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karmaswimswami
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  • Not Happy About APPY

    Venaxis (NASDAQ:APPY) is a small biotech firm that purports to be developing for clinical diagnostic use a vaunted special test to help clinicians decide whether or not a patient presenting with abdomen pain may have appendicitis.

    Frankly, I am in no way persuaded. Its test looks at serum levels of calprotectin and C-reactive protein. Calprotectin is a neutrophil-released protein that is elevated in response to inflammatory processes in the GI tract such as Crohn's disease, ulcerative colitis, and food-borne illnesses. C-reactive protein is a non-specific marker of inflammation, and is already in wide use as a screening tool in suspected cases of appendicitis.

    How will APPY's assay help? I cannot see that it will. If its tests are negative, patients may be comfortably sent home. And often they already are when C-reactive protein is not elevated. I thus cannot see the test preventing CT scans. If calprotectin is elevated it is in no way specific for appendicitis, though the company tries to spin its tests as if they are. Meanwhile, it is very conceivable that a patient could develop rapid-onset appendicitis before the tests have time to rise. Appendicitis is a diagnosis based in a large way on suspicion, and how a patient looks and acts, and what the patient's physical exam is like. APPY's test will not change that as the downside of a missed diagnosis---perforation and lawsuit---is too high.

    In any other biotech market, this would not be a $55 million dollar company.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Feb 28 4:56 PM | Link | Comment!
  • QRx Pharma Is A Buy

    I am reiterating a buy rating on QRx Pharma (OTCQX:QRXPY). I feel that these shares are beaten down because of all the fervor just now about the FDA's approval last fall of Zohydro, a high-dose hydrocodone formulation with no abuse-deterrent features. There are calls for the FDA to pull this agent off the market from consumer and physician groups concerned about abuse. Opioid abuse is high in the US right now, but I am not necessarily persuaded that there is a new epidemic of prescription drug abuse as some claim. Certainly sites like opiophile.org might lead you to think otherwise....if you ever want to laugh or be shocked check out the site: the rantings of abusers about what combos work best to make one high, and about which doctors are easiest to score narcotic prescriptions from. Much of the American problem is non-prescription: it owes to the ready availability of extremely cheap heroin (as Philip Seymour Hoffman's death evinces), and in fact the US is seeing a pop in incidence, number of new cases, of HCV and HIV, even as prevalence is fairly stable.

    QRx is an Australian company whose abuse-deterrent blend of oxycodone and morphine for acute pain will be re-reviewed by an FDA advisory committee in April and has a PDUFA date in late May 2014. The main firm following it has a near term price target of A$1.79, implying US$8.05 for the ADR shares here. The company has no marketed products and has a market cap of US$132 million, and approval would be a transformative event for the company. Shares are currently at about $4. Australian analysts are famously stingy in their upside ratings, a sort of underpromise/overdeliver mentality.

    QRx has addressed all concerns about the formulation raised in a prior CRL. The science behind this blend of two drugs in the ratio set forth in MoxDuo, the agent's name, is elegant and solid.

    Disclosure: I am long QRXPY.

    Tags: QRXPY
    Feb 28 10:53 AM | Link | 2 Comments
  • Durata (DRTX) Is A Strong Buy Here

    Durata has completed phase II and phase III studies on an exceptional antibiotic, dalbavancin. This agent will be considered by an FDA AdCom at the end of March 2014 and appears on track to be recommended for approval. Dalbavancin is likely to be deemed exceptional in ways not yet priced into DRTX.

    This antibiotic has exceptional pharmacokinetics. It is given iv but requires only once-weekly administration. Dalbavancin has excellent activity against gram positives that cause cellulitis, certain pneumonias and osteomyelitis.

    The advent of dalbavancin could lead to a minor sea change in medical practice and will likely be embraced by payers for one reason: it prevents hospitalization. Clinicians like me often panic with certain bacterial infections clinically (e.g., cellulitis in a diabetic patient) and plonk those patients in hospital to give round the clock in antibiotics. Now we can infuse a drug in the office, send the patient out and see them again in 5 days. The advent of dalbavancin will also obviate many situations in which home-health nurses muse infuse daily antibiotics, which is less costly than inpatient care but still costly.

    Detractors will whine and say that antibiotics are not blockbusters. Yet it is on the basis of one antibiotic, daptomycin, that Cubist has become a multi-billion dollar company. Dalbavancin will be more convenient than daptomycin and just as effective.

    DRTX does not yet have a product to market. An approval will be a transformative event for the company, which is now at market cap of about $300 million. To speculate, it may be an attractive takeover target.

    One stealth source of appeal for dalbavancin is its activity against a serious bio-terror threat:

    www.ncbi.nlm.nih.gov/pmc/articles/PMC2826002/

    Disclosure: I am long DRTX, CBST.

    Tags: DRTX, CBST
    Feb 28 10:53 AM | Link | 4 Comments
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