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Wednesday, July 27, 2016: Pharmaceutical/ Biotechnology Sector, Today's News Digest For Investors; Spotlight On Evoke Pharma (NASDAQ: EVOK)

Jul. 27, 2016 10:44 PM ETEVOK, XBI, IBB3 Comments
Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

- Anavex Biosciences (NASDAQ: AVXL) stock fell more than 40% today after investors were disappointed with the 31-week data from the on-going phase 2a study of ANAVEX 2-73 in Alzheimer's Disease. Press Release. Link to More Analysis from thestreet.com.

- Sequenom (NASDAQ: SQNM) agreed to be acquired for $302 million by LabCorp (NYSE: LH). Press Release.

- FDA updates warnings for fluoroquinolone antibiotics. Press Release. We have earlier written a research report on Cempra (NASDAQ: CEMP), whose broad-spectrum, next-generation macrolide antibiotic Solithromycin stands to benefit from these news. Link to research report.

- Tokai (NASDAQ: TKAI): Link to excellent analysis by EP Vantage. The company stock fell hard after a failed phase-3 trial in prostate cancer earlier this week.

- FDA has accepted a BLA for Biomarin's (NASDAQ: BMRN) investigational therapy to treat a form of Batten's disease, a rare disorder. The PDUFA date for the application is 1/27/2017. The drug has Orphan Drug and Breakthrough Therapy designation for this indication. Press Release.

- Biomarin also presented positive proof-of-concept data for its investigational gene therapy to treat hemophilia A at a scientific meeting. Press Release.

- UniQure (NASDAQ: QURE) announced positive phase 1/2 data from its investigational gene therapy in severe hemophilia B. Press Release.

- Today's review: What is new in the treatment of Alzheimer's Disease? Link to article.

- From STAT News: Nasal bacteria produce an antibiotic that kills MRSA. Link to article.

- ** Abbott (NYSE: ABT): CEO bought about $30 million worth of common stock today.

- ** Spotlight on Medivation (NASDAQ: MDVN). The company has been on our take-over candidate list. Chatter is that the acquisition is close and could happen within next week.

Other new additions to the existing list:

- Cannabinoid product companies:

  • GW Pharma (NASDAQ: GWPH)
  • Insys Therapeutics (NASDAQ: INSY)

- Versartis (NASDAQ: VSAR): detailed research report to be published tomorrow on SA.

- Ultragenyx (NASDAQ: RARE)

- Puma Biotechnology (NASDAQ: PBYI)

- Ironwood Pharma (NASDAQ: IRWD)

- Depomed (NASDAQ: DEPO)

- Pacira Pharmaceuticals (NASDAQ: PCRX)

- Opthotech Corp. (NASDAQ: OPTH)

- ** Spotlight on Eleven Biotherapeutics (NASDAQ: EBIO) which was again up 13.8% today. The stock has been in our top largest % gainers list for third consecutive day today. The company's focus is ocular therapeutics and announced acceptance of IND for EB-031 (a monoclonal antibody to treat diabetic macular edema and uveitis), and a licensing deal with Roche recently. The company earlier had two phase 3 failures in dry eye disease and conjuctivitis, causing the stock to sink below $1. Institutional accumulation appears on-going in this stock which is well below 52-week highs. Will post a brief research note tomorrow.

- Regulus (NASDAQ: RGLS): 16.48%

- Eleven Biotherapeutics : 13.8%

- Biocryst (NASDAQ: BCRX): 13.67%

- Amicus Therapeutics (NASDAQ: FOLD): 12.46%>> up-coming catalysts, EU Fabry's approval and EB data.

- Bluebird Bio (NASDAQ: BLUE): 11.2%

- Today's new addition:

Ocular Therapeutix (NASDAQ: OCUL): The stock fell earlier this week after getting CRL for Dextenza to treat pain after eye surgery (secondary to manufacturing concerns).

Notes on Evoke Pharma (NASDAQ: EVOK):

Today spotlight stock is Evoke Pharma. The company is developing a intranasal preparation of metocloporamide (EVK-001), a prokinetic agent, which is already being used for many decades in oral and intravenous forms for treatment of diabetic gastroparesis. Gastroparesis is a condition associated with delayed gastric emptying in the absence of mechanical obstruction. Dysfunction of the autonomic nervous system results in gastroparesis in diabetes but the condition can also result due to collagen vascular disorders, post-surgery, etc.

The prevalence of gastroparesis may be as early as 4 to 6% of the population in the US. The rationale behind developing nasal delivery of metoclopramide is that this route might still be effective when oral medication intake is not possible due to nausea and vomiting secondary to gastroparesis. Oral medications are likely to have poor absorption in gastroparesis. The target market is about 12 to 16 million patients with gastroparesis in the United States (asper company estimate). Only 2 to 3 million of these are estimated to be receiving therapeutic treatment. About 4 million prescriptions of metoclopramide are written every year.

Among the five companies developing drugs for this clinical indication, only EVK-001 has shown clinical efficacy in improvement of the clinical symptoms in a phase 2 study. The drug was also shown to be well-tolerated without any serious adverse events or adverse effects on the EKG.

The results of phase 3 study were announced recently. The stock fell from its 52 week highs of $10.73 on July 15 after the company announced that the phase 3 trial did not meet its primary endpoint. A preliminary review of topline data across all study sites revealed similar improvement in the drug and placebo groups at week 4 of treatment (as measured by the total symptom score as well as individual scores for each of the signs and symptoms), but these results were not consistent across astudy sites. Further evaluation of the topline data revealed that diary data from sites 28 of 41 showing a statistically significant benefit at week four for the drug which was statistically significant in comparison to results from the other 13 sites that showed significant significant for the placebo. Press release

The company issued a press release that the results of the phase 3 trial were unexpected and possibly an anomaly, given that metoclopramide has been approved and used for treating diabetic gastroparesis for more than 35 years. In addition, the nasal preparation was shown to be well-absorbed in the earlier clinical studies.

Various patents protecting the drug extend till 2030. The company had it cash balance of $6.1 million as of end of first quarter 2016,and raised additional $4.5 million in a secondary offering earlier this month. The eight sell-side analysts covering the company have mean peak sales estimates of $336 million for the drug, and mean stock price target of $18.

The stock fell to a low of $1.59 on July 26. Today, the company issued a press release that FDA has conditionally accepted the proprietary brand-name 'Gimoti' for EVK-001. The news revealed optimism in successful phase 3 results of the drug and the stock jumped up more than 44% today.

Moreover, there is a significant institutional buying after the stock hit a 52-week low. Intercoastal Capital, LLC bought 472,188 shares representing 4.99%. Frigate Ventures acquired 701,754 shares representing 7.8%. Iliad Research and Trading LP acquired 350,000 shares representing 4.8. The stock certainly seems to have been oversold secondary to a knee-jerk reaction to the phase 3 trial news. We opened a small long-position in the stock today. We have profiled the company for past few days under out bottom-fishing stock list. The stock certainly seems undervalued at its current stock price and a detailed research report will follow soon with DCF valuation.

Existing List

Our secret existing list of take-over candidates, stocks with up-coming catalysts, significant insider buying and bottom-fishing candidates can be accessed here (updated daily).

Investors are encouraged to use the list of stocks given above as a starting point for their research.

To get more investment ideas like this as soon as they are published, click on my profile and hit the "Follow" button and choose the real-time alerts option.

Analyst's Disclosure: I am/we are long EVOK, NERV, SGYP, INVA, FLXN, VSAR, TBRA, VRX, PTLA, ACAD, KITE, VTVT, TNXP, ARGS, ARDX, TTNP, NK, SCYX, CMRX, VYGR, RDUS, SRPT, CALA, MRNS, VRTX, ALDR, ITCI, CEMP, ACOR, NBIX, OCRX, CATB, JUNO, LJPC, CARA, ZFGN.

This newsletter/article represents my own opinion and is not a substitute for professional investment advice. It does not represent solicitation to buy or sell any security. Investors should do their own research and consult their financial advisor before making any investment.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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