I know, I know.
Just what the world needs; another biotech writer clogging the web with scientific drivel on which Pharmaceutical company will gain FDA approval or not. Bombarded with constant insight from supposed experts on trial results, dosing levels, and safety data, it appears a degree from MIT is a prerequisite to understanding your investment. This may be fine for most biotech writers but not me….
Science isn’t my strong suit.
With that being said, using technical indicators to trade stocks is my expertise and got me thinking. “If biotech analysts use their scientific background to predict outcomes why can’t I use technical analysis to make a prediction and just back into the scientific reasoning?” Who really cares why a stock went up or down? You just want to know which way it’s going.
Which brings us to Halloween weekend and our first foray into the spooky world of the FDA. Both our little ghouls Avanir Pharmaceuticals (AVNR) and Biodel, Inc.(BIOD) have Saturday PDUFA dates of October 30th. This could make for a frightful first trading day in November.
Avanir Pharmaceuticals (AVNR)
According to technical indicators, Avanir will again fail to gain approval for AVP-923 (formally known as Zenvia) for the treatment of pseudobulbar affect (PBA). One needs not look any further than the seven deaths during trials to find the potential reason. Of course deaths are not uncommon among people with underlying amyotrophic lateral sclerosis, but what may hurt Avanir is 6 of the deaths occurred while taking AVP-923 opposed to just one in the placebo group. This ratio could cast just enough doubt in the mind of the FDA to warrant non-approval.
I think a more important question for Avanir is what type of response will the company get? Revenues from the sale of Abreva through a partnership with GlaxoSmithKline (GSK) have been diminishing each year. With the exception of a licensing deal with Novartis (NVS) for their MIF Inhibitor, the company has no other drugs in the pipeline not involving AVP-923. The company could survive another CRL but rejection would be crushing for shareholders. There just aren’t enough revenues or prospects to warrant further investment.
Biodel, Inc. (BIOD)
I must admit this one surprised me. After seeing all the recommendations and price projections I really thought Biodel was a sure thing. On two occasions I purchased the stock and watched it run for a few days only to get stopped out at breakeven. I kept waiting for the buy signal that would precede Biodel’s major move to FDA approval, but it never came.
According to the technical’s it won’t come this weekend either and Linjeta will fail to gain approval.
The reason seems to stem from the difference in phase II and phase III results and damaged samples. The company traced the issues to a bad batch of blood and argued excluding the sample would provide improved results. After seeing the FDA’s track record over the past few months I think there is no other option but a CRL and additional testing. This will be bad news in the short term for shareholders, but will give traders another crack at a potential Biodel approval move down the road.
So there you have it. Quite a scary weekend we have in store for us. Think of Biodel as the Mummy, wrap it up and watch it come back to life in 2011. As for Avanir, can it remain one of the undead or will the FDA finally come with a wooden stake? We soon will find out.
Disclosure: No Positions