D impairments and upfront collaboration payments."

Looking at their product lineup, we see consistent growth in most of the company's marketed products, and all of the products that can be considered "vital" to Celgene's valuation of $50 B including Revlimid (Lenalidomide), Vidaza (Azacitidine), and Abraxane (Protein-bound paclitaxel) with 16%, 10%, and 18% in sales growth (respectively). The success of these products in the last year drove the company's top-line growth, which came in at 15% year-over-year. The company also maintained existing financial forecasts, which estimate that the company will see 11% growth in net product sales throughout the next year. These are good figures, but they are not surprising.

Due to a lack of surprises, investors should expect CELG to mirror the movements of the biotech sector (NASDAQ: BIIB) , and act as a barometer for the health of medium sized pharmaceutical companies for the next few weeks until we reach the PDUFA goal date for Revlimid (lenalidomide) on June 5th 2013 for submitted sNDA for the mantle cell lymphoma (MCL) indication, followed by data releases which may skew bullish/bearish perspective on Celgene going forward.

This makes CELG one of many attractive picks in the event that the broader market makes a sudden turn for the worse. The company is expensive, but is financially secure and may be able to grow Revlimid sales significantly with its introduction into other cancer indications.

From Bio-Wire - April 25 2013 2:28 PM

The biopharmaceutical company Theravance (NASDAQ: THRX) is gunning new 52-week highs as we finally approach the FDA Advisory Committee Meeting regarding the NDA that the company submitted for the inhaled Chronic Obstructive Pulmonary Disease (COPD) and Asthma drug BREO ™ (also known as RELVAR™ outside of the United States). We originally mentioned Theravance on March 6th, and noted the potential for the stock to run up ahead of its upcoming catalysts. THRX is up over 13% after yesterday's rally.

Breo/Relvar is a reformulated dose of vilanterol (a long-acting β2 agonist) and fluticasone furorate (a long-acting glucocorticoid receptor agonist). Vilanterol is a new compound, although fluticasone furorate is already marketed by Theravance's partnerGlaxoSmithKline (NYSE: GSK) as a treatment for allergies.

The NDA that was submitted by Theravance in 2012 was specifically for the COPD indication, and has a PDUFA goal date of 5/12/13 under standard ten month review. The advisory committee meeting mentioned in the last article was originally scheduled to take place on March 7th, 2013; although it was postponed due to a particularly nasty snowstorm that hit the Northeastern United States and shut down major lines of transportation. The new date is April 17th 2013 (today).

The advisory committee vote is expected to be generally positive for the COPD indication, although the asthma indication (which is a heavily debated subject right now) is less certain. Theravance had initially been proceeding with a phase III trial in asthma without any guidance from the FDA regarding its validity in a potential sNDA, although feedback was given earlier in the year and the Phase III trial is now undergoing the recruitment process.

The asthma trial is estimated to enroll about 990 patients, and will have forced expiratory volume in one second (FEV1) data determining the success or failure of its primary endpoint. Secondary outcome measures will back the efficacy/safety profile of Breo in asthma patients as well. Investors should note that the large (and presumably expensive) clinical trial will be conducted by GlaxoSmithKline, which means that we should not see any meaningful spikes in Theravance's overall expenses inside its income statements in the upcoming earnings releases. In addition, the short length of this trial (12 weeks) means that the data should be finalized by October 2013.

GlaxoSmithKline seems eager to dominate the Asthma/COPD space, which generates roughly $10.8 billion for the company every year in sales. No other big pharma comes close to GSK's dominant position, and small pharma competitors have only managed to generate tens of millions in revenue from the sector.

Because of its close relationship with Theravance, investors generally expect GSK's inherent ability to sell into the asthma/COPD space to help Theravance - which is now worth about $2.8 billion. Mentioned in the last article was Piper Jaffray's speculation that GSK would buy Theravance on a positive adcom vote, which is also very possible given the situation. GSK saw enormous success with the Advair/Seretide combined inhaler, which generated sales revenues of around of $8 billion in 2012.

The Takeaway:

2013 should be an exceptional year for Theravance, assuming that all goes well. The company is expected to see a positive vote for Breo in the COPD indication later today, which may result in a FDA approval in a few weeks. Given a positive advisory committee vote, I expect THRX to rally as buyout speculation (specifically surrounding GSK) rises.

A word of warning: the FDA is notorious for issuing a CRL (rejection) even after a positive vote, so there is always risk going into an FDA decision on a company's NDA or sNDA.

If the FDA approves Breo for the COPD indication and GSK doesn't buy Theravance, I expect investors to retain their expectations that there will be an acquisition, with catalysts from the asthma indication on the horizon. Data from the Phase III should be in by October 2013, which implies that investors will get the vital data before the end of the year along with a sNDA submission. Under standard procedure, we would expect another adcom and another PDUFA goal date in 2014. Whether or not THRX investors will have to wait that long for an acquisition remains to be seen.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Bio-Wire Weekly (4/1/13 - 4/5/13)

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The Newsmakers:

Amarin Corporation (NASDAQ: AMRN)

It seems that the heat between the bull/bear struggle in Amarin is being turned up, as the company is once again dominating headlines and social media commentary within the biotech & small pharma investment community. There seem to be very mixed opinions on the market performance of Vascepa (Amarin's recently approved hypertriglyceridemia drug) after the company launched the drug without big pharma help in January 2013. AMRN was down 3% last week after the bearishness in the broader market tanked the stock by over 4% last Friday.

The bulls were encouraged after equity research firm Leerink Swann mentioned that Vascepa seemed to be "tracking well". Vascepa weekly sales are now getting very close to the 2,000 TRx/week mark, which is encouraging. On the flip side, NCE designation remains a mystery, and we know that Vascepa still needs to multiply sales at least ten times to justify the valuation on Amarin.

Rigel Pharmaceuticals (NASDAQ: RIGL)

On Friday, Rigel Pharmaceuticals closed over 40% lower after their partner AstraZeneca (NYSE: AZN) announced the top-line results from the OSKIRA-1 Phase III study of flagship, partnered rheumatoid arthritis drug Fostamatinib.

OSKIRA-1 had two primary endpoints. One measured the results using ACR20 (a rating scale developed by the American College of Rheumatology), and one used an X-ray endpoint known as mTSS (modified Total Sharp Score). The trial failed to produce statistically significant results for the mTSS endpoint, which is discouraging but doesn't mean the death of fostamatinib's development program. We are awaiting results for OSKIRA-2 and 3, which will further clarify how strong fostamatinib's efficacy profile is.

Astex Pharmaceuticals (NASDAQ: ASTX)

ASTX moved up just short of 21% last week, primarily because of initiation of coverage by RBC Capital Markets which set an "outperform" rating on the stock along with a price target of $9 per share (implying 67% upside potential). This was great timing, as the stock was also seeing enthusiasm over the company's presentation of phase II data for SG-110 and preclinical data for AT13387, both of which have demonstrated interesting anti-tumor activity.

MannKind Corporation (NASDAQ: MNKD)

The stock moved up nearly 11% last week in reaction to a barrage of generally positive articles about the company from financial sites like The Motley Fool, seeking Alpha, and even TheStreet (although Adam Feuerstein is clearly bearish). Still, the stock has strong support from the retail investor audience, and seems to be affected quite strongly by the headlines.

MNKD longs may cause a run-up in the common stock before August 2013, when the company expects to release Phase III top-line data for flagship drug Afrezza. Data is generally expected to be quite good, and a PDUFA date for the Afrezza NDA is expected in mid-2014.

Zogenix Inc. (NASDAQ: ZGNX)

ZGNX traders are waiting for the FDA's final decision on the NDA that this company submitted for Zohydro ER, which missed its PDUFA date for an unknown reason. The FDA said that it needed "more time" to review, which leads some to believe that there will be an approval (maybe under REMS). Others believe that the drug has virtually no shot at approval.

In either scenario, expect a massive reaction in ZGNX when the final word comes.

ZGNX was very orderly until a massive sell order came in at around 3:12 PM EST. ZGNX closed almost 13% lower by the closing bell. There is some speculation that news from the FDA may have leaked, but we only have rumors at this point.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.