Saturday, February 22, 2014

Daily Dose - Chelsea, Exelixis

The Nasdaq Biotech had a nice week up over 3.6%.  The highlight of the week was the FDA approval of Chelsea's drug Northera for dizziness.

Chelsea CHTP was up approximately 20% after it received FDA approval for Northera after a 16-1 positive Adcom meeting in January.  The FDA had previously rejected the drug in 2012 but Chelsea ran another trial and convinced regulators to approve the drug under the accelerated approval process due to the unmet need for symptomatic NOH.  Now the challenge turns to the commercialization of the drug.  Chelsea claims that the market opportunity is north of $300 million but many of these small biotech's do a nice job developing new treatments but fail miserably transitioning to a commercial entity.  The hope is that they sign an commercialization agreement with a partner with the sales expertise to realize the full potential of the drug.  I have a small position in Chelsea post-approval but plan to liquidate my position in the coming weeks. 



2,000   $5.7426   $574.83   5.00%   $12,080.00
Exelixis announced 4th quarter and full year results on Thursday.  There was nothing exciting that came out of the release or conference call.  Their lead compound, Cometriq, had modest sales growth of 8% quarter over quarter in treating MTC (one of the rarer forms of thyroid cancer).  The potentially exciting news will come later in the year when they expect to report results of four (yes, four) phase 3 trials.  These trials include overall survival of Cometriq in MTC (this isn't big news as they already have the majority of market share in the MTC market prior to running this trial), overall survival in prostate cancer (if positive, this would be a HUGE opportunity), pain reduction in prostate cancer (this would further help differentiate Cometriq from other prostate cancer drugs assuming the overall survival trial is positive - ie help drive sales), and progression free survival results of a partnered drug with Roche and Genetech, Cobimetinib, in patients with malignant melanoma. 

Exelixis also has phase 3 trials of Cometriq in HCC and RCC which should how results in 2015 and 2016 as well as a number of phase 1 and 2 trials of the drug in numerous indications.  They should also have a decision on expanding approval of Cometriq in MTC within the European Union sometime in the coming months.  The company also has a long list of partnered, early stage compounds so there's even more opportunities for shots on goal in the coming years. 

Taking all of the opportunities highlighted above, combined with a market cap of $1.29 billion and cash on hand of over $400 million, I believe Exelixis is a very strong buy at these prices which is reflective in my below position. 



12,000   $7.1151   -$1,181.06   -1.38%   $84,240.00


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