Friday, March 28, 2014

Mannkind Adcom Prediction

I predict a positive vote at Tuesday's ADCOM meeting for Mannkind MNKD with the following caveats based on the briefing documents.  I've provided some of the FDA reviewers comments below. 

-  Type 2 diabetes only (Type 1 not approved)
-  Limited use to restrict patients with lung disease (asthma, COPD, etc) or at high risk of lung disease (ie smokers)


In conclusion, the available data from clinical pharmacology studies for
AFREZZA does not conclusively support use in patients with underlying lung diseases.  The data from clinical studies will be considered along with the available limited PK results to develop
the final labeling recommendations.

Reviewer’s comment: The study results show that the primary objective of noninferiority
of Afrezza TI Gen2 to insulin aspart was met (noninferiority margin 0.4%). However, Afrezza TI Gen2 was statistically worse than insulin aspart. (Type 1 comment)
 
The FDA statistician also performed extensive sensitivity analyses for study 175 and
verified the Sponsor’s sensitivity analyses. In brief, the FDA statistician concluded that
sensitivity analyses supported the superiority finding. (Type 2 comment)
 




Thursday, March 27, 2014

Daily Dose - Mannkind, Threshold, Arena

Mannkind's MNKD day of reckoning is upon them.  They have their adcom meeting on monday for their inhaled insulin product which has already been rejected by the FDA twice.  Will the third time be a charm?  Maybe but between the chances that the drug gets approved, the commercial potential for inhaled insulin, and Mannkind's insanely high market cap....I'm not a buyer.  In fact, I'm short via naked January $10 calls as I don't see the company worth more than $3 billion in January even if the drug is approved.

Threshold THLD announced that their partner Merck KGaA is initiating a phase 1 trial of their lead compound, TH-302.  The drug is already in two phase 3 studies for pancreatic cancer and soft tissue carcinoma and a number of phase 2/1 studies.  I like Threshold based on TH-302's broad potential in a number of cancers, it's partnership with Merck, and relatively small market cap of under $300 million.  The downside is that Threshold is a one trick pony with TH-302 with nothing else of value in the pipeline.  I own 3,000 shares so we will see how these results play out next year.

Arena ARNA announced the initiation of a phase 2 trial of it's lead compound, Lorcaserin, in smoking cessation.  The company has a market cap of $1.4 billion and sales of Lorcaserin to treat obesity have been underwhelming since it's launch last year.  I feel the company is undervalued and hold a short position via naked July $10 calls.  There's no way this company will be worth north of $2.5 billion come July though there may be long-term potential for the smoking cessation opportunity.


Tuesday, March 25, 2014

Exelixis provides phase 3 prostate cancer trial update after hours

Exelixis EXEL had a busy day issuing press releases today.  The first came before the market opened with the announcement of European approval of Cometriq for MTC (a rare form of thyroid cancer).  The second came after the market closed which was an update on Cometriq's phase 3 trial in the much more lucrative prostate cancer indication.  The company was notified by the IDMC that the planned interim analysis of the trial has been completed and that the trial will proceed to its final analysis.  The good news is that the drug made it through the futility checkpoint.  The bad news is that the trial could have been concluded early if the results through the interim analysis were exceptional - so statistically significant through the current number of events (deaths) that the trial would be successful no matter how the rest of the events played out. 

Now we wait for the top line results in the coming months. 

Cyclacel reported earnings after the market closed with an update on phase 3 enrollment in AML

Cyclacel (CYCC) reported earnings after the market closed today and provided an updated on enrollment for it's phase 3 trial of it's lead compound to treat AML in elderly patients.  They have expanded into approximately 80 sites which brings total enrolling sites to approximately 120 after you included the 40 sites in the United States.  They have now enrolled 60% of patients in the trial and expect to complete enrollment by the end of the year with top line results in 2015.  They have an agreed upon Special Protocol Assessment with the FDA for this trial.  They are also evaluating the opportunity to begin a second phase 3 trial for the same compound to treat MDS and expect to provide an update on this opportunity later this year. 

I own a small position of 2,000 shares in Cyclacel.  The company has a small market cap of $68 million with a phase 3 trial expecting results in 2015 in an indication (AML) which needs improved treatment options so I believe the stock is a good value. 

Exelixis wins European approval for Cometriq in MTC; Phase 3 prostate results due soon

Exelixis ($EXEL) announced this morning it won European Commission approval for it's lead compound, Cometriq, in MTC (rare version of thyroid cancer).  This was widely expected after the CHMP issued a positive opinion in December though it has lifted the stock a few percent while the broader Nasdaq Biotech Index is down. 

The real news that will move the stock should come out within the next few months which is Cometriq's results in it's phase 3 trial in prostate cancer.  If successful analysts expect Cometriq sales could top $1.7 billion by 2020.  The company also has three additional active phase 4 trials for Cometriq in prostate (pain reduction), MTC (overall survival), HCC, and RCC not to mention a countless number of phase 2 trials for the compound. 

They also have a number of impressive partnerships including Genetech which expects to announce phase 3 results of a partnered compound, XL518, in Melanoma later this year. 

The company has a market cap of $1.26 billion which seems like great value based on the above near term catalysts and opportunities.  I own 13,000 shares of Exelixis so I have a great deal of confidence in the upside of this biotech. 

Monday, March 24, 2014

Celator Pharma announces earnings after hours

Celator (CPXX) announced year end 2013 and Q4 2013 earnings after the market closed today.  I listened on the call and have the following updates.

-  The company has a phase 3 trial enrolling in their lead agent CPX351 in secondary AML and expects enrollment to be completed by the end of the year.  They already have over 50% of planned enrollment completed in the targeted enrollment of 300 in the 41 sites currently active. 

-  Overall survival is expected in the beginning of 2016.  

-  They have a number of IST's (investigator sponsored trials) ongoing throughout the US including Fred Hutchinson in Seattle and Cincinnati Children's Hospital.  

-  The company has an extremely low market cap of only $86 million for a company with a phase 3 candidate.

-  It's one of the few biotech's trading near a 52 week low. 

I feel like Celator has a great risk vs. reward profile between it's $86 million market cap and phase 3 trial in secondary AML  I currently own 3,000 shares of Celator and may add to my position leading into the full enrollment of the phase 3 trial and top line results. 

Thursday, March 20, 2014

Ziopharm climbs 12% after $11 price target from Mizuho Financial Group

This may be the first Mizuho Financial Group price target that I've seen in the biotech industry in my 20 years of trading - I'd take this price target with a grain of salt.  Ziopharm has a drug in phase 2 trials which will report around the end of the year but they are a long way from commercializing anything (if ever) and already carry a heft $540 million+ market cap.

Aveo jumpes 19% in after hours trading after regaining rights of AV-203 from Biogen

Yes, you read the headline correctly.  Aveo JUMPED after Biogen gave the drug back to them when it should have gone down as it lost it's major pharma partner' support of the drug.  The drug just finished up a phase 1 safety study but it's many, many years away from possible commercialization (if ever).  On that note, I sold my 4,000 shares for $1.94 in after hours trading after buying them earlier in the week for $1.69 as a day trading strategy.  It worked out well for me but I'm dumbfounded by the optimism driving up the share price in after hours.  I expect the stock will come back down to earth in the coming weeks. 

Wednesday, March 19, 2014

European Marketing Authorization Application Update - Navidea Bio

Navidea (NAVB) provided an updated on it's ongoing European Marketing Authorization Application for Lymphoseek a few hours after the market closed today and the stock jumped over 5% in after hours trading.  The company presented oral explanations to the CHMP to address questions regarding the application.  The CHMP stated that it will continue it's review of the application though the company believes that the they are satisfied with the safety and efficiency for the breast cancer and melanoma indications so their review now turns to the head and neck cancer indications.  Unlike the FDA approval which only included use for breast cancer and melanoma, Navidea include the results of the head and neck cancer within the European application which weren't available during the FDA review.  Navidea has a supplemental NDA review target date on Lymphoseek for head and neck cancer on June 16th. 

I've been a long time investor of Navidea and believe that the upcoming catalysts, including EU approval, expanded approval in head and neck cancer by the FDA, and the expanded labeling sNDA at the end of the year, provide tremendous upside for this stock. They also have two phase 3 studies in imaging agents for Alzheimer's and Parkinson's which provide additional long-term catalysts and value. 

Trade Updates - Aveo BioPharma and Bind Therapeutics

Aveo (AVEO) - Purchased 4,000 shares at $1.69.  I don't necessary feel great about the companies near term prospects but they had approximately $120 million in cash at the end of the year and their current book value is $87 million so I felt it was a good value play.  They have an opportunity to in-license or hope for some positive developments in their preclinical program.  I'm selling back at $1.90.

Bind (BIND) - Purchased 1,000 shares at $12.10.  The company went public last year at $15 and is running two phase 2 trails of it's lead compound in Lung and Prostate cancer with results expected later this year.  They had over $80 million in cash at the end of Q3 and three outstanding partnerships - Amgen, Pfizer, and AstraZeneca.  With a market cap just under $200 million, this seemed like a great buy at this price. 

Tuesday, March 18, 2014

The BiotechInvestor Inbox - What do you think of Provectus (PVCT)?



 


What do you think of Provectus (PVCT)? Legit or snake oil? Moffitt Cancer Center thinks legit.

Thank you for the question EJ.  I'm not investing in Provectus.  I'm not sure about snake oil, but I don't invest a company with a $366 million market cap, no large pharma partner, traded on the OTC bulletin board, only $15 million in cash, and only 4 employees working for the company with their pay listed as $1.19 million EACH under yahoo's profile page which is ridiculous for a company of this size and in the development stage.  There are much better places to put my money and I'm definitely not going to put it in these guys pockets. 





Great article by Adam and The Street on today's Seeking Alpha article on Mannkind


Great article by Adam at The Street on today's Seeking Alpha article on Mannkind

Monday, March 17, 2014

Trade Updates - Rigel Pharma, KaloBios Pharma

The Nasdaq Bio Index is up a solid 1.48% to start off the week.  Oxigene is off to a strong start, up over 7% thus far for the day.  I added two new positions to my portfolio late last week.

I purchased 3,000 shares of KaloBios (KBIO) at $3.09.  The company is expecting phase 2 results in the 4th quarter for cystic fibrosis patients with chronic PA lung colonization.  They also expect phase 2 results on their trials in AML and MDS (Leukemia) in the 2nd quarter of 2015.  They have two solid partnerships with Sanofi and Novartis as well as $76 million in cash (end of Q4) which makes me feel better about investing in a company with a small market cap of $101 million.  They are a long ways away from getting a product to market but at $101 million and for the reasons mentioned above, they seem to be a great value. 


KBIO

 
3.07  


4,000   $3.0884   -$83.59   -0.68%   $12,280.00  


I purchased 3,000 shares of Rigel (RIGL) at $3.98 and to my surprise the stock jumped up over 13% by the end of the week so it's currently trading at $4.50.  They have phase 2 results in dry eye expected in the 2nd half of the year and they are also initiated a phase 3 study of their drug to treat ITP, an autoimmune disease that affects approximately 60,000 people in the United States.  They have a very strong cash position of $212 million as of the end of the year and partnerships with AstraZenenca, BerGenBio, and Daiichi Sankyo. 


RIGL

 
4.58  


3,000   $3.9792   $1,792.41   15.00%   $13,740.00



Thursday, March 13, 2014

Analyst calls out Aveo CEO on earnings call

After numerous clinical failures and a stock price that has lost over 75% of it's value in the last twelve months, Aveo's leadership (if that designation is appropriate) plans to use the $118 million in cash at the end of 2013 to invest in an early state compound that's not going to see human trials until 2015 and attempt to "partner" their later stage compounds which have thus far been failures.  Hats off to Brian Klein at Stifel, Nicolaus, & Company for asking the question that everyone else is thinking and see the response from the companies "leadership". 

Brian Klein - Stifel, Nicolaus & Company, Incorporated, Research Division
Okay. I guess, last question then is, was there ever any thought between you and the Board to essentially shut down all clinical activities that are being sponsored by AVEO and just out-license all of your products and return the cash and anything else you'll get from partners back to investors?

Tuan Ha-Ngoc - Chief Executive Officer, President, Principal Financial Officer and Director
Obviously, we're -- as we defined our strategy together with the Board, we have looked at all the past value creation. And obviously, that's our responsibility, to look all the various paths. And we agree, together with the board, that the path that is outlined today with our strategy will present the optimal path for value creation.

New Price Target - Chelsea Therapeutics

Chelsea (CHTP) ended the day up almost 14% after Wedbush put a $8 price target on the small biotech a month after it received it's first FDA approval for the drug Northera which treats symptomatic neurogenic orthostatic hypotension (it's a condition of dizziness of people with diseases such as Parkinson).  Wedbush believes that there is a strong chance of the company securing a partner which has been my bull thesis on the stock as well.  One thing that has me a bit worried about it's commercial potential is my recent conversation with a friend that runs a non-profit that supports folks with Parkinson's.  He had not heard of Northera which surprised me if the condition is prevalent in that population of patients as some of Chelsea's numbers have indicated.  He was very aware of the upcoming results of Abbvie's LCIG in Parkinson's.  Just some food for thought. 
CHTP

 
5.95  


2,000   $5.7426   $394.83   3.43%   $11,900.00  

Tuesday, March 11, 2014

Talk about timing - Oxigene reports positive topline results from randomized phase 2 study of Zybrestat - stock is up over 18%!

I wrote an article yesterday about the most overpriced and underpriced biotechs.  Oxigene (OXGN) was my pick for most undervalued due to it's upcoming phase 2 results of it's lead compound, Zybrestat, to treat Ovarian cancer.   Results are out and they are communicating positive topline results; stock is up over 18% in the last few minutes of trading.  


Monday, March 10, 2014

The Most Overpriced and Underpriced Biotech Stocks? Mannkind and Oxigene


Mannkind Corporation had a market cap of almost $2 billion and it’s my vote for the most overpriced biotech stock.  Most investors already know the story of Mannkind – Inhaled insulin product Alfrezza, already rejected twice by the FDA, prior inhaled insulin product launched by Pfizer was a commercial flop, and a third and possible final showdown with the FDA set to unfold in the coming month with a ADCOM meeting on April 1st and a PDUFA date for April 15th.  So many investors ask, “Is the third time a charm?” 

I would say that the chances of a successful approval are less than 50%.  The results that have been shared (emphasis on shared as the full results haven’t been released) have been mediocre at best.  The Phase 3 results in Type 1 diabetes was numerically worse than injectable Novolog and the results in Type 2 diabetes was statistically better than Novolog but patients gained weight on the drug.  We don’t have much safety data but we do know that the inhaled insulin causes a persistent cough that the company says is benign.  My real concerns are what I refer to as “clues” which make me wary of approval.  They include the company’s unwillingness to release the full results from the trial, their inability to secure a marketing partner (if the data was that great, why can’t they get someone to partner), and the prior two FDA rejections. 

Even if the drug is approved, then comes the challenge of commercializing inhaled insulin.  Will people use inhaled insulin or are the comfortable with their current product?  Remember, the needles are much smaller, less painful (if at all), and less expensive than they were when Alfrezza first went down the path to develop inhaled insulin.  Are people scared of the long-term effects of inhaling a medication and the impact on their lungs including the very serious and deadly lung cancer?  Can Mannkind land a formidable marketing partner?  If the pharma giant Pfizer was unsuccessful in marketing inhaled insulin, what makes anyone think that another company will be successful?  Will anyone want to pay a premium for inhaled insulin versus their current insulin product knowing that Alfrezza will cost significantly more than Novolog or the other products on the market? 

Are there any dirty secrets in the trial data?  Will Alfrezza receive a positive ADCOM vote?  Will the FDA approve Alfrezza?  Can they secure a marketing partner?  Will it be a commercial success?  It seems to me there is way to many questions to justify a market cap of almost $2 billion until some of these questions are answered which is why Mannkind is my vote for the most overpriced biotech stock. 

On the other end of the spectrum is OXiGENE which has a whopping market cap of approximately $12 million.  The company’s lead drug is Zybrestat which is a vascular disrupting agent currently focused on Ovarian and Anaplastic Thyroid Cancer (ATC).  The drug works by blocking the blood flow to the tumor that then kills the cancerous tumor cells.  The company has invested over $200 million to date in this approach to tackling cancer and hopes these investments will pay off in the upcoming readout of it’s phase 2 trial in Ovarian cancer. 

Zybrestat is currently in a randomized phase 2 trials in ovarian cancer in combination with Genetech/Roche’s Avastin.  Ovarian cancer leads to 14,000 deaths in the US each year and has a 5-year survival rate of only 47%, which has been largely unchanged since the 90’s.  The trial is being conducted in 67 clinical sites and has enrolled 107 patients randomized 1:1 to receive Avastin and Zybrestat or Avastin and placebo.  The primary endpoint is an improvement of progression free survival from 50% to 65%, which is expected to report in the first half of this year (so any day now).  The trial has already passed two independent safety committee reviews and a futility analysis.  

With an upcoming phase 2 readout in a Ovarian cancer population that’s in dire need for improved treatment options, a positive result would make OXiGENE’s $12 million market cap the underpriced bargain of the century. 

Thursday, March 6, 2014

Daily Dose - Navidea Bio, Rigel Pharma

The Nasdaq Biotech Index pulled back 2.62% today after strong gains earlier in the week. 

Navidea Biopharmaceuticals jumped 8.11% after announcing full year 2013 results and providing guidance of $5 million - $6 million in 2014 revenues for it's lymphatic mapping agent Lymphoseek.  The agent was approved March 2013 in the United States for breast cancer and Melanoma and has already captured 10% market share for this indication within it's first twelve months of sales.  I believe Navidea has a great deal of upside potential as there are a number of upcoming catalysts which can significantly expand the addressable market for Lymphoseek and create shareholder value.  There are TWO supplemental NDA reviews coming up for the agent; one to expand use for head and neck cancers and one to expand the labeling to support more broader use on June 16 and October 16, respectively.  Also, the European Medicines Agency is expected to make a decision on approval within the EU sometime this month.  These three events have the potential to significantly increase Lymposeek's addressable market in 2014.  Also, let's not forget that Navidea has TWO additional imaging agents for Alzheimer's and Parkinson's in Phase 3 trials expected to read out in 2015 and 2016, respectively.  I have two long positions in Navidea but I may add to this position in the coming months. 

NAVB Apr 19 '14
$2 Put
  0.20  


-100   $0.30   $914.01   29.62%   -$2,000.00

NAVB Jan 17 '15
$2 Put
  0.50  


-100   $0.538   $293.36   5.37%   -$5,000.00
Rigel Pharmaceuticals climbed over 10% today after announcing promising preclinical results of it's treatment, R118, in Peripheral Artery Disease.  The company also announced that the compound will now enter phase 1 human trials.  I feel like the jump might be a bit overdone since the drug is still many, many years from approval assuming the trials are successful but it is a company to keep an eye on and I may take a long position in the coming months.  The company does have a reasonable valuations of $395 million when you take into account they have $212 million in cash and some other programs with solid partners such as AstraZeneca.  It gives me great comfort when a major pharmaceutical player partners with a small biotech as you know they've done extensive due diligence into the company that's unavailable to the retail investor.