4 Companies With Upcoming Drug Approval Dates With 1 Potential Buyout Looming

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Includes: AMRN, ARNA, OMPI, ONXX, VVUS
by: StockMatusow

In the following article, I list 4 Bio Pharmas with upcoming drug approval decision dates. I give a summary with my opinion on the chances for each of their respective drugs being approved.

The 5th and last company I mention in this article has very strong buy out speculation associated with it. I am personally convinced this company will receive and make public, a buy out offer within 2 weeks.

Onyx Pharma (NASDAQ:ONXX): Onyx has an FDA advisory panel convening for its cancer drug carfilzomib on June 20, which at that time will either recommend the drug for approval or not. The full FDA will then convene afterwards for the final approval decision, which is expected by July 27th.

Kyprolis™ (proposed tradename for carfilzomib) is a late-stage, next-generation proteasome inhibitor that is being developed as a potential treatment for patients with multiple myeloma and solid tumors. To date, the agent has generated a positive efficacy signal in multiple clinical studies with an encouraging safety profile, including low rates of neuropathy.

Onyx's CEO, N. ANTHONY (TONY) COLES, M.D, spoke recently with CNBC about this drug and other drugs the company is working on which investors can view here.

Opinion on approval chance: 80%

Arena Pharma (NASDAQ:ARNA): Arena faces an FDA approval decision for the weight-loss drug Lorcaserin on June 27, 2012.

Lorcaserin is intended for weight management, including weight loss and maintenance of weight loss. According to the Centers for Disease Control and Prevention, more than one-third of US adults were obese in 2009-2010. Studies have shown that a weight loss of 5% to 10% of body weight from baseline can result in meaningful improvements in cardiovascular risk factors (e.g., lipids, blood pressure and blood glucose), quality of life and functional capacity, and a significant reduction in the incidence of type 2 diabetes. There are currently limited pharmaceutical treatment options to help patients lose weight.

Personally, I cannot wait for all the drama to come to an end with this drug. To me, it is rather obvious the political pressure to approve a weight loss drug is at an all time high, so barring a last minute change in the landscape of things, Lorcaserin will be approved in my opinion.

I would not recommend anyone hold the stock short, as you will likely be burned for doing so. Arena is now beginning to make the transition from a developmental pharma to a full fledged big revenue generating one.

Opinion on approval chance: 95%

Vivus (NASDAQ:VVUS): Vivus faces an FDA approval decision for the weight-loss drug Qnexa on July 20, 2012.

Qnexa® (phentermine and topiramate) Extended-release Capsules is an investigational, once-per-day, weight-loss therapy that combines low doses of two agents approved by the FDA, phentermine and topiramate, in a controlled-release formulation. Investors should not assume because when and if Arena's Lorcaserin is approved, Qnexa will be automatically approved as well.

Qnexa (a combination of phentermine, an amphetamine, and topiramate, an anti-seizure medication) has been shown to cause increased heart rate and may lead to severe cardiovascular problems, such as heart attacks and arrhythmias, as well as birth defects, kidney stones, decreased bone mineral density and memory impairment. Needless to say, I am not wild about Qnexa.

In February of this year, an advisory committee to the Food and Drug Administration voted 20 to 2 in favor of Qnexa, stating that the benefits from the weight loss provided by the drug more than offset the potential risks of heart problems and birth defects.

On April 4, 2012, following the FDA's request, VIVUS submitted a Qnexa Risk Evaluation and Mitigation Strategy (REMS), which was considered a major amendment to the NDA. The submission consisted of proposed REMS materials. Since the receipt date was within three months of the PDUFA, the FDA has extended this date by three months to provide time for a full review of the submission. The final decision on Qnexa is now due by July 17th, 2012.

It appears to me that Arena's Lorcaserin will be the first weight loss drug to be approved and as well, will be the first weight loss drug to market. Lorcaserin is really not all that effective, but in my opinion, is much safer than Qnexa. Because of this, Lorcaserin will be the drug that gets the political backing, and I believe Qnexa might very well get the axe by the FDA.

Opinion on approval chance: 45%

Amarin (NASDAQ:AMRN): Amarin faces an FDA approval decision for the prescription fish-oil pill AMR101 on July 26th, 2012.

AMR101 is an investigational ultra-pure omega-3 fatty acid in a capsule, comprising not less than 96% icosapent ethyl (ethyl-EPA) in a capsule. Amarin is developing AMR101 for the potential treatment of patients with very high triglyceride levels and high triglyceride levels, or hypertriglyceridemia. Triglycerides are fats in the blood. Amarin's cardiovascular strategy leverages our extensive knowledge and experience in lipid science and the potential therapeutic benefits of polyunsaturated fatty acids in cardiovascular disease.

We in the western world just seem to be eating more poorly as the years go by. We live in such a fast paced society, and our food is trying to keep up with us. Weight loss drugs, cholesterol and Triglycerides treatments can barely keep up as well, so it seems. AMR101 though does appear to be a good thing - it's safe and effective.

There is no question in my mind that AMR101 will be approved by July 26th. However, I have some questions on patent protection for this product. What is to stop other companies from developing and marketing similar formulations? Perhaps I need to investigate this matter more when it comes to AMR101, and I invite Amarin longs to chime in with their comments in the comment section below to address this.

Opinion on approval chance: 90%

At the annual Obagi Medical Products (NASDAQ:OMPI) shareholders meeting, shareholders overwhelmingly voted against ratifying its shareholders Rights Plan, also know as a "poison pill," by a 2 to 1 margin. The buzz I am hearing is that a deal has already been agreed upon with the top shareholders of the company for a price of around $20 a share, equating to a cash deal of roughly $345M based on the 18M+ shares outstanding. One top executive has already cleaned out his desk so to speak.

James P. Hartman, vice president of global marketing and business development, this week left Obagi to take a job with Merz, Inc. Hartman has been appointed as vice president of medical dermatology effective June 12, 2012. Hartman will be responsible for the company's Medical and OTC/OTX dermatology business unit, which includes Naftin® (naftifine hydrochloride) and Mederma®.

The last time Hartman left a prior job was before Stiefel was bought out by GlaxoSmithKline (NYSE:GSK) in July of 2009 for $2.9 billion.

Also of note are the recent awarded options that have a forfeiture date of June 6th, 2013. I see these rewards as a kind of 'parting gift' so to speak:

2012-06-06
Option Award
2012-06-08
12:51 pm
Obagi Medical Products, Inc. OMPI DUERDEN JOHN H
(Director)
2,206 $0 $0 15,426
(Direct)
View
2012-06-06
Option Award
2012-06-08
12:47 pm
Obagi Medical Products, Inc. OMPI Grant Edward A
(Director)
2,206 $0 $0 21,202
(Direct)
View
2012-06-06
Option Award
2012-06-08
12:45 pm
Obagi Medical Products, Inc. OMPI FITZGIBBONS ALBERT J III
(Director)
2,206 $0 $0 17,953
(Direct)
View
2012-06-06
Option Award
2012-06-08
12:43 pm
Obagi Medical Products, Inc. OMPI BADIE RONALD P
(Director)
2,206 $0 $0 18,952
(Direct)
View
2012-06-06
Option Award
2012-06-08
12:42 pm
Obagi Medical Products, Inc. OMPI Bartholdson John A.
(Director)
2,206 $0 $0 17,953
(Direct)
View

Obagi's products are hot to say the least - strongly catching on with many women; Obagi Nu-Derm® Systems, Obagi Condition & Enhance® Systems, and Obagi-C® Rx Systems just to name a few. Google these products and visit the Obagi website to cross reference the rest of the company's products.

Last quarter Obagi raked in a record revenue:

Income Statement
Revenue (TTM): 118.35M
Revenue Per Share : 6.36
Qtrly Revenue Growth (yoy): 16.00%
Gross Profit : 90.09M

Obagi is a perfect company for acquisition by a larger player in this field, a player that has the money to effectively market these products world wide. The right company can easily increase the above revenues 5 to 7 fold with correct marketing. Personally, I think selling this company for $20 a share is way too low looking forward. I would prefer to see an infusion of investment capital to grow this company into a monster, but I do not think current management wants this.

In fact, the major shareholders wanted to see something similar, and from what I have been told, they have been approached by at least 2 major players about tendering their shares. As a result, the company inserted a share holders right provision, also known as a poison pill. It is clear to me that management was attempting to save their own cushy jobs rather than doing what the majority of shareholders wanted - selling the company. Now that the poison pill has been voted down by the shareholders, and according to what I am hearing, a buyout offer announcement should be forthcoming very soon for the price I mentioned earlier.

The June 15th calls with $15 strike price expire today, so a buyout will not be taking place until afterwards in my opinion. The July calls at $15 have a huge spread - $0.40/$1.90 the last time I checked, so it sure seems to me that the so called 'market makers' do not want action on these - another sign to me a buyout is imminent. Savvy investors with experience in the area of merger and acquisition trading should take a serious look at this developing situation, and dig deep to find out what they believe to be the likely outcome here.

Opinion on revelation of buy out offer occurring within 2 weeks: 90%

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

Additional disclosure: A family member owns shares of OMPI. I own no shares of OMPI in my account.