Today we highlight some biotechs with near-term catalysts along with positive sentiment that we feel should see higher stock prices in the short-term.
As we move towards the end of October, the market historically sees increased in-flows of money into "risk on" stocks. We feel that since the debt ceiling issue is off the table, there should be little headwind for the rest of the year, allowing for "smooth sailing."
XOMA Corp (NASDAQ:XOMA) Catalyst event: Data release.
Xoma has four catalysts for their drug Gevokizumab within the next 6 months:
- Phase II data of Gevokizumab for Erosive osteoarthritis of the hand in October 2013.
- Phase II data of Gevokizumab for Non-Infectious scleritis in the 4Q 2013.
- Phase III data of Gevokizumab from EYEGUARD-A study in patients with active Non-Infectious uveitis in late 2013.
- Phase III data of Gevokizumab from EYEGUARD-C for controlled Non-Infectious uveitis in 1Q 2014.
The company's most imminent catalyst is for the treatment for Erosive osteoarthritis, with data due in October. Erosive osteoarthritis of the hand is caused by the breakdown of the body's natural balance between cartilage formation and degradation, which leads to the narrowing of the space between the first and second joints in the fingers.
This can be very debilitating for those who suffer from this condition as the joints in the hand can become deformed to the point that normal hand functions become very hard to execute.
Around four million people in the U.S. have been diagnosed with this disease, and affects women twelve times more often than men.
This should be a significant catalyst of the company, as positive data is likely to move the stock in a strong upwards direction. It's noteworthy to point out that the Baker Brothers LLC control over 20M shares of the company. The Bakers are one of the most successful small cap biotech institutional investors around, having already locked in huge gains with Acadia Pharma (NASDAQ:ACAD) over the last year. Any company the Bakers own, we feel is a company worth taking a strong look at.
Sunshine Heart (SSH) Catalyst event: Data Release.
Sunshine Heart has a catalyst for its medical device in one week:
- Partial data for its C-Pulse device is expected to be released at the 2013 Transcatheter Cardiovascular Therapeutics meeting on 10/28/13.
The C-Pulse device is designed to treat clinical symptoms associated with Class III and ambulatory Class IV heart failure. If proven successful, patients who suffer from heart failure would be able to engage in normal activities that "healthy people" partake in.
The C-Pulse System utilizes the scientific principles of intra-aortic balloon counter-pulsation applied in an extra-aortic approach to assist the left ventricle by reducing the workload required to pump blood throughout the body, while increasing blood flow to the coronary arteries.
While early in the developmental phase, we believe C-Pulse has the potential to revolutionize the treatment of Class III and ambulatory Class IV heart failure.
When Heartware International (NASDAQ:HTWR) received CE-Mark approval in January 2009, it had a market cap of $200MM. Sunshine's current market cap is $132.88M, so we strongly feel Sunshine is very speculation undervalued, especially when compared to other vascular assist device companies at this stage in their product development cycles, such as Heartware.
Merrimack Pharmaceuticals (NASDAQ:MACK) Catalyst event: Data release.
Merrimack Pharmaceuticals has five catalysts for their drugs MM-121 and MM-398 within the next 6 months:
- Phase II data of first cohort of MM-121 for HER2-negative breast cancer due fall of 2013.
- Phase II data of MM-121 for NSCLC due 2H 2013.
- Phase II data of MM-121 for ovarian cancer due 2H 2013.
- Phase II data of MM-121 for hormone receptor positive breast cancer due 2H 2013.
- Phase III MM-398 data for second line pancreatic cancer due 4Q 2013 or 1Q 2014.
Phase III data release for MM-398 could prove to be the most critical for the company because it is furthest along in development and is treating an important indication.
Needless to say, any new effective treatment for pancreatic cancer would be most welcomed as pancreatic cancer is the fourth most common cause of cancer-related deaths in the United States, and the eighth worldwide. Pancreatic cancer has a very poor prognosis, and if not caught very early on, it's basically a death sentence.
Although MM-398 is being targeted as a 2nd line treatment, a positive data announcement for MM-398 should have a very positive effect on the stock.
Also, Merrimack is currently presenting pre-clinical poster data at the 2013 AACR-NCI-EORTC International Conference on Molecular Targets and Cancer Therapeutics, which should serve as an additional catalysts for the company.
Halozyme has a catalyst for their drug MabThera Subcanteous (SC) before the end of October:
- Halozyme is waiting on the opinion from The Committee for Medicinal Products for Human Use (CHMP) for MabThera Subcanteous (MabThera SC), which is partnered with Roche Holding AG (OTCQX:RHHBY).
- Pfizer is partnered with Halozyme to develop 6 drugs. So far, Pfizer has disclosed 3 of those drugs. The announcement of the last 3 could also prove to be a strong catalyst for Halozyme. The timetable for this announcement is unknown.
The CHMP is the European version of our Food and Drug Administration's Advisory committee (ADCOMM), so this is an important decision for Halozyme, which we expect to be positive. This month, the CHMP is meeting from October 21 through October 24, so investors are expecting a decision imminently afterwards.
MabThera SC is a therapeutic monoclonal antibody that uses Halozyme's Enhanze Technology, allowing an injection of large volumes of the medication under the skin (subcutaneous). It temporarily modifies a gel-like substance (hyaluronan) that forms a barrier in the tissues between cells under the skin. MabThera SC binds to the CD20 antigen on the surface of normal and malignant B-cells, using the body's natural defenses to attack and kill the marked B-cells.
It is important for Halozyme to receive approval for MabThera SC so that the company can have a steady stream of milestone and royalty payments to support the development of their proprietary drugs. This allows the company to continue trials without diluting shareholders to raise money. This model has been followed by several successful pharmaceutical companies including Jazz Pharmaceuticals (NASDAQ:JAZZ) and ISIS Pharmaceuticals (ISIS).
Halozyme has the potential to capture share in the Pancreatic Cancer market with PEGPH20. If successful with PEGPH20, we believe Halozyme could become a Jazz or ISIS down the road and turn itself into a large pharmaceutical company.
Celldex Therapeutics (NASDAQ:CLDX) Catalyst event: Data release.
The company announced yesterday that data from two of its clinical programs, the Phase 1 dose-escalation CDX-1127 study and the Phase 2 recurrent rindopepimut study, will be presented at two upcoming medical meetings, the Society for Immunotherapy of Cancer (SITC) and the Society of Neuro-Oncology (SNO).
Additionally, according to the company:
The embargo for all data to be presented at SITC lifts on Thursday, November 7 at 8:00 am ET, at which time abstracts will be published on the SITC website. Celldex has three abstracts on CDX-1127 that have been accepted for poster presentation (outlined below). Concurrent with the embargo lifting, Celldex will issue a press release that will include the preliminary data contained in the abstracts and updated data that will be presented in the poster sessions. Management will also hold a conference call at 8:30 am ET on Thursday, November 7 to review the data.
- Data from the solid tumor arm of the Phase 1 dose-escalation study of CDX-1127 will be presented in a poster session entitled "A Phase 1 Study of an Agonist anti-CD27 Human Antibody (CDX-1127) in Patients with Advanced Hematologic Malignancies or Solid Tumors" on Saturday, November 9 from 1:00 pm to 2:00 pm and 6:15 pm to 7:15 pm ET.
- Data from the hematologic arm of the Phase 1 dose-escalation study of CDX-1127 will be presented in a poster session entitled "A Phase 1 Study of an Agonist anti-CD27 Human Antibody (CDX-1127) in Patients with Advanced Hematologic Malignancies or Solid Tumors" on Saturday, November 9 from 1:00 pm to 2:00 pm and 6:15 pm to 7:15 pm ET.
- Data from preclinical combination studies of CDX-1127 with chemotherapies and checkpoint inhibitors will be presented in a poster session entitled "Combination Therapies Augment the Anti-tumor Activity of Agonist CD27 mAb in Human CD27 Transgenic Mouse Models" on Friday, November 8 from 1:00 pm to 2:00 pm and 6:15 pm to 7:15 pm ET.
Interestingly enough, the stock sold off hard yesterday immediately after this announcement, which confirmed the release times of the data points, and when the data embargo, or better said "data blackout" will be lifted. Celldex has been a high flying stock over the last year when we first started covering it, going from around $5 a share up to a recent 52 week high of $38.84, set on October 2nd.
This could be a case of "buy on rumor, sell on the news" in part, and also a case of profit taking, since as mentioned, the stock has had incredible gains over the last year.
Nevertheless, if the data presented at these sessions is positive, we would expect the Celldex stock to resume an upwards trend.
Disclosure: I am long MACK, SSH. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
Additional disclosure: Disclaimer: This article is intended for informational and entertainment use only, and should not be construed as professional investment advice. They are my opinions only. Trading stocks is risky -- always be sure to know and understand your risk tolerance. You can incur substantial financial losses in any trade or investment. Always do your own due diligence before buying and selling any stock, and/or consult with a licensed financial adviser.