Distribution day. VIX 7.38% higher. U.S consumer spending increased for third straight month in June.
- Seres Therapeutics (MCRB): Primary Clostridium Difficile Infection and Inflammatory Bowel Disease are major future revenue drivers.
(26.6% potential upside to stock price from the time of publication).
-The major highlight of the day was rumor of take-over interest in Biogen (BIIB) by Allergan (AGN) and Merck (MRK). Biogen was up more than 9% before pulling back after Allergan denied take-over interest in the company. RBC Capital analysts provided a price target range of $375-$475/share for Biogen in case of a take-over. Link to WSJ story.
We have added Biogen to our take-over candidates list.
- Advaxis (OTCQX:ADXS) shares were up more than 30% today after the company announced a collaboration deal with Amgen (AMGN) to develop and commercialize its preclinical cancer immunotherapy pipeline. Link to press release.
Advaxis has been in our watch-list after receiving Fast Track designation for its experimental therapy in high-risk, locally-advanced cervical cancer on 7/21/16.
- Regeneron (REGN) bets on off-the-shelf T cell therapies (solid tumors and hematogeneous cancers) with Adicet (privately held) deal. Link to press release.
- Human CAR-T cells with cell-intrinsic PD-1 blockade resist tumor-mediated inhibition. Research paper published in the Journal of Clinical Investigation. Link.
Memorial-Sloan Kettering scientists show that combining CAR-T and anti-PD1 therapies may be effective in a preclinical model of mesothelioma.
- What is the evolutionary explanation for female orgasm? Link to article by STAT News.
Contrafect (NASDAQ: CFRX): Company has early stage pipeline in anti-infectives. CEO bought shares worth about $50K on 7/26/16. Cormorant Health Advisors Fund announced that it had bought about 4.2 million shares (9.99%) in 13-D filed yesterday.
Stock also added to our bottom-fishing list.
Keryx Biopharmaceuticals (NASDAQ: KERX):
Keryx's key product is Auryxia (oral ferric citrate), an absorbable medication which was approved by FDA in September 2014 to control elevated serum phosphorus levels in patients with chronic kidney disease (CKD) on dialysis. Keryx is also trying to get the drug approved to treat iron deficiency anemia (IDA) in adults with stage 3 to 5 non-dialysis dependent CKD. After a successful phase 3 study in this indication, the company plans to submit a supplemental new drug application (NDA) in 3Q, 2016. The drug can thus, treat elevated phosphorus levels and iron deficiency anemia with a single medication in CKD. The company has collaboration rights to commercialize the drug in Japan with its Japanese partners.
The company has succeeded to win a big institutional supporter, Boston-based Baupost group, which owns 24% of the outstanding common stock. Baupost also bought $125 million of convertible senior notes in October 2015 and its stake in the company would increase to approximately 43% if these convertible notes were converted to common stock.
The stock has been on a steady increase since March 2016 after hitting a 52-week low of $3.19 reaching $7.53 per share last week. Blackrock recently announced 4.5 million share stake in the company. Yesterday, the company announced that there was an interruption in the supply of Auryxia due to a production-related issue converting active pharmaceutical ingredient to the finished product. The company anticipated that the supply of the drug will be back to adequate levels in the Q4, 2016. The company is working with the existing manufacturer to resolve the production-related issue and rebuild adequate supply. In addition, Keryx has been working to bring a secondary manufacturer online to supply a finished product. There was 44% growth rate in prescriptions at end of Q2, 2016 from Q1, 2016. The company does not anticipate any change in its plan to file a supplemental NDA with the FDA in Q3, 2016 for IDA in non-dialysis dependent CKD. The company has cash reserves of $156 million at the end of Q2 2016.
The stock fell to reach a low of $4.13 on the news. We consider this news of supply interruption as a temporary setback and do not anticipate it to affect peak revenue estimates of $450 million in 2023. The fall in the stock has offered long-term value investors an excellent opportunity to enter long positions in this company which is a favorite of institutional investors. We opened a long position in the stock today and have a price target of $8 for the common stock. A detailed research report with valuation will follow.
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