2 Pharmaceutical Stocks Ready To Move

Includes: BMY, PBTH
by: Bio Insights

1.) Prolor Biotechnologies

Prolor Biotechnologies (NYSEMKT:PBTH) is an emerging pharmaceutical company that is seeking to develop enhanced versions of preexisting drugs. Their flagship product is hGH-CTP, which is human growth hormone with a proprietary modification that allows it to have the desired effects on a patient with only one injection a week instead of seven for each day. Growth hormone treatment is used for a wide variety of illnesses, including everything from glandular hormone deficiencies (especially in children) to AIDS-related weight loss.

Prolor expects that in due time, HGH will be used to treat lifestyle issues due to some of the extremely positive effects it has on the health and well-being of users. This could, hypothetically, expand the market well beyond its current size but it is quite a stretch to say this potential matters to investors right now. The estimated size of the current human growth hormone market, according to Prolor, is $3 billion.

Strong Phase II clinical trials for hGH-CTP released in 2011 got investors excited about the stock. Patients injected with various doses of the drug (30%, 45% and 100%) all exhibited strong tolerance for it with no signs of excessive hormonal levels or other difficulties. As the drug enters phase III trials in 2012 the possibility of a deal with a larger company look increasingly apparent, especially if Prolor exhibits the same efficacy as they achieved in phase II trials. This should be a massive catalyst for the stock's price action due to the potential for milestone payments and a sounder backing behind hGH-CTP's development. In addition, Prolor's other drugs (Factor Vlla/IX CTP for Hemophilia and GLP1 for type-2 diabetes) are in the very early stages of development.

2.) Amylin Pharmaceuticals

Amylin Pharmaceuticals (AMLN) is a drug-developing company with a market cap of 1.7 billion. For the last six months or so, the shares have been range-bound between roughly $10-12 a share as investors patiently wait for additional news about the company's pipeline. In the last month, there has been an increase in the total number of shares short (up to 10.6M from 9.4M before) but this is becoming increasingly dangerous due to an impending response letter from the FDA about Amylin's New Drug Application for BYDUREON.

BYDUREON is the once-weekly form of an exenatide injection. This is an improved version of the already approved drug BYETTA (which is also an exenatide injection) which requires constant doses to be effective. Exenatide is used to improve control of blood sugar levels in patients suffering from type-II diabetes, especially after meals. Since BYDUREON has proven to exhibit the same efficacy as BYETTA in its clinical trials, its improved method of delivery could allow a deeper penetration of exenatide in the massive market for diabetes medications.

As a class-2 resubmission under the PDUFA, the NDA for BYDUREON is expected to be fully reviewed by January 28th 2011 by the FDA. President and CEO Daniel Bradbury has emphasized Amylin's focus on invigorating their sale of exenatide through this product in recent presentations, which implies that the NDA decision should indeed be a significant catalyst for the stock.

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