5 Healthcare Stocks of Interest This Week

by: Alex Shadunsky

There were a number of healthcare stocks in the news this week, led by Transcept (TSPT) after it received disappointing news from the FDA regarding its Intermezzo NDA.

Transcept fell more than 40% on Wednesday after the company announced that it expected to receive a Complete Response Letter from the FDA regarding the resubmitted New Drug Application (NDA) for Intermezzo (zolpidem tartrate sublingual tablet). Late on Thursday night, the company confirmed that it received the Complete Response Letter. The FDA confirmed that Transcept adequately demonstrated that Intermezzo is efficacious for use as needed in the treatment of insomnia when a middle-of-the-night awakening is followed by difficulty returning to sleep. However, the FDA stated that it cannot conclude that Intermezzo can be used safely based on the information in the Intermezzo NDA.

As a possible path forward, the FDA suggested that Transcept further investigate whether body weight and demographic factors contribute to differentially elevated blood levels the morning after dosing Intermezzo, develop strategies to decrease next-morning zolpidem levels, and, after mitigation strategies are implemented, demonstrate that next-morning blood levels do not present an unacceptable risk of next-day impairment, which may include the conduct of an additional driving study.

SuperGen (SUPG) quietly made the news on Wednesday after the FDA accepted for review its supplemental New Drug Application (sNDA) seeking approval of Dacogen (decitabine) for injection in the treatment of acute myeloid leukemia. Acute myeloid leukemia (AML) is a life-threatening cancer of the blood for which there are few treatment options. The sNDA was submitted to FDA on May 6, 2011. A standard 10-month review implies a PDUFA date of March 6, 2011. The stock rose 5% following that new release.

Seattle Genetics (NASDAQ:SGEN) tumbled on Friday despite the FDA’s ODAC Committee recommending both of the company’s product candidates. ODAC voted 10-0 to recommend that the FDA grant accelerated approval of Adcetris (brentuximab vedotin) for the treatment of patients with Hodgkin lymphoma who relapse after autologous stem cell transplant (ASCT). In addition, ODAC voted 10-0 to recommend that the FDA grant accelerated approval of Adcetris for the treatment of patients with relapsed or refractory systemic anaplastic large cell lymphoma (ALCL). The FDA is expected to act on the two Biologics License Applications (BLAs) for Adcetris by August 30, 2011, under the Prescription Drug User Fee Act (PDUFA).

Vical (NASDAQ:VICL) rose on Friday after it agreed to license TransVax. The company and Astellas announced that they signed exclusive license agreements to develop and commercialize TransVax, Vical's therapeutic vaccine designed to control cytomegalovirus (CMV) reactivation in transplant recipients. The companies expect to begin a multi-national Phase 3 registration trial of TransVax in hematopoietic stem cell transplant (HSCT) recipients as well as a Phase 2 trial in solid organ transplant (SOT) recipients in the first half of 2012.

Under the agreements, Astellas will be responsible for further development and commercialization, including all costs. Vical has an option to co-promote TransVax in the United States. Vical will provide assistance to Astellas with TransVax-related manufacturing, regulatory and certain development activities, for which Astellas will reimburse all of Vical's future costs, including personnel and external expenses. Vical will receive near-term payments of $35 million, including $25 million upon the effective date and $10 million upon finalization of the Phase 3 trial design. Vical potentially will receive up to $130 million in total upfront and milestone payments through commercial launch and double-digit royalties on net sales.

Icagen (NASDAQ:ICGN) rose more than 30% on Thursday. Note, the stock has been on a tear all month long after Pfizer (NYSE:PFE) said that as part of its ongoing evaluation of the possible extension or other modification of the existing collaboration agreement between the parties, it is evaluating the possibility of entering into a strategic transaction with Icagen. This strategic transaction could have the effect of influencing or changing the control of Icagen by means of a stock or asset acquisition or merger. Icagen then acknowledged that it is engaged in preliminary discussions with Pfizer regarding a potential strategic transaction.

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