Premarket Biotech Digest: CLL Treatment, Gilead CEO Sells, Acelity IPO

| About: Gilead Sciences, (GILD)

Summary

This article discusses latest advances in chronic lymphocytic leukemia.

Gilead CEO John Martin sold shares.

Acelity Holdings files for IPO.

Dr De's Opening Thoughts: Chronic Lymphocytic Leukemia

Chronic Lymphocytic Leukemia ('CLL) is the most common form of adult leukemia. It starts, like all leukemia, in the bone marrow, specifically in the cells that form blood, whence it spills into the blood as lymphocytes or white cells. If these white cells are partly, but not fully mature, they may take years to detect and to develop symptoms, but are also more difficult to treat because of that. This is chronic lymphocytic leukemia. In CLL, the body becomes easily susceptible to infection because the "bad" white cells crowd out normal white cells, which are essential for fighting infection.

The American Cancer Society estimates that there were 14,620 new cases of CLL in 2015. About a third of those, that is roughly 4650 people, died from the disease (note: doesn't imply new cases died in the same year). The average age for CLL to be diagnosed is 71, and it is rarer for those under 40, almost nonexistent for the pediatric population.

The first line of treatment for CLL has long been chemotherapy, including drugs like fludaribine (Fludara, available since 1968), a purine analog, alkylating agents, corticosteroids, and other cytotoxic agents. Since these drugs attack fast growing cells, normal fast growing cells are also affected, leading to hair loss, sores of the mouth lining, effects on normal bone marrow cells etc. In recent times, monoclonal antibodies, which are artificially created immune system antibodies, have been developed to fight CLL both in early stages and when the disease is no longer responding to chemo.

Rituximab, or Rituxan, is a standard mAb treatment, owned by Roche (OTCQX:RHHBY), either first line or second, with chemo or without, for CLL. It targets the CD20 antigen found on the surface of B Cell lymphocytes in CLL. Two other new drugs are Obinutuzumab (Gazyva) and Ofatumumab (Arzerra) which are used in combination with chemo agent chlorambucil to target CD20. Gazyva is owned by Roche. Arzerra, owned by GlaxoSmithKline (NYSE:GSK), is about to be purchased by Novartis (NYSE:NVS). Some of these drugs are also used for multiple sclerosis.

Another mAb, Alemtuzumab (Campath), targets CD52, another antigen associated with CLL. Besides these, there are also newly approved drugs ibrutinib and idelalisib, which have been approved very recently. Idelalisib, trade name Zydelig, developed by Gilead (NASDAQ:GILD), is used with Rituxan, and had $56 million in sales this year. Ibrutinib, or Imbruvica, developed by Pharmacyclics, now a unit of AbbVie (NYSE:ABBV), and partially owned by Johnson & Johnson (NYSE:JNJ), had annual sales of $730 million last year.

CLL treatment has advanced so far this year that ASCO calls it the advance of the year for 2015.

Focus Ticker

Gilead Sciences (GILD) shares bounced back with the broader market on Wednesday. The stock gained more than 4% on Wednesday and is up another 2% in pre-market trading today.

The sell-off was seen by many as an excellent buying opportunity. GILD shares dropped to $86 for a brief period earlier this week. While anyone who was able to buy shares at that level would have got a huge bargain, Gilead is still a bargain even at around $105.

Interestingly, on August 25th, Gilead Chairman & CEO John C Martin sold a huge amount of shares, according to an SEC filing. Martin sold 133,213 shares at $105.17. The total value of the transaction was around $14 million. However, this should not be seen as a negative. Insiders can sell for any number of reasons.

What investors should focus on is Gilead's strong fundamentals. The company currently has more than $14 billion in cash, a strong Hep C and HIV franchise, and a robust pipeline. In addition, there is an expectation that Gilead will use some of its cash to make acquisitions. Even though the healthcare sector has seen significant M&A activity this year, Gilead has not made any acquisitions. But if the company does have any plans to acquire, then this probably is the best time to do so, given the pullback in the biotech sector in the past few weeks.

Sector News

Piper Jaffray Recommends Buying on Weakness - The pullback in the biotech sector has created an excellent buying opportunity. Brokerage firm Piper Jaffray said that it is a buyer on weakness of four biotech names, which include Vertex Pharma (NASDAQ:VRTX), Novavax (NASDAQ:NVAX), Alnylam Pharma (NASDAQ:ALNY), and Arrowhead Research (NASDAQ:ARWR). Piper Jaffray noted that all four companies have strong balance sheets to make it through upcoming value-driving events. I have been bullish on Arrowhead's prospects for a while, and initiated coverage on the company in March this year. The company has an upcoming catalyst, which could possibly give a boost to the stock price.

Exact Sciences Shares Rally on Pricing Ruling - Exact Sciences (NASDAQ:EXAS) shares rose more than 6% on Wednesday, and another 4% in after-hours trading after a Medicare/Medicaid advisory panel voted in favor of maintaining its current crosswalk pricing of $492.72 for Cologuard, which is the company's test to screen average-risk adults for colorectal cancer.

Advaxis Signs Licensing Agreement - Advaxis (NASDAQ:ADXS) announced that it has signed a licensing agreement with Knight Therapeutics (OTC:KHTRF) to commercialize its product portfolio in Canada. The licensing agreement includes Advaxis's three lead drug candidates: ADXS-HPV, ADXS-PSA, and ADXS-HER2. Knight will buy 359,454 shares of ADVX common stock at $13.91 as part of the agreement. Advaxis also announced that Sectoral Asset Management will buy 1,437,815 shares of ADXS common stock at $13.91. The gross proceeds from both the transactions will be $25 million.

Drug Approvals

Valeant Pharma (NYSE:VRX) received a supplementary addition for Xenazine, a vesicular monoamine transporter 2 (VMAT) inhibitor indicated for the treatment of chorea associated with Huntington's disease. The drug was first approved in 2008, lost its orphan drug status this month, and there are generic versions available. According to a Seeking Alpha article, "Since Xenazine's launch in the fourth quarter of 2008, annual sales in the U.S. have grown to approximately $238 million for the four quarters ended September 30, 2013. The treatment costs about $60,000 to $70,000 annually for each patient."

There were a few other additions and revisions to old drugs, but nothing of consequence. Europe has been silent this entire month.

Trials and results

Merck (NYSE:MRK) is undertaking a study to assess the effect of the addition of sitagliptin to metformin compared with the addition of dapagliflozin to metformin on hemoglobin A1c (A1C) over 24 weeks of treatment as well as the overall safety and tolerability of sitagliptin in comparison to that of dapagliflozin after 24 weeks of treatment. This is a Phase 3 study enrolling 556 patients and ending in April 2017. Sitagliptin is Januvia, while dapagliflozin is Farxiga from Bristol-Myers Squibb (NYSE:BMY) and AstraZeneca (NYSE:AZN). "In FY 2012, global sales of the combined diabetes franchise of Januvia/Janumet (which contains the popular type-2 diabetes drug metformin) grew 23% to $5.7 billion, primarily driven by growth in the United States and Japan. Januvia (sitagliptin), approved in October 2006, is the first diabetes drug in a new class called dipeptidyl peptidase 4 (DPP-4) inhibitors." Last quarter, it had sales of $1.6 billion, which, taking out the effect of currency fluctuations, is up 9% yoy.

Deals

WuXi PharmaTech Signs Agreement with Lee's Pharmaceutical - WuXi PharmaTech (NYSE:WX) announced that it signed an agreement with Hong Kong-based biopharma Lee's Pharmaceutical Holdings under which WX's Laboratory Testing Division (LTD) will be the exclusive supplier of laboratory testing services for Lee's Pharmaceutical. The services will include LTD's entire portfolio of discovery and IND/NDA package services.

Enumeral and UMass School Announce Research Study Agreement - Enumeral Biomedical (OTCQB:ENUM) announced that it has entered into a research study with the University of Massachusetts Medical School (UMMS), which includes UMass Memorial Health Care Inc. As per the study agreement, UMass Medical School will provide Enumeral with tissue samples and blood samples from subjects with melanoma who are being treated with Ipilimumab (Yervoy).

Recipharm Signs Agreement with RedHill Biopharma - Recipharm has signed an agreement with Israel-based biopharma RedHill Biopharma (NASDAQ:RDHL) for the manufacturing of RDHL's leading, late-stage patented drug candidate, RHB-105. RedHill is developing RHB-105 for the treatment of Helicobacter pylori bacterial infection. As per the agreement, Recipharm will be responsible for the supply of the remaining clinical trial material and ongoing future commercial supply.

Secondary Offerings

Aldeyra Files Form S-3 - Aldeyra Therapeutics (NASDAQ:ALDX) has filed a Form S-3 with the U.S. Securities and Exchange Commission (SEC). As per the filing, ALDX may offer and sell shares of preferred stock, common stock, debt securities or warrants either separately or in units in one or more offerings in amounts, at prices and on terms that the company will determine from time to time. The aggregate offering price of all securities will not exceed $100 million.

IPOs

Acelity Holdings Files for IPO - Acelity Holdings has filed for a $100 IPO with the SEC. However, Renaissance Capital believes that the deal size is likely a placeholder and the company could raise up to $1 billion. Based in San Antonio, Texas, Acelity is a medical technology company engaged in the development of advanced wound care and regenerative medicine. The company plans to list its shares on the NYSE.

Earnings

No earnings to report on.

Insider Transactions

Sunesis CEO Buys - Daniel N Swisher Jr, President & CEO at Sunesis Pharmaceuticals (NASDAQ:SNSS) bought 25,000 shares in two separate transactions. Swisher bought 12,216 shares at $1.01 and another 12,784 shares at the same price.

Sorrento CEO Buys - Henry Ji, President & CEO at Sorrento Therapeutics (NASDAQ:SRNE) bought 500 shares at $0.95. The total value of the transaction was $474.

BioTime Insider Buys - Deborah J Andrews, director at BioTime (NYSEMKT:BTX) bought 2,000 shares at $2.82. The total value of the transaction was $5,640.

BioDelivery Sciences Insider Buys - BioDelivery Sciences' (NASDAQ:BDSI) CFO Ernest R. De Paolantonio, CPA bought 1,650 shares at $6.20. The total value of the transaction was $10,230.

Novavax Insider Sells - Gary C. Evans, director at Novavax sold 20,000 shares at $11.24. The total value of the transaction was $224,808.

Aquinox Insider Buys - David C. Mitchell, VP Global Regulatory & Quality at Aquinox Pharmaceuticals (NASDAQ:AQXP) bought 3,575 shares at $17.81. The total value of the transaction was $63,671.

Celldex Insider Buys - Larry Ellberger, director at Celldex (NASDAQ:CLDX) bought 5,000 shares at $14. The total value of the transaction was $70,000.

Big Movers

NYSE - Mallinckrodt (NYSE:MNK) shares were among the major biotech movers on the NYSE. The stock closed 9.10% higher. Lannett (NYSEMKT:LCI) shares also rose sharply, closing 7.37% higher. Puma Biotechnology (NYSE:PBYI) shares closed 6.68% higher. Opko Health (NYSEMKT:OPK) shares closed 6.45% higher. Axovant Sciences (NYSE:AXON) shares also saw significant activity. The stock closed 4.73% lower.

NASDAQ - Eagle Pharmaceuticals (NASDAQ:EGRX) shares were among the major biotech movers on the NASDAQ. The stock closed 13.75% higher. Immune Design (NASDAQ:IMDZ) shares rallied 11.16%. MannKind (NASDAQ:MNKD) shares surged 10.27%. PTC Therapeutics (NASDAQ:PTCT) shares gained 9.62%. Verastem (NASDAQ:VSTM) was one of the biggest biotech losers on the NASDAQ. The stock closed 25.72% lower. Viking Therapeutics (NASDAQ:VKTX) shares closed 10.16% lower.

NYSEMKT - Hemispherx BioPharma (NYSEMKT:HEB) shares closed 1.38% higher. Organovo Holdings (NYSEMKT:ONVO) shares gained 4.05%.

OTC - Anavex Life Sciences (OTCQX:AVXL) shares closed flat but the stock fluctuated between gains and losses throughout the day. Volume stood at 4.19 million.

Disclosure: I am/we are long GILD.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Editor's Note: This article covers one or more stocks trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks.

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