Watch These December Biotech Catalysts: A Retrospective

Includes: ADMP, NVAX, PGNX
by: John Engle

In early December, I reviewed the month’s most anticipated biotech catalysts.

Adamis was expected to close a partnership deal for its generic epinephrine injector.

Progenics anticipated FDA would give an answer on its NDA submission for cancer drug Azedra.

Novavax planned to release data from its first human trial for a novel flu vaccine.

This article looks at each of these catalysts, and reviews what did – and didn’t – happen.

Early last month, I wrote an article about a group of biotech stocks with catalysts expected during the last days of 2017. Adamis Pharmaceuticals (ADMP), Progenics Pharmaceuticals (PGNX), and Novavax (NVAX) all had major catalysts scheduled or expected. Some delivered, while others did not.

Let’s take a look at each of these companies, their catalysts, what I anticipated would happen, and what investors can expect next.

Adamis: Still Waiting, Waiting, Waiting

Adamis has been engaged in long and protracted potential partners for Symjepi, its FDA-approved epinephrine injector with the potential to gain significant market share as a lower-cost alternative to Mylan’s (MYL) market-leading EpiPen. The expected December catalyst was an announcement regarding a partnership. The company had originally forecasted a partnership announcement in Q3 2017 with the possibility of a commercial rollout before year-end. It appeared that Adamis could still close a deal before tipping into 2018.

What I Said Should Happen

From my December article:

“Barring total disaster, it is only a matter of time before pen is put to paper and a partnership deal is finalized. There is also the outside chance that discussions involve outright buyout (though reports from various sources that have spoken to Adamis Investor Relations offers highly conflicted reports on that score). A partnership with terms even close to where observers and analysts expect should see the share price soar above $7 easily, possibly rising to $9 in the relative short-term. As for timeline, it should probably happen before the end of the year. Possibly it will drag into early Q1 2018, though that would be a head-scratcher to be sure.”

What Actually Happened

Well, the head-scratcher occurred. We are now in the first week of January and we are still bereft of a partnership. Despite seemingly having cleared away some of the potential question marks that might disconcert partners, including issuing a press release on its submission of a prior approval supplement for its juvenile version of Symjepi and its forthcoming presentation of the results of a human factors study demonstrating the injector’s ease of use. The clock continues to tick.

What Happens Next

The delay and continued lack of serious communication has not stopped Adamis’ share price from improving recently, reaching $4.60 at the time of writing on January 3rd. That appreciation is likely the result of investors accumulating positions in anticipation of a seemingly inevitable partnership announcement. And it does still seem inevitable. The market opportunity is tremendous and numerous potential partners could profit handsomely from a deal.

Investors now face a waiting game. While management’s tendency to play its cards close to the vest and the lack of an updated partnership timeline make investors nervous, patience still seems to be the order of the day. Alas, we cannot say when it will happen – but it still should happen. And soon.

Progenics: Delivering Double

Progenics has had a volatile 2017, even as Azedra, its rare adrenal cancer drug, has taken major steps toward FDA approval. In March 2017, the company released top line data on its Phase 2b study of Azedra and, while the results were generally positive, questions were raised about the validity of the data and apparent discrepancies between the Phase 2b trial and the Phase 2a trial. While shares dipped, they began to climb again as investors started to realize the trial data was actually quite sound. However, shares again took a hit when the company was forced to delay the submission of its NDA due to issues with the manufacturing site.

Yet, despite the delay, Progenics finished the NDA submission in sufficient time to receive an answer from the FDA by year-end. Progenics also expected a second, more minor catalyst: finalizing enrollment in the Phase 3 trial of 1404, an imaging agent being tested for identification of prostate cancer.

What I Said Should Happen

From my December article:

“Investors have every reason to be confident that the NDA will be accepted for review. We have to remember that an NDA acceptance is not a drug approval. The FDA will still have the opportunity to reject it in 2018, should it so choose. But to reject the NDA of an ultra-orphan drug with both Fast Track and Breakthrough status would be highly uncharacteristic of today’s FDA. And when it comes down to it, approval is very probable: The trial results were positive and there is no approved treatment for this type of cancer. The FDA has nothing to lose from approval, but would be lambasted for rejecting it. A good drug with good reasons for approval alongside a regulatory agency with strong incentives to give the nod bodes well indeed. With an NDA acceptance, some of the dented investor confidence should be restored and we should see shares getting close to $8 again – and expect them to run higher still when the PDUFA date approaches.

“Not to forget 1404 in the excitement over Azedra, the announcement of full enrollment in the Phase 3 trial can be taken as a sign that everything is moving on schedule – though investors should expect at most a modest bump on such news.”

What Actually Happened

In the end, Progenics delivered on both counts. On December 29th, the company announced that the FDA had accepted the Azedra NDA and had scheduled a PDUFA action date for April 30th, creating a new catalyst to watch. The immediate result upon the announcement was a surge in share price over $7, but this price level was not as stable as I had predicted. In the end, many investors “sold on the news” and pushed shares below $6 again, though they have since rebounded above that level. Likewise, the announcement on January 2nd that the 1404 Phase 3 trial had completed enrollment did little to buoy the share price.

What Happens Next

I had anticipated investors would come to their senses more quickly once the bizarre and unjustified cloud of doubt around NDA acceptance was dispelled. While that has not yet transpired, we should see solid price appreciation in the run-up to the April 30th PDUFA deadline. The upside is tremendous and, given Azedra’s demonstrated efficacy and orphan drug status, there should be little impediment to approval. 2018 should be a huge year for Progenics.

Novavax: Kicking The Can

Novavax stated repeatedly that it intended to share data from early human trials for NanoFlu, its flu vaccine candidate. NanoFlu shone in preclinical trials, outperforming the market leader, Sanofi’s (SNY) Fluzone HD. With human testing now underway, many investors anticipated good news, sending the share price upward in preparation for the promised end-of-year announcement.

What I Said Should Happen

From my December article:

“No one can predict trial results with any degree of certainty. It is far easier to assess how people will react and judge results that are known. If the top line data impress, we can expect this still depressed stock to enjoy another run – perhaps even cracking through the $2 level it has not seen since before the last failed RSV vaccine trial.

“Should the results prove to be a flop, the stock price will probably track back downward to around the $1 level. The danger with that is that it leaves the company with essentially zero wiggle room for further capital raising. That should not be necessary before the data readout from the maternal RSV trial is announced, but trailing around penny-stock territory is dangerous.”

What Actually Happened

Alas, Novavax seems to have failed to learn from past PR mistakes. Instead of furnishing investors with data, the company announced on December 18th that it would be punting on the data release. Now the company expects to release a full data package in February 2018. The reason for the delay was given as relating to the difficulty of obtaining wild strains of the flu virus, forcing the company to grow them independently. The delay was obviously not what investors wanted to hear: Shares tumbled precipitously, though never crashing down to true penny stock levels as had occurred on previous disappointing news releases.

In fact, the share price has recovered significantly since the temper tantrum following the delayed data release. Shares were trading a little under $1.40 at time of writing. That is a strong sign that many of the investors and speculators who took positions in advance of a December announcement have largely accepted Novavax’s explanation of the delay and are willing to hold on until February. This remains a very speculative play, but a solid data reading in February will likely pop the share price significantly – and set it up nicely for its mid-year RSV vaccine data reading.

Disclosure: I am/we are long PGNX, ADMP, NVAX.

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.