Your Daily Pharma Scoop: Neurocrine Has Upside, Dynavax Gets FDA Nod, Sage Soars

| About: Dynavax Technologies (DVAX)
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Summary

Neurocrine could still see some upside.

Dynavax makes it on third attempt.

Sage surges on positive data.

This abridged “Daily Scoop” is published by Avisol Capital Partners, which runs the physician-managed Total Pharma Tracker healthcare investment research service on Seeking Alpha Marketplace.

Analysis of top Seeking Alpha coverage: Neurocrine Biosciences

Today we will discuss an article on Neurocrine Biosciences (NBIX) by Stephen Ayers, titled “Buy Neurocrine, But At Cheaper Prices.”

Before we dive into Ayers’ article, let’s take a quick look at what has happened with Neurocrine in 2017. For Neurocrine longs, it has been a phenomenal run, with the stock returning nearly 95% for the year so far. Much of the gains have been driven by the approval of INGREZZA. In April, INGREZZA became the first medicine to be approved by the FDA for the treatment of adults with tardive dyskinesia. In October, the FDA also approved the company’s supplemental New Drug Application (sNDA) for the 80mg capsule of INGREZZA.

INGREZZA’s uptake has been strong, with Neurocrine reporting sales of $45.8 million in the third quarter. This was the first full quarter of Neurocrine sales. Given the strong uptake and the fact that Neurocrine’s drug is targeting an indication that has unmet need, investors’ excitement post approval does not come as a surprise. But Ayers believes that a correction is now due.

The title of Ayers’ article suggests that he does like the Neurocrine story but not at current levels. The author points out that INGREZZA will face competition as the FDA has also approved Teva Pharmaceutical's (TEVA) Austedo. In terms of efficacy, both drugs have a similar profile but INGREZZA does have an edge when it comes to safety, given that Austedo comes with a black box warning.

According to Thomson Reuters, the consensus forecast for peak INGREZZA sales are currently at $700 million by 2023. But these might turn out to be conservative estimates. An estimated 500,000 people in the U.S. alone have tardive dyskinesia. Assuming that 70% of these patients (350,000) seek treatment and INGREZZA captures just 5% of the market, peak sales would be $875 million (based on a 20% discount to list price). Remember that the drug is being evaluated in a second indication (Tourette’s syndrome). INGREZZA has advanced the Tourette’s program into a Phase 2b trial, with the T-Force GOLD study in pediatric patients with Tourette’s syndrome. Top-line data from the trial is expected in late 2018 and is one of the major catalysts in the next 12 months.

Neurocrine also has a solid pipeline, which Ayers also notes in his article. One of the concerns raised by Ayers is the cash burn rate. In the third quarter, Neurocrine’s SG&A expenses rose to $43.9 million from $17.5 million. The significant increase, though, was driven by commercialization activities for INGREZZA. We disagree with Ayers that the company will have to raise cash soon as the end of quarter cash balance combined with potential milestone payments and assuming increasing revenue for INGREZZA should be sufficient to fund operations in the medium term.

We believe that based just on the potential of INGREZZA, NBIX has 20% upside from current levels. Label expansion would further boost INGREZZA’s sales potential, making NBIX an attractive long-term investment.

Stocks in the news: Analysis of HRTX, DVAX, SAGE

FDA OKs Heron's Cinvanti for chemo-induced nausea and vomiting

Company: Heron Therapeutics (NASDAQ: HRTX)

Co Name

Heron Therapeutics Inc

Ticker

HRTX

Focusarea

Oncology

Today's Price

$17.35

52-week high

$20.85

52-week low

$12.21

%diff--52w-low

42.10

Mktcap

939M

Volume

827,052.00

CashBalance

30M

Therapy: CINVANTI (aprepitant)

Disease: nausea and vomiting associated with chemotherapy in adult patients.

News: The FDA approves Heron Therapeutics' intravenously administered CINVANTI (aprepitant) injectable emulsion for the prevention of acute and delayed nausea and vomiting associated with chemotherapy in adult patients.

Aprepitant is substance P/neurokinin-1 (NK1) receptor antagonist.

Merck also markets aprepitant, branded as EMEND, in an oral suspension formulation. Its prodrug of aprepitant, fosaprepitant, was approved for IV use in adults in February 2016 under the same brand name.

Heron was down a fraction after-hours.

Analysis: The approval for CINVANTI was based on data that showed the bioequivalence of CINVANTI to EMEND. Results from the two pivotal trials showed that subjects receiving CINVANTI had fewer adverse events compared to those receiving EMEND.

FDA OKs Dynavax's Heplisav-B; shares up 15% after-hours

Company: Dynavax Technologies (NASDAQ:DVAX)

Co Name

Dynavax Technologies Corporation

Ticker

DVAX

Focusarea

Oncology

Today's Price

$20.05

52-week high

$24.45

52-week low

$3.20

%diff--52w-low

526.56

Mktcap

939M

Volume

1,648,230.00

CashBalance

30M

Therapy: HEPLISAV-B [Hepatitis B Vaccine]

Disease: Recombinant (Adjuvanted)] for the prevention of infection caused by all subtypes of the hepatitis B virus in adults at least 18 years old.

News: The FDA approves Dynavax Technologies’ HEPLISAV-B [Hepatitis B Vaccine, Recombinant (Adjuvanted)] for the prevention of infection caused by all subtypes of the hepatitis B virus in adults at least 18 years old.

Commercial launch will commence in Q1.

Management will host a conference call today at 5:00 pm ET to discuss its plans.

Analysis: As expected, Dynavax has received the much-anticipated and the much awaited approval for HEPLISAV-B. As we noted in a scoop earlier this week, an approval could lead to a 20% upside to DVAX. In pre-market trading, the stock is currently up around 17%. We expect some profit-taking, especially from investors who entered DVAX at its lows from earlier in the year. The correction though should be seen as a buying opportunity, given the commercial potential of HEPLISAV-B.

Sage Therapeutics' brexanolone successful in two late-stage PPD studies

Company: Sage Therapeutics (SAGE)

Co Name

Sage Therapeutics

Ticker

SAGE

Focusarea

CNS

Today's Price

$97.21

52-week high

$97.47

52-week low

$44.55

%diff--52w-low

88.14

Mktcap

3.6B

Volume

803514

CashBalance

342.5m

Therapy: brexanolone (SAGE-547)

Disease: women with postpartum depression [PPD].

News: Sage Therapeutics gained more than 50% on Thursday after announcing successful results from two Phase 3 clinical trials evaluating an intravenous formulation of brexanolone (SAGE-547) for the treatment of women with postpartum depression.

Analysis: Both trials, Study 202B in severe PPD and Study 202C in moderate PPD, met the primary endpoint of a statistically significant average reduction from baseline in a scale for depression called HAM-D versus placebo at hour 60 (p=0.0242 and p=0.0160, respectively).

In other news

The FDA approves Merck's (MRK) PREVYMIS (letermovir) for the prevention of cytomegalovirus (CMV) infection in patients receiving an allogeneic hematopoietic stem cell transplant (HSCT) and for preventing CMV reactivation in CMV-seropositive patients undergoing HSCT. Both oral and IV formulations were approved.

The FDA approves Seattle Genetics' (SGEN -0.9%) ADCETRIS (brentuximab vedotin) for the treatment of adult patients with primary cutaneous anaplastic large cell lymphoma and CD30-expressing mycosis fungoides who have been previously treated with systemic therapy. It is the fourth approved indication for the product in the U.S.

Analyst Ratings

Acorda Therapeutics (ACOR): CIBC and Oppenheimer Holdings initiate market perform rating. See our analysis of ACOR.

Aerie Pharmaceuticals (AERI): Mizuho reiterates buy with target of $87.00. See Avisol’s coverage.

Akebia Therapeutics (AKBA): Mizuho reiterates buy with target of $24.00. See our coverage.

Alnylam Pharmaceuticals (ALNY): Cowen and Company reiterates buy with target of $151.00; JPMorgan Chase & Co. (NYSE:JPM) upgrades from neutral to overweight; Morgan Stanley (NYSE:MS) raises target from $101.00 to $130.00 with equal weight rating. See Avisol's coverage.

Biogen (BIIB): Oppenheimer Holdings initiates outperform rating with target of $350.00. See also our coverage of BIIB.

Eagle Pharmaceuticals (EGRX): Royal Bank Of Canada (NYSE:RY) lowers target from $81.00 to $75.00 and reiterates outperform rating. We have covered EGRX here.

Nektar Therapeutics (NKTR): Canaccord Genuity initiates buy with target of $35.00. See our coverage of NKTR.

Onconova Therapeutics (ONTX): HC Wainwright and Maxim Group reiterate buy rating. See our coverage on ONTX.

Regeneron Pharmaceuticals (REGN): BMO Capital Markets lowers target to $479.00 with market perform rating; Citigroup reiterates buy with target of $480.00; Morgan Stanley lowers target to $463.00 with equal weight rating; Royal Bank Of Canada reiterates sector perform with target of $425.00. See Avisol's coverage of REGN.

TESARO (TSRO): Lake Street Capital reiterates buy with target of $143.00. TSRO is in our watch list with entry price of $110 and target of $160. See also our coverage of TSRO.

Valeant Pharmaceuticals International (VRX): HC Wainwright reiterates hold with target of $17.00. See Avisol's coverage.

More analyst ratings in appendix.

Insider Sales

Amphastar Pharmaceuticals, Inc. (AMPH): EVP, QA, Regulatory Affairs Gerst Diane G., sold 523 shares for $9,375.

Cannabis Sativa, Inc. (OTCQB:CBDS): Director Goldsberry Debby, Pres & 10% shareholder Tobias David, CEO Gravel Mike, sold 6000 (30% of their holding), 10000 (<1%), 9900 (5%) shares, respectively, for $18,120, $30,000, $29,595, respectively.

Conmed Corp. (CNMD): EVP, Finance, CFO Pomilio Luke A, sold 62% of their holding, 29363 shares for $1,488,785.

Karyopharm Therapeutics Inc. (KPTI): Chief Dev Operations Officer Frenkel Ran, sold 4958 shares, 17% of their holding for $55,755; SVP, OPS, BUS DEV, GC, SEC Primiano Christopher Brett, sold 4958 shares, 19% of their holding for $55,755.

Lannett Co. Inc. (LCI): 10% shareholder Farber David sold 10000 shares for $250,294; CEO Bedrosian Arthur P sold 7422 shares for $187,034.

Insider Purchases

Apollo Endosurgery, Inc. (APEN): Schwartzhoff Bret, VP U.S. Sales & Marketing, acquired 9500 shares for $40,280.

Flexion Therapeutics Inc (FLXN): Clayman Michael D., President & CEO, acquired 5000 shares for $118,000.

Revance Therapeutics, Inc. (RVNC): Foley Mark J, Director, acquired 20000 shares for $539,168.

Teligent, Inc. (TLGT): Collins Jenniffer, CFO, acquired 7000 shares for $21,280.

Ziopharm Oncology Inc (ZIOP): Cooper Laurence James Neil, CEO, acquired 6440 shares for $30,139; Mauney David M Md, EVP, Chief Business Officer, acquired 4270 shares for $19,984.

Earnings

ARCA Biopharma (ABIO) reported that its net loss for the third quarter was $4.4 million, or $0.39 per share, compared to $4.7 million, or $0.51 per share, for the third quarter of 2016. The company’s Cash, cash equivalents and marketable securities totaled $16.0 million as of September 30, 2017, compared to $23.5 million as of December 31, 2016.

Achieve Life Sciences Inc. (ACHV) reported its net loss for the three and nine months ended September 30, 2017 was $6.5 million and $6.8 million, respectively, compared to $0.3 million and $0.7 million for the three and nine months ended September 30, 2016, respectively. The company's cash and cash equivalents were $8.0 million as of September 30, 2017 compared with $15,000 as of December 31, 2016.

Aptevo Therapeutics (APVO) reported its third quarter EPS at ($0.14). The company’s revenue for IXINITY for the three months ended September 30, 2017, was $2.5 million, compared to $2.8 million for the three months ended September 30, 2016. Aptevo’s net income for the three months ended September 30, 2017, was $37.9 million or $1.77 per share, compared to a net loss of $71.7 million or ($3.55) per share for the corresponding period in 2016.

Galena Biopharma (GALE) reported its loss from continuing operations for the third quarter of 2017 was $6.2 million, or $0.15 per basic and diluted share, including $1.7 million in non-operating expense. The company reported its cash and cash equivalent at approximately $12.9 million as of September 30, 2017, compared with $18.1 million as of December 31, 2016.

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Appendix/Tables:

Analyst Ratings

Company

Ticker

Analyst

Action

Rating

Target

Achaogen

AKAO

HC Wainwright

Reiterates

Positive -> Buy

$25.00

Achaogen

AKAO

Mizuho

Reiterates

Buy

$28.00

Achaogen

AKAO

Stifel Nicolaus

Lowers Target

Buy -> Buy

$30.00 -> $27.00

Align Technology

ALGN

Credit Suisse Group

Reiterates

Outperform -> Positive

$209.00 -> $261.00

Amphastar Pharmaceuticals

AMPH

Raymond James Financial

Downgrades

Outperform -> Market Perform

$18.00

AnaptysBio

ANAB

Jefferies Group LLC

Initiates

Buy -> Buy

$101.00

Aquinox Pharmaceuticals

AQXP

Cantor Fitzgerald

Reiterates

Buy

$28.00

Aquinox Pharmaceuticals

AQXP

Needham & Company LLC

Reiterates

Buy

$25.00

Atara Biotherapeutics

ATRA

Canaccord Genuity

Reiterates

Buy

Cidara Therapeutics

CDTX

HC Wainwright

Raises Target

Buy

$14.00 -> $16.00

CRISPR THERAPTC

CRSP

Cann

Reiterates

Hold

Depomed

DEPO

Morgan Stanley

Upgrades

Underweight -> Equal Weight

Dynavax Technologies Corporation

DVAX

Cantor Fitzgerald

Reiterates

Buy

$25.00

Egalet Corporation

EGLT

Gabelli

Downgrades

Buy -> Hold

Eyegate Pharmaceuticals

EYEG

HC Wainwright

Reiterates

Buy

$6.00

FibroGen

FGEN

Mizuho

Reiterates

Hold

$61.00

Global Blood Therapeutics

GBT

Cowen and Company

Reiterates

Buy

$83.00

Galmed Pharmaceuticals

GLMD

Maxim Group

Reiterates

Buy

$14.00

Globus Medical

GMED

Barclays PLC

Raises Target

Underweight

$27.00 -> $29.00

Globus Medical

GMED

BTIG Research

Reiterates

Buy

$37.00

Globus Medical

GMED

Canaccord Genuity

Reiterates

Buy

$38.00

Globus Medical

GMED

Needham & Company LLC

Reiterates

Hold

GTx

GTXI

Stifel Nicolaus

Initiates

Buy -> Buy

Hologic

HOLX

Piper Jaffray Companies

Reiterates

Buy

$48.00

Idera Pharmaceuticals

IDRA

HC Wainwright

Initiates

Buy -> Buy

$4.00

Inovio Pharmaceuticals

INO

HC Wainwright

Reiterates

Buy

$13.00

Kura Oncology

KURA

Citigroup

Reiterates

Buy

$19.00

Medtronic PLC

MDT

Needham & Company LLC

Reiterates

Buy

$94.00

OncoSec Medical Incorporated

ONCS

HC Wainwright

Reiterates

Buy

$6.00

Prima BioMed Ltd

PBMD

Maxim Group

Reiterates

Buy

$7.00

Pacira Pharmaceuticals

PCRX

Canaccord Genuity

Raises Target

Hold

$33.00 -> $38.00

Pacira Pharmaceuticals

PCRX

HC Wainwright

Reiterates

Buy -> Buy

$52.00

Pacira Pharmaceuticals

PCRX

Jefferies Group LLC

Lowers Target

Buy

$52.00

Pacira Pharmaceuticals

PCRX

Oppenheimer Holdings

Reiterates

Hold

Prothena Corporation PLC

PRTA

Oppenheimer Holdings

Reiterates

Buy

$70.00

Pluristem Therapeutics

PSTI

HC Wainwright

Reiterates

Buy

$3.50

REGENXBIO

RGNX

Chardan Capital

Raises Target

Buy -> Buy

$75.00 -> $85.00

REGENXBIO

RGNX

Morgan Stanley

Initiates

Overweight -> Overweight

$34.00

Sage Therapeutics

SAGE

Leerink Swann

Raises Target

Outperform -> Positive

$85.00 -> $123.00

Sage Therapeutics

SAGE

Raymond James Financial

Raises Target

Buy

$109.00

Sage Therapeutics

SAGE

Royal Bank Of Canada

Raises Target

Outperform

$145.00

Sage Therapeutics

SAGE

Stifel Nicolaus

Raises Target

Buy

$91.00 -> $105.00

Zimmer Biomet Holdings

ZBH

Edward Jones

Upgrades

Hold -> Buy

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

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.