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EXP is a graduate from The University of Wall Street and serves as the CEO / Chief Stock Strategist at research firm. With over 30 years of trading the market, EXP is an experienced investor using a fundamental and technical approach as a market analyst, chartist, visual... More
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  • Idera Pharmaceuticals' Proof Of Concept Goal Was Met

    If you have been following Idera Pharmaceuticals (NASDAQ:IDRA), which I wrote about in my prior article here, you will see that they have been ramping up as one of the most cutting edge companies in the field of discovery and development of novel synthetic DNA- and RNA- based drug candidates which I believe could radically change gene therapies in medicine today.

    Lets Stay Focused On The Goals:

    The primary objective of the latest trial was to evaluate the "safety and tolerability" of its lead antagonist IMO-8400 over a 12-week treatment period, with a secondary objective to evaluate the "clinical activity" of IMO-8400.

    In the news that was released on March 28, 2014, the company announced that its randomized, double-blind, placebo controlled Phase 2 trial of IMO-8400 in 32 patients with moderate-to-severe plaque psoriasis resulted in "positive top-line data." Quite simply, this translates into meaning that they met both safety and tolerability at all dose levels. This particular low-dose IMO-8400 treatment was "safe."

    About the Phase 2 Trial

    As explained by the company in its press releases: This Phase 2 trial was a randomized, double-blind, placebo-controlled trial, in which the Company enrolled 32 patients with moderate-to-severe plaque psoriasis, with a minimum PASI score of 12 or above. All patients were withdrawn from prior therapies with an appropriate wash-out period, and were randomized equally to receive subcutaneous IMO-8400 monotherapy at dose levels of 0.075 mg/kg, 0.15 mg/kg and 0.3 mg/kg or placebo, weekly for 12 weeks, with a six-week follow-up period. The primary objective of the trial was to evaluate the safety and tolerability of IMO-8400. A secondary objective of the trial was to evaluate the clinical activity of IMO-8400 as assessed using standard clinical metrics, including Psoriasis Area and Severity Index (PASI) scores.

    Remember that this trial was only 12 weeks, not a full year:

    While the cohorts (groups) only lasted 12 short weeks, the trial was able to successfully meet a secondary objective of demonstrating clinical activity based on PASI scores. In layman's terms, a PASI score is a tool used to measure the severity and extent of psoriasis (Psoriasis Area and Severity Index).

    Furthermore, the company stated that among patients who completed 3 months of treatment per protocol, PASI 50 was achieved in nine (45%) of 20 who received IMO-8400 at any dose level, and in one (14%) of seven who received placebo. PASI 75 was achieved in four (20%) of IMO-8400 treated patients at any dose level, and in zero placebo patients. PASI 50 and PASI 75 are defined as 50% and 75% improvement, respectively, compared to baseline PASI.

    The Two Platforms Can Now Advance

    Specifically, Idera Pharmaceuticals is working towards two very unique platforms. One is focusing in on autoimuune diseases (in which there are many) and the other is a novel approach in the treatment of certain genetically defined forms of B-cell lymphoma. So, the very astute scientific team at Idera is very strategically working on developing two key drug discovery platforms based on nucleic acid therapeutics:

    1. Toll-like Receptor (NYSEMKT:TLR) antagonists
    2. Gene Silencing Oligonucleotides (GSOs)

    I strongly believe that this company is still pretty much under the radar. Also, as stated in my article in March, if Idera could show positive "proof of concept" (which it just did) in psoriasis, and it's treatment can show "clinical activity" then it would only make sound business sense to go after many more serious unmet indications including, but not limited to, lymphomas, lupus and other various autoimmune diseases.

    Now For The Disconnect:

    On March 24, 2014 only a few days prior to the announcement of the Idera P2 trial, Celgene (NASDAQ:CELG) announced that the U.S. Food and Drug Administration (FDA) has approved OTEZLA® (apremilast), the Company's oral, selective inhibitor of phosphodiesterase 4 (PDE4), for the treatment of adult patients with active "psoriatic arthritis." While I do believe that the approval of this "pill" is great news for Celgene, this is not and was not the intended goal that Idera was striving for in its IMO-8400 trial. According to my research, Idera has never intended to go into this already crowded space (but has stated in its webcasts and news releases that they could partner this out).

    Given these recent announcements, I do believe that investors sold on this news which I believe is unwarranted, hence the disconnect. Maybe investors aren't looking deep enough into the real translation of the data to see that we are actually are on the cusp of something very remarkable. The positive Top-Line data seems to be clearly overlooked, misunderstood and misrepresented by the individual investor. In simple terms, the current stock evaluation of $4.10 (in my sincere opinion) is not representative of what is lurking under the hood. Investors might think we have a 6 cylinder engine, but as far as I can interpret the data, it seems as though we just might have a 427 big block hemi. I could be wrong, but I don't believe that I am and I will be anxiously waiting for more data from the "higher dose" cohorts to be announced soon enough.

    These Are My Thoughts At The Present Time:

    First, as shown in this biotech ETF chart below, symbol IBB (NASDAQ:IBB) which I have been mentioning to investors from the $90's a few years back, you will see that even the largest biotech investments may be in a brief correction phase. With good news or bad news sometimes it doesn't even matter when the "powers to be" are selling off. At this juncture, we just need to dust ourselves off and get ready for the next bull run. Is this correction bad? No, actually not at all. On the contrary, its quite healthy to have these brief pullbacks from time-to-time as we trend higher in the current economic recovery process. I'm calling the recovery a process, because the global rebound that started a few years ago isn't a one time event, but rather a "process" of upward and downward waves in stock valuations. These waves are not entirely in our control week after week or month to month. Preferably, we would like to see higher highs and higher lows. Remember that at the present time, the U.S. economy is still only advancing from a modest 2%-2.5% growth rate, but at least we are moving in the right direction, and that is up.

    (click to enlarge)

    Moving Forward:

    Despite getting caught up in the recent biotech correction in the past few weeks (as seen in the chart above) I still very firmly believe (as a biotech investor) that DNA- and RNA- therapies are the place to be as these novel types of medical advancements make significant progress. Advancements in science take time and a great deal of patience. So far, it has taken takes many years to get us to where we stand today; decades.

    The company has developed first, second and now third generation science (at Idera's labs) which is taking place right now. Hiccup's do occur in science and there is no question that it has been a long haul for the many dedicated scientists and lab technicians. These are the folks who have been working month after month to discover and develop novel synthetic DNA- and RNA- based drug candidates standing right before our very eyes. Yes, without question, these are exciting times. Some of us just don't realize how lucky we are to stand witness to these new breakthrough discoveries.

    I truly believe that we are at the forefront of controlling the behavior of DNA and proteins. Imagine a company who has the technology to target specific molecules that could either increase or decrease their activity or even silence bad genes causing cancers or diseases to patients around the world. What kind of value would this be worth?

    This question that I pose is exactly why I believe that Idera Pharmaceuticals has amassed what I would call the elite team of biotech leaders and investment bankers over the past several quarters. What I am referring to is Idera's highly gifted management team, it's board, leadership, and two main investment banking firms; Pillar Invest Corp. and Baker Brothers Advisors. See the company news releases for more information if you need to get up to speed here.

    (click to enlarge)idra

    Future Catalysts:

    Idera Pharmaceuticals clinical development for IMO-8400 is focused on B-cell lymphomas harboring the MYD88 L265P mutation, and on orphan autoimmune disease indications this could be a very big deal as the company maintains its focus in the area for in 2014. Expect further updates on its IMO-8400 trials for Waldenstroms toll-like receptor antagonists and more details about its - gene silencing oligonucleotides (GSO) program.

    Also, on March 27, 2014 PiperJaffray stated that Idera Pharmaceuticals' weakness appeared to be overdone and they maintain a PT of $7.00. This would be a respectable percentage move from where it sits today.

    Note: PiperJaffray has been very successful in its coverage of this company quarter after quarter, as well as with many other successful companies in the biotech industry such as JAZZ, Vanada, ACADIA and others. Cowen & Co has provided excellent coverage too.

    Disclosure: I am long IDRA.

    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.

    Tags: IDRA
    Apr 01 10:33 AM | Link | 10 Comments
  • A Top Pick For March: Questcor Pharmaceuticals

    Questcor Pharmaceuticals (QCOR) is a very good long term, as well as a reversal biotech stock play, with its 19 indications for flagship product Acthar Gel, a naturally-derived formulation of adrenocorticotropic hormone used in a variety of inflammatory disorders. QCOR stock is expected to exhibit more upside from valuation multiples. Additional Company background and due diligence about Questcor can be seen here, as well as by another SA associate who lays out some pretty compelling arguments about owning Questcor stock here. I will also include this 74 page report by the FDA for you to review as well. In the meantime, please let me say that fundamentally, this company is financially strong as evidenced by its latest earnings report which you can review here.

    At the present time, (according to its filings), Acthar revenues are only showing low market penetration, which suggests there is significant room for long-term growth. Management commented on potentially weaker January scripts owing to MS seasonality and patient insurance re-enrollment, with trends improving in February. Its overall growth story is intact. I would expect sales to continue to ramp through 2014, particularly from contributions in rheumatology, nephrotic syndrome, and the recently launched efforts in sarcoidosis.

    Recently, management (whom I personally believe is solid) finally stepped up to defend against relentless short seller activities. On March 3, 2014, Questcor Pharmaceuticals, Inc. provided the following information here. "

    "Over the last few years, Questcor has demonstrated a strong track record of providing therapies to patients with unmet medical needs. Despite its track record of creating value for Questcor's investors, has been the subject of a few "bear raids." Questcor believes that these short attacks have been actively engaged in tarnishing Questcor's good in the medical community by distracting investors from the Company's investment fundamentals. Regarding Acthar containing "deamidated corticotropin," this peptide has been listed for many years in the FDA-approved Acthar package inserts. Acthar is a naturally-derived, complex peptide formulation that is still not yet fully understood." Questcor has discussed this more in depth here.

    (click to enlarge)

    Investment Thesis:

    There is increasing confidence in Questcor's Rheumatology (NYSE:RA) marketing plan that could match or exceed sales that are currently being generated in its Nephrotic Syndrome (NYSE:NS) sales program. Rhematology sales should continue to rise as doctors look for additional options for their refractory patients. This is a market that could be as much as 10x as large as QCOR's market in NS. The patient population could be as large as 200,000 patients or more. RA sales were in the low 22%-23% of sales and are expected to increase to over 30%-35% in the next few years. Also, the company is on a nationwide hiring campaign too to ramp up its sales force to meet the anticipated demands.

    I don't want to overlook the fact that there appears to be some concern about its pricing structure, but in reality it isn't a concern for patients who understand that Acthar is a last-line therapy for hard to treat refractory patients. The number of doctors prescribing Acthar has actually been growing over the past several quarters according to my research, not declining. This is because doctors see that there are justifiable benefits to the patients being prescribed the treatments.

    Also, if we connect the dots to QCOR's growth strategy, you really can't overlook the fact that Questcor has added Kelly Martin, the former CEO from Elan Pharmaceuticals to Questcor's board. The writing may be on the wall that he was added to the QCOR board along with the Rajesh (Raj) Asarpota, the Company's new Chief Financial Officer, effective February 17, 2014 to work on a corporate tax strategy that is taking hold with many large US corporations.

    It just might be that Questcor is working on a strategy to re-domicile QCOR in Ireland who has been known to offer corporate-friendly rates as low as 12.5%? Think about the multi-millions of tax savings that would go to its bottom line. A future announcement about a re-domiciling of QCOR to Ireland would boost the share price dramatically in shareholder value don't you think? I'm betting that it would.

    So, if you crunched the numbers with its earnings growth and expected new tax-rate if it were to relocate (which seems highly probable), you might very well be looking at a $90 or more stock valuation; $80 per share for its existing 19 indications and $10 per share cash = $90.00+ without any re-domiciling or controversial settlement news that could occur at any time. If either of these events does in fact occur, I believe that you are looking at another incremental move up in the stock of about $15 - $20 per share which would bring the EOY 2014 valuation at over $105+ very easily.

    The Latest Financials Showed:
    Questcor Fourth Quarter and Full Year 2013 Financial Results
    - Fourth Quarter Net Sales $243 Million; Increase 51% Year-over-Year
    - Fourth Quarter GAAP EPS of $1.44, Non-GAAP EPS of $1.67 up 53%
    - Full Year 2013 Net Sales $799 Million; Increase 57% Year-over-Year
    - Full Year GAAP EPS of $4.76, Non-GAAP EPS of $5.48 up 65%

    What Some Wall Street Analysts Are Saying:

    Mizuho stated: We find it implausible that Acthar is somehow mislabeled or adulterated, lab error more likely. They maintain a $93 target.

    Oppenheimer: Says it expects continued momentum into 2014 and has the stock rated as Outperform with a $99 target.

    Janney Capital: Fair value estimate is $90.00.

    Piper Jaffray: Has the stock rated as Overweight and raised its price target from $85 to $98.

    Merrill Lynch stated: Product quality allegations create a compelling opportunity - BUY.

    Relax, Management and the Board is strong:

    Since the acquisition of Acthar Gel from Aventis in 2001, management and the board have been strong. There is no question that the company has performed very well.

    I recently told some friends that Questcor Management picked up Acthar like it was a Picasso sold in a garage sale. The drug was abandoned folks. I was soon reminded that Acthar was not merely purchased for a song as some shorts might suggest, but rather Questcor's elite team of highly skilled and trained professionals have spent multiple millions in refining the Gold (its key product) that has led them to such great success over the years. By 2012, Questcor's spending on research and development had risen to $34M, and that was budgeted to nearly double in 2013.

    Look, in life you make your own luck, it doesn't just fall in your lap like some people believe that it does. Stock valuations (over time) are earned over time and QCOR has definitely earned my respect.

    Finally, in the case of Questcor, I would like to suggest that followers take all of the fear, uncertainty and doubt (NYSEARCA:FUD) with a grain of salt because, after all, it's just noise in the grand scheme of things. Focus on the fundamentals, because this will ultimately prevail. In the meantime, I would expect a reversal followed by a bleed-up in the stock on anticipated and improved earnings. For those who may still be skeptical of Questcor, have faith and trust in those who actually "do what they say that they will do, when they say that they will do it!" So many companies fail on promised execution, however in this case I have no doubt this company is a "real" growth story and its stock will move significantly higher in the near term, as well as into 2014 on improving fundamentals, not to be confused with fud-a-mentals.

    Disclosure: I am long QCOR. 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.

    Mar 12 8:45 AM | Link | 10 Comments
  • Questcor Pharmaceuticals Update Following Its October 2013 Earnings Call

    Questcor Pharmaceuticals (QCOR) had very good earnings on Oct. 29, 2013 following the close of the market and the stock spiked as expected after being up $1.76 at the close.... then dropped... then sat at about $72 for a while before the market makers (MM's) dropped their bids down hard.

    Here is the official release:

    Questcor Pharma beats by $0.40, beats on revenues • 4:04 PM

    • Questcor Pharma (QCOR): Q3 EPS of $1.68 beats by $0.40.
    • Revenue of $236.3M (+68% Y/Y) beats by $36.6M. Shares +1.8% AH. (PR)

    Following the release was a scheduled CC lead by the IR people and CEO Bailey. On the call was some talk about an investigation...And I'm assuming this was something that was brought up last year into its marketing practices that has Never evolved into anything other than a tactic that may very well be presented by the Bear Camp?

    For the record....on the unexpected and brisk drop, I was a net BUYER at various levels and did not sell into the close or in AH whatsoever. My network is very heavily invested here (having done extensive DD) and we feel that we are all sitting on a winner into 2014.... not just this quarter... or the past year for that matter but could very well see $90 - $100 before to long with increased progress on its Acthar Gel and increased earnings momentum.

    What we have concluded is that the shorts (20% of the float) are most likely pressuring the government to investigate Questcor for obvious reasons.... to instill fear in its loyal investors. This is what the shorts do, and as you know I do spend a considerable amount of time defending good companies time and time again against this type of activity.

    See if you can follow:
    First, the shorts (who profit from a stock decline) sell short a top performing stock, then get an investigation, and/or place articles about trouble (FEAR) or some other type of nonsensical turmoil, then do whatever they can in an effort to collapse a stock for their financial gain, and then they move on to raid another company. This happens more and more it seems. Defending against this is a full time job.

    I saw the same MM rape job on Vocera (NYSE:VCRA) about 8 months ago on a NICKEL miss (yes, 5 cents) and the shares tubed to $12.50 where it looked like a HUGE opportunity and some of my followers jumped in ....

    The earnings were off by a smidge and the market makers (MMs) used that smidge as an opportunity to literally screw everyone holding because with the stroke of a keyboard they can set the prices when folks are screaming for help.

    As a general rule, here is what we do in this situations is:

    1) Stay Calm
    2) Buy The Fear on solid companies

    What has transpired since the MM rape job on VCRA?

    See for yourself. I see a significant bounce and Channel Up.

    (click to enlarge)

    What's Next?

    Moving forward, I suspect that we should get some analyst support (upgrades) on Questcor (QCOR) and this communication will in most probabilities soon be cleared up. I believe that we may see a few good upgrades in the next few days that will overshadow the work of these shorts.

    Please remember that in these instances of Bear Raids...Fundamentals will prevail and increased earnings should eventually drive the stock higher.

    In the meantime, stay tuned and I will try to keep you all informed about what is going on and I do believe that this too shall pass sooner than later.

    Here is the earnings call transcript:

    Disclosure: I am long QCOR.

    Oct 29 8:21 PM | Link | 3 Comments
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