Justin M. Hall's  Instablog

Historically, playing the drug makers in December has proven to be a safe bet. December ranks first, above August and September, as the best performing month for the iShares Nasdaq Biotechnology (IBB) ETF with average gains of about 8%.


Outlined below is a game plan that might help investors beat the benchmark.

12/2 Endo Pharmaceuticals (ENDP)
On Wednesday, December 2, the FDA could hand down a decision for ENDP’s Nebido®, a treatment indicated for hypogonadism or low testosterone in men. 

Unlike competitive products, which require more frequent injections and doctor visits, Nebido is a long-acting form of testosterone that only requires injection four to five times annually. With approximately 13.8 million American men that are estimated to have low testosterone - sufficient for hormone treatment, Nebido possesses excellent market potential.

It should be noted that Nebido was developed by Bayer Schering (BYERF.PK) and is already approved in 86 countries, of which 50 are located in Europe, Asia Pacific and Latin America.  ENDP retains the rights to market the drug in the US.

Back on September 2, ENDP indicated that regulators needed some more time to finalize the risk evaluation and mitigation strategy (REMS). Hence the three-month delay. On Wednesday, I expect Nebido will finally be approved by the FDA for use in the US. Upon the drug's approval, ENDP shareholders could see a nice bump in their shares.



12/5 - 12/8 Spectrum Pharmaceuticals (SPPI)
The American Society of Hematologists or ASH Annual Meeting will begin on Saturday, December 5 and conclude on Tuesday, December 8. This year, an impressive 14 presentations, 2 oral and 12 poster, will feature Spectrum Pharmaceuticals (SPPI) radio-immunotherapeutic, Zevalin®.

On September 4, 2009, Zevalin was approved by the FDA for use as a first-line consolidation treatment in patients with non-Hodgkin’s lymphoma (NHL).

Following all 14 presentations (detailed in the table below), shares of SPPI could begin to head north again. 

For more information on Zevalin, interested investors should reference these two articles from October 25 and November 22.
 

12/12 Immunogen (IMGN)
On December 12, Immunogen (IMGN) along with its partner Roche (RHHBY.PK) will announce Phase 2 data for DM1 in combination with Herceptin® (trastuzumab) for the third-line treatment of metastatic breast cancer. It is worth noting that Herceptin is also marketed by RHHBY.PK.

With favorable results, IMGN’s partner RHHBY.PK says it intends to file for an early or accelerated approval for DM1 due to the unmet medical need, which exists for these particular patients.  Such an outcome should also generate significant interest in shares of IMGN. 

If DM1 is shown to be a winner here, some investors, who I tend to agree, are predicting that IMGN might also be a takeover target by RHHBY.PK.



Caveat Emptor
To mitigate risk of loss, investors should appropriately hedge all long positions. Purchasing put options can be an effective way to hedge long stock and call option positions.