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Second Quarter Results Confirm Why We Like Aastrom
- Second quarter results confirm a turnaround is underway at Aastrom Biosciences, lead by the recent acquisition of the CTRM business from Sanofi.
- We believe Aastrom will generate roughly $50 million in revenues in 2015 and $5 million in positive cash flow from the CTRM business.
- The Phase 2b ixCELL-DCM study continues on plan.
- We believe Aastrom shares are worth $6.50 based on the revenues and projected cash flow from CTRM and the NPV of the Phase 2 ixmyelocel-T asset in DCM.
DARA Q2 Shows Good Progress, Signs Of Upside
- Revenues for the Q2-2014 were $0.41 million, up 432% from last year and exceeding expectations for the first time.
- DARA's revamped and enhanced commercial sales efforts seem to be working. We believe revenues in 2015 can approach $5.0 million.
- DARA will meet with the U.S. FDA to discuss KRN5500 in the coming months. KRN5500 has been awarded two Orphan Drug designations and Fast Track development status.
- Securing a development partnership for the initiation of a Phase 2b study with KRN5500 is top-priority after the FDA meeting. The company reports being in-talks with potential partners right now.
- As of June 30, 2014, DARA held cash of $15.9 million. We believe this is enough to fund operations into 2016 based on a declining burn rate.
Depomed Shares Offer 50% Upside Over The Next Six Months
- Depomed Q2 financial results exceed Street expectations based on strong product sales and royalties. The company raised guidance on their second quarter call. Business fundamentals looks strong.
- We expect the company to win its ANDA patent litigation against Actavis, keeping a generic Gralise off the market until at least 2022.
- Zipsor product sales are poised to increase meaningfully in 2015 based on loss of formulary coverage for chief competition and increase marketing effort by the company.
- Depomed exited the second quarter with $224 million in cash, representing roughly 1/3rd of the current market capitalization.
- Depomed currently trades at less than 3X 2014 revenues. The specialty pharma average is roughly 4.5X revenues. We see the stock as meaningfully under-valued. Our target is $17.50.
Why I'm Still Optimistic On LymPro And Amarantus Bio
- Last month Amarantus presented data on LymPro, the company's Alzheimer's disease blood test, at two Alzheimer's conferences.
- Amarantus shares ran up significantly in anticipation of this data, then corrected hard when the market was less than impressed with what was released.
- We believe the market may have misinterpreted the initial data on LymPro. Additional data, specifically with a newer version of the test, is coming in September 2014.
- Nothing we have seen over the past month changes our belief that the opportunity for Amarantus with LymPro, specifically under CLIA, remains meaningful.
Cipher's Business Continues To Hum Along
- Second quarter financial results exceeded our expectations on strong royalties from U.S. sales of Absorica and a surge in revenues on Lipofen.
- We believe Cipher will become active in the in-licensing and M&A market over the next several months. Cipher exited the second quarter with nearly $40 million in the bank.
- Cipher is trading at only 10x 2014 EPS, well below the specialty pharmaceutical industry average of 16x. Based on fair-value valuation, we see Cipher worth $12 per share.
Great Buying Opportunity In Pozen Shares
- Pozen shares have sold off significantly over the past month on PDUFA delay and Horizon's loss of some formulary coverage for VIMOVO.
- We believe PA will be approved in December 2014 and there will be a meaningful run in the shares ahead of approval.
- Horizon losing formulary coverage for VIMOVO is unfortunate, but the impact to Pozen is minimized by minimum guaranteed payments and an increase in the Ex-U.S. sales royalty rate.
- We believe Pozen is worth $11.50 per share based on DCF. Assuming PA gets approved in December 2014, Pozen should generate over $1.00 in EPS.
MYOS Corp. Tackles Muscles Health
- MYOS Corporation is a biotherapeutics and bionutrition company focused on improving muscle health and function to combat muscle related diseases.
- We believe a solid scientific basis differentiates MYOS from other bionutrition companies.
- Rapidly increasing revenues are helping to provide the necessary capital for research initiatives targeting muscle health.
- The company just recently listed on the NASDAQ. MYOS has a clean capital structure and strong management.
- We believe MYOS would make a good investment for those looking to get into the emerging area of muscle health. We see the shares fairly valued at $20.
For Avita, 'NICE' Decision In September Could Be Huge
- The UK's MTAC is expected to meet on July 17th to review data on Avita Medical's ReCell for the treatment of burns and scalds.
- A positive recommendation to MTAC to NICE would facilitate reimbursement of ReCell in the UK, opening up a huge market and setting a precedent for the rest of Europe.
- ReCell is a simple to use and effective product for the treatment of a number of skin defects. Sales, however, are limited by lack of reimbursement.
- A decision by NICE is expected in September 2014.
Immune Pharma: A Top-Pick Based On Pipeline And Valuation
- Amiket™ is a Phase 3 ready neuropathic pain product that has been granted Fast Track status by the U.S. FDA for Chemotherapy Induced Peripheral Neuropathy (CIPN).
- The drug has been tested in over 1700 patients in various Phase 1/2 trials for different types of neuropathic pain.
- The drug has also received Orphan Drug Designation for treatment of post-herpetic neuralgia (PHN) in the U.S. We anticipate an EU Orphan filing in the next few months.
- Amiket™ has the potential to reach approximately $850 million in sales as a treatment for various types of neuropathic pain, which we discuss below.
Pozen Resubmits PA NDA, PDUFA In Two Months?
- We believe Pozen represents a compelling valuation and catalyst play at this level.
- Despite the minor CRL issued by the FDA in April, the application is now back under review and we continue to believe PA is approved in 2014.
- Once PA is approved, we think Pozen becomes cash flow positive on an operating basis through a combination of growing royalties on both PA and Vimovo.
- Pozen is also sitting on enough cash that the company may look to do another cash-distribution to shareholders in 2015.
- We see the shares fairly-valued at $12.50.
Update On Dario Launch And Progress
- Dario has been undertaking a "soft launch" of the Dario device and App since March 2014. Initial user feedback has been very positive.
- The company is working on securing new distribution agreements and insurance reimbursement over the past year. Recent wins in Italy and the UK are encouraging.
- LabStyle's market capitalization is a puny $27 million, but we believe the company is well-positioned to become a major player in the $12 billion SMBG market.
- We believe the shares a meaningfully undervalued at today's level and expect significant news flow on the EU launch and U.S. approval will drive the shares higher.
2 Biotechs Race To Treat Movement Disorders
- Tetrabenazine is a 60-year old drug used to treat involuntary movement disorders. The drug is highly effective, but use is limited by poor tolerability.
- Auspex Pharma and Neurocrine Bio are racing to develop improved forms of tetrabenazine, with each company going after a different lead indication.
- Auspex shares look attractively valued base on the potential for SD-809. Similarly, Neurocrine shares offer significant upside to investors based on development of valbenazine (and elagolix).
Protalex PRTX-100 - A Potential Blockbuster For RA
- PRTX-100 shown to be safe and well tolerated in five weekly doses up to 12.0 micrograms/kg (μg/kg).
- A majority of PRTX-100 treated patients developed anti-drug antibodies, but these did not correlate with clearance of the drug or preclude a CDAI response.
- Treatment with PRTX-100 lead to a higher response rate for ACR, DAS28-CRP, and CDAI measures at days 29, 57, 85, and 113 vs. placebo.
DARA Snags Second Orphan Indication For KRN5500
- The FDA granted KRN5500 a second Orphan Drug Designation, this time for the treatment of multiple myeloma.
- In our article below we summarize some publications highlighting data from KRN5500 in both neuropathy and multiple myeloma.
- We believe DARA's commercial business is worth $15 to $20 million. KRN5500 adds another $10 to $15 million in value within our model.
- Investors are getting DARA's commercial business at fair-value at today's price. We believe they are getting KRN5500 for free. If a deal can be struck, we see sizable upside.
Time To Buy Aastrom Biosciences
- We believe ixmyelocel-T for ischemic DCM is worth $30 million in value, valued based on a probability-adjusted NPV analysis.
- Management has laid out an aggressive yet comprehensive plan to turn around the newly acquired CTRM business.
- If our projections hold and the company can generate $5+ million in positive cash flow in 2015, then CTRM could be worth another $25 to $50 million in value.
- The current market capitalization is only $27 million, making the stock attractive for share accumulation in our view.
BrainStorm Tackles Neurodegenerative Diseases With Novel Cell Therapy
- BrainStorm Cell Therapeutics, Inc. (BCLI) is a biotechnology company developing adult stem cell therapies for a range of neurodegenerative diseases.
- The company has a proprietary process called NurOwn™ that harvests and propagates autologous Mesenchymal Stem Cells (MSC) and then induces their differentiation into neurotrophic factor (NTF) secreting cells.
- Brainstorm recently initiated a multi-center, randomized, double blind, placebo controlled trial Phase 2 clinical trial in the U.S. for ALS.
- While limited, we are intrigued by the clinical data seen thus far. We believe the shares are worth at least $0.50, which is a handsome 67% return from today.
ICo's IDEAL Trial Fails, What's Left For Investors?
- Top-line results of the much anticipated Phase 2 iDEAL trial with iCo-007 failed to show separation from the active controls.
- Full data is expected in the fourth quarter 2014. The company is hoping to show positive subset analysis in VEGF-refractory patients.
- Residual valuation for iCo-008 and iCo-009 lead us to conclude the stock is worth $0.15 per share.
- At this stage, risk and volatility remain high.
Investment In Nuvo Research Looks Like An Easy Call
- Mallinckrodt Nuvo’s licensee for both Pennsaid® 1.5% and Pennsaid 2%, is in the process of converting Pennsaid 1.5% patients and prescribers to Pennsaid® 2%.
- Most recent IMS data shows Pennsaid® 2% prescriptions exceeded Pennsaid 1.5%. For 2014, we believe Pennsaid 2% sales could approach $29 million.
- We continue to believe Nuvo has a very strong case in their litigation with Mallinckrodt, and that a likely outcome will result in significant cash inflow to Nuvo.
- We believe Nuvo Research is significantly undervalued at today's price and offers upside of 200% based on our analysis.
Cynapsus Offers Potential Big Returns
- Investor misconceptions about Cynapsus have led to an incredible buying opportunity.
- We believe the company's APL-130277 is a potential $700 million product.
- Cynapsus recently raised $25 million in cash, enough to fund operations through the NDA filing.
- Our DCF valuation pegs the shares at $2.25-2.50 right now, with upside to $4.50 on a take-out in 2016.
Neuralstem NSI-189 Abstract Teases At Potential Greatness
- Phase 1b data will be presented over the course of 2 medical conferences in June. Comments in the abstract lead us to believe the data are strong.
- Study investigators noted the data showed a clinically meaningful reduction in depressive and cognitive symptoms that persisted well beyond dosing.
- Neuralstem's goal is to initiate a Phase 2 study later in 2014.
- We believe Neuralstem would like to partner NSI-189 with a large pharma company in 2015. This move could unlock significant value for shareholders.
GlassesOff: Ready For Prime Time
- We believe the "Soft Launch" of the GlassesOff App was successful, and are looking forward to seeing the full marketing of the App commence shortly.
- We believe the upside to the App is enormous and the revenue potential over the next few quarters is significant.
- With a growing user base and through a combination of social media and celebrity endorsements, we believe the company can achieve cash flow positive operations in 2015.
Expecting Big Revenue Ramp At ULURU In The Coming Quarters
- ULURU is expected to launch Altrazeal in 10 countries in the Q2. We believe this will generate revenue of approximately $400k, up 4x from the Q1.
- We are expecting Altrazeal to launch in another 30 countries in the Q3 and Q4, generating revenue of approximately $1.2 million.
- Operating burn in the Q1 was only $160k. We believe the company is rapidly approaching cash flow positive operations.
- ULURU has undertaken several initiatives to improve the balance sheet, which now shows over $1.0 million in cash and $3.1 million in positive shareholder equity.
- Given the improvements in the balance sheet and the expected ramp in revenues over the next few quarters, we believe the shares are headed significantly higher by year end.
An In-Depth Look At Kiacta Yields 200% Upside On Bellus Health
- Bellus Health, Inc. (BLU.TO) is a company focused on the development of treatments for rare diseases.
- The lead product candidate is Kiacta™, a drug candidate currently in a confirmatory Phase III trial for the treatment of AA Amyloidosis.
- Bellus has an additional clinical stage compound in Shigamab™, a monoclonal antibody treatment for hemolytic uremic syndrome caused by Shiga-like toxin producing E. coli.
- The company exited the first quarter 2014 with approximately CAD$14 million, which should enable Bellus to finance its operations beyond the end of the Kiacta™ Phase III trial.
- We feel confident that the Phase III trial for Kiacta™ will be successful. We are initiating coverage with a Buy rating and $2.50 price target.
Deal To Acquire Sanofi's CTRM Could Double Shares Of Aastrom Biosciences
- We believe acquiring the Cell Therapy & Regenerative Medicine business from Sanofi was an incredible deal for Aastrom.
- Aastrom will immediately being generating revenues to the tune of $44 million per year, with strong potential to drive operating profits over the near-term.
- Based on our back-of-the-envelope calculations, Aastrom could see $5-10 million in operating profits from CTRM in 2015.
- Terms will be announced in the next 2-3 weeks. We believe this could double the shares.
Why I'm Early, But Bullish On Cytomedix
- Q1 2014 financial results were nothing to get excited about. We believe it may take 1-2 more quarters before real progress is demonstrated.
- Despite being early on our call, we are confident that Cytomedix has a bright future based on sizable revenues opportunities for both Angel and AutoloGel.
- Cytomedix' valuation is extremely attractive. We believe the shares are worth 3x the current value. We expect significant progress to be demonstrated by year end 2014.
DARA Bio - Waiting For Progress
- Q1 financials came in below expectations, impacted by wholesaler inventory workdown and lower-than-expected prescription fill rate at pharmacies.
- DARA has put a new program in place to increase fill rate at the pharmacies and we expect wholesaler stocking in the Q2.
- DARA's new sales force is now in place and gaining traction. We expect meaningfully better sales figured in the coming quarters.
- However, DARA's near-term focus on raising cash (yet again) keeps us on the side-lines. We believe more progress must be demonstrated before we would put new cash to work.
Zalicus To Be Acquired By Epirus Biopharma
- Deal should close this summer.
- The combined company looks to have an attractive valuation.
- Over the near-term, we expect Zalicus to focus on asset sales to raise cash prior to the close of the deal.
Pozen, Inc.: Buy This Biotech For Growth And Income
- Vimovo Sales at Horizon Pharma lead to significant EPS upside in Q1.
- Pozen should be cash flow positive by the end of the year, even without PA approval. We think this results in more cash distributions / dividends in 2015.
- Pozen's stock is extremely attractive based on DCF, P/E, and DDM valuation models.
- We expect PA approval in the second half of 2014.
Review Of Depomed's First Quarter Results - Mind The GAAP
- Depomed posted somewhat disappointing Q1 product sales, and that lead to a significant sell-off in the shares on Friday, May 9th.
- We think many of the issues that lead to weak Q1 sales were one-time events and expect a snap-back in products sales in the Q2.
- Depomed financial results are complex because of the differences between GAAP and pro-forma accounting. We attempt to explain the true results below.
- We continue to believe the core business remains solid and that the shares are attractively valued based on industry-average valuation measures.
- We see $15 as a reasonable target over the near-term.
Acadia Remains On Track With Pimavanserin Program
- NDA for pimavanserin in PDP expected to be filed late 2014. This would put a PDUFA late 2015.
- Phase 2 program in ADP, a significant value-driver in our opinion, continues on plan, with data expected late 2015.
- Our DCF model pegs fair-value between $25-30 per share, making the stock attractive for long-term investors at today's price of $17.
Nuvo Research Offers Low-Risk With Big Upside
- Nuvo Research, Inc. is a specialty pharmaceutical company with a diverse portfolio of marketed products (Pennsaid®, Pennsaid® 2%, Synera®, Pliaglis®).
- Beside the marketed products, the company also has an immunotherapy treatment (WF10) for allergic rhinitis in Phase 2 testing.
- We feel that Nuvo has tremendous upside. We believe investor should ‘Buy’ the shares today, and our target is $7.50 per share.
AntriaBio Looks To Corner The Long-Acting Insulin Market
- Long-acting insulin is currently dominated by Sanofi's Lantus. Thanks to once daily dosing, Lantus sales totaled nearly $8 billion in 2013.
- AntriaBio is taking a unique approach to developing the world's first once weekly insulin therapy.
- Moving from once daily to once weekly dosing has the potential to capture 30-40% of the $10 billion long-acting insulin market.
- We believe AntriaBio shares are attractive today based on the potential for AB101.