The Smaller Cap BioPharma Watch List For Friday, September 14

by: StockMatusow

Today's watch list has what I feel are interesting opportunities for traders, both long and short side -- let's take a look.

Amarin (NASDAQ:AMRN) $14.19, up $0.87 (6.53%). After Hours : 14.43 $0.24 (1.69%) 7:59PM EDT Thursday, September 13.

Amarin has been expecting an FDA orange book decision on New Chemical Entity (NCE) status soon for its recently FDA approved Vescepa -- a prescription-only omega-3 fatty acid comprising icosapent ethyl, or ethyl-EPA for the treatment of patients with moderately to extreme elevated levels of high triglyceride levels or hypertriglyceridemia. However, NCE status continually has been delayed as the company has guided in its recent 8k SEC filing.

For some time now, I have been perplexed by what is causing the delay for NCE, but a recent tweet to me on twitter might provide the answer why.

The tweeter questioned if the NCE delay had to do with the fact that GlaxoSmithKline's (NYSE:GSK) $1 billion drug Lovaza is scheduled to go off of NCE status on September 16 -- this month.

(Exclusivity Code Exclusivity Expiration
N021654 001 M - 87 Sep 16, 2012)

Both Vascepa are Lovaza are essentially pharmaceuticalized fish oil drugs that went through the full phase 1-to-phase 3 process, and are now approved by the U.S. Food and Drug Administration (FDA) for treating very high triglyceride levels.

Could the delay be designed to avoid overlapping NCE? I think this is entirely possible.

Adam Feuerstein commented in an article for in January:

If FDA wasn't prepared to provide Amarin with the eight or so years of market exclusivity that comes with NCE status, would the agency really demand the conduct of an 8,000-patient cardiovascular outcomes study that will cost $120 million?

I agree with Adam's original assessment concerning NCE status, notwithstanding the new consideration offered to me in a tweet as mentioned above.

It's my personal opinion it's likely that the company will be acquired for the Vascepa asset by a larger pharma soon -- if NCE status is granted. The reasoning for this is that NCE gives a time limited iron clad exclusive window where the drug cannot be challenged by a potential competitor seeking to formulate a similar drug. The sooner a big pharma can acquire the asset, the faster they can get it out to market -- the faster they can rake in the revenue and profit from it.

Also, since Amarin is really not properly prepared to market Vescepa themselves, and since the company has no partnership for the drug, a buyout of the company for the Vescepa asset really seems like the only viable play for the company at this time.

My price target opinion for Amarin in the next 6 weeks, based on the factors mentioned above is around $19 a share.

Cornerstone Therapeutics (NASDAQ:CRTX) $5.10, down $1.37 (21.17%).

Cornerstone engages in the acquisition, development, and commercialization of prescription pharmaceutical drugs for the hospital, niche respiratory, and related specialty markets.

Yesterday, the FDA's cardiovascular and kidney drug advisory panel recommended against marketing approval for the company's drug lixivaptan. The drug is designed to treat hyponatremia, or a lack of salt in bodily fluids outside the cells. The panel voted 8-0 against recommending the drug for approval.

In a prior article of mine, I remarked that I felt Cornerstone was a good catalyst trade prior to the advisory panel meeting. As I take credit when I offer mostly good opinions, I also admit when I am flat wrong. I was flat wrong about this one -- period. The bears actually made a good case against this drug's approval, some remarking that the lack of peer-reviewed phase III data was a signal that the drug might have issues that the company did not want others to see -- the short case turned out to be dead right. I do not feel this company has anything to offer investors at this time. So, after admitting my bad call here, I have also turned bearish for obvious reasons. I look for more selling pressure to be on Cornerstone in the short term.

Antares Pharma (NASDAQ:ATRS) $3.94, down $0.01 (0.25%).

Antares engages in the development and marketing of self-injection pharmaceutical products and technologies, and topical gel-based products.

I have been invested now in Antares for over a year, at an average price of $2.25 a share -- so I have a very good feel for its price movements. Earlier this year, I remarked that we could see Antares reach $4.25 a share based on warrant expiration, which I believed would lead to a massive short cover rally. I also remarked on my twitter that I expected Antares to reach $5 a share in July.

I believe that in October coming up, Antares will see its share price return to over $5 dollars a share based on a few factors:

  • Warrant holders covering their short positions.
  • Paul Wotton, the Antares CEO remarked around the 10 minute market in the company's presentation at the 2012 Stifel Nicolaus Healthcare Conference, that the company expected positive user data on its self injector platform Vibex MTX. Vibex MTX is designed to treat Rheumatoid Arthritis.
  • Additionally from this conference, when speaking about catalysts within the next 12-18 months, Wotten talks about two things I especially liked. One, he mentions the undisclosed Pfizer product that will begin phase three trials -- the other Wotton also remarks:

We have the other Teva (NYSE:TEVA) programs advancing including the first pen product filed as an NDA and that's qute a big one. Everyone will be well aware of what that one is when the thirteen month clock starts ticking.

  • Company history of under promising and over delivering -- It's my opinion based on this, that we will see an earlier than expected NDA filing for Vibex MTX, which should also be a catalyst price driver for the stock. Antares has said the Vibex MTX NDA filing is expected in February 2013. I think we will see the actual filing in December of this year, again, based on company guidance history. In the Antares Q1 2012 10Q, the company revealed the identity of its Vibex QS1 as a testosterone quick shot for Low T, now called Vibex QS-T -- 6 months earlier than promised.

Antares is a company every small cap long-term investor should do careful and complete due diligence on -- in my opinion.

Sarepta Therapeutics (NASDAQ:SRPT) $13.94, up $0.98 (7.56%).

Sarepta focuses on the discovery and development of RNA-based therapeutics for the treatment of serious and life-threatening rare and infectious diseases. Its lead clinical candidate is Eteplirsen, which is in Phase 2 clinical stage for the treatment of Duchenne muscular dystrophy.

On August 27, 2012, the company announced that its drug eteplirsen, developed for the treatment of Duchenne muscular dystrophy, received positive early clinical trial results.

Jerry Mendell, M.D., Director of the Centers for Gene Therapy and Muscular Dystrophy at Nationwide Children's Hospital and principal investigator of the Phase IIb study, remarked:

The magnitude of this clinical benefit is an unprecedented treatment effect in DMD. This result represents a major advance in the pursuit of a disease modifying treatment for this severe, progressive and life-threatening disease. Dr. Mendell added, The 6-minute walk test results with eteplirsen, combined with its safety profile to date, make eteplirsen the most promising advance to treat the underlying cause of muscular dystrophy I've seen in my more than 30 years in the field.

Due to the above factor, the drug could be see expedited FDA approval potential and be available to patients for compassionate use in the second half of 2013. Sarepta will report its final results of the trial in October -- which gives the company a potential strong upcoming catalyst to trade on.

Sarepta is definitely one Biopharma to watch, as any significant treatment for Duchenne muscular dystrophy that ends up being FDA approved would be a huge breakthrough for the patients suffering from this terrible disease, and create big money potential for the company.

Disclosure: I am long ATRS. 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.

Additional disclosure: Disclaimer: This article is intended for informational and entertainment use only, and should not be construed as professional investment advice. They are my opinions only. Trading stocks is risky -- always be sure to know and understand your risk tolerance. You can incur substantial financial losses in any trade or investment. Always do your own due diligence before buying and selling any stock, and/or consult with a licensed financial adviser.