Prana: A Speculative Ten-Bagger Scenario (PRAN)

March 26, 2011 · Filed Under alzheimer's, Financial, M&A, R&D, Research, Secondary Offering · Comment 

This last week brought an interesting move in shares of Prana Biotechnology Ltd. (NASDAQ: PRAN).  On Friday we gave this coverage right at the open noting at 24/7 Wall Street that the stock was still worth a look for speculators despite a news pop followed by a capital raise that hurt the stock’s gain during the week.  This ADR is of a company based in Australia and its focus is Alzheimer’s, Parkinson’s, and Huntingston’s Diseases.  It is highly speculative by any measurement.  Prana effectively has no revenues and our take is that it will be highly reliant upon grants from governments, agencies, and other foundations and organizations or it will have to rely upon the capital markets or a partnership for more funding down the road. 

The company saw shares surge earlier in the week on reports that data was being published in the science journal PLoS ONE with the title “Metal Ionophore Treatment Restores Dendritic Spine Density and Synaptic Protein Levels in a Mouse Model of Alzheimer’s Disease.”  Its PBT2 was shown to have repaired damage in an Alzheimer’s affected brain and that facilitated the restoration of cognition in Alzheimer’s Disease.

Then came news from the company that it was raising capital in Australia to the tune of $6.1 million (Australian Dollars), a move which investors often consider as pump and dump capital raises.  What is interesting though is that right after we published “Still Worth a Look for Speculators” we saw an immediate 10% rise in the stock.  Shares went from $2.78 or so up to $3.10 in very short order and then the stock rose again in a second leg up to as high as $3.34 before closing at $2.86 for a near three percent gain on the day.

Prana ADRs were under $1.50 before it published the news on Monday and shares closed at $2.86 on Friday, nearly a double for the week.  We also saw shares hit a high of $4.50 on Tuesday and that was on a whopping 36.4 million shares that day.  This was previously unheard of trading volume in a single day and there are many days where the stock has traded only a few thousand shares.  The 52-week range is $1.09 to $4.50 and this stock once traded above $6.00 per ADR back in 2004 or 2005.

We would note that StockCharts.com offers a full gallery review for the charts on Prana, and its Point & Figure price target objective is all the way up at $7.50.  That figure will change through time and was based upon March 25 prices and volume.

So, even at the low of $1.09, you may wonder why we call Prana an opportunity for a ten-bagger with that implied upside of 1,000%.  Shares have never traded above $10.00 for its ADRs and technically this stock would have to rise to well above $11.00 before we could legitimately call this a ten-bagger.  The whole issue surrounding the stock is that even at $2.86 the company’s market cap is a mere $69.2 million before considering the effects of its capital raise.  For these ADRs to rise this high in ten-bagger land it would imply a market capitalization rate of what is still only about $266 million.

We believe that the company will continue to need more funds ahead in the coming months and years and it seems logical that the company will raise capital each time its shares rise significantly.  There is no way to know yet whether PBT2 is going to be the Holy Grail or whether it will be yet another disappointing flash in the pan.  The company noted, “After 11 days of treatment, the brains of the Alzheimer’s mice showed a statistically significant increase in the numbers of spines on the branches (or dendrites) of neurons in the hippocampus, a memory centre specifically affected in Alzheimer’s Disease.” 

What we do know is simple.  If it turns out that Prana has the next new real treatment candidate for Alzheimer’s, even a $266 million market cap will sound very small.  It could quite literally end up being an “Off To The Races” scenario for investors.  A Big Pharma company could either become an acquirer or it could become a partnership opportunity. Again, this is all around speculative analysis rather than using true fundamental and financial analysis based solely on today’s finances.  There are no real US firms which cover Prana so we have no real benchmark to judge what could happen in just a bullish scenario rather than a runaway scenario.  The company has a single research report posted on its site from 2009 by Southern Cross Equities and it is very bullish with a title “Unforgettable Opportunity” from that time.

Looking at potential ten-baggers is not for widows and orphans.  After all, we are talking about study results conducted on mice and on a company which will need significant funding ahead by our count.  A large partnership or other liquidity event from a Big Pharma player could also bring rewards and also bring risks down the road.  Many companies rise on news and end up in a flame-out situation.  All of the magic characteristics are in place for a possible ten-bagger scenario, and all of the risks are in place as well.  Time will be the judge as to whether or not Prana will end up being he next ten-bagger in biohealth. 

Here is that data published in PLoS ONE.

JON C. OGG

Merck Commits To New Alzheimer’s-Focused Collaboration

August 12, 2010 · Filed Under alzheimer's · Comment 

In an effort to combat Alzheimer’s disease, global health care giant Merck & Company, Inc. (NYSE: MRK) has entered into a deal for $289 million with Canada’s Alectos Therapeutics to develop new therapeutic molecules.  The deal is meant to jumpstart a collaboration between the two companies to tackle the enzyme O-linked N-acetylglucosaminidase, which is believed to have causal effects in the development of Alzheimer’s disease.

Merck has experienced poor results in the past with regards to treating Alzheimer’s, however outlook seems positive with this new outing.

-Michael B. Sauter

Nymox Moves Following Singular Research Report

July 26, 2010 · Filed Under alzheimer's · Comment 

Nymox Pharmaceutical Corporation (NASDAQ: NYMX) was up $0.59 (15.32%) today to $4.44 following a Singular Research report in which the company was predicted to obtain greater value in the coming months as the result of a compound for enlarged prostate that is in Phase 3 clinical trials which Nymox is currently developing.

Nymox Pharmaceutical Corporation is a biopharm company which develops drugs and diagnostic devices for age-related conditions.  The company is known for producing AlzheimAlert, which is a urinary test used for the diagnosis of Alzheimer’s disease.

-Michael B. Sauter

Ten-Bagger Chase Goes After Prana (PRAN)

April 19, 2010 · Filed Under alzheimer's, Financial · Comment 

Prana Biotechnology Ltd. (NASDAQ: PRAN) is up over 100% today on some published data.  The share trading activity is indicative of traders and investors looking for the next biotech ten-bagger, or that search for a 1,000% Gainer.

The report causing the run-up is new published analysis of its clinical trial excerpt taken from the Journal of Alzheimer’s Disease.

The publication published an article about Prana’s lead drug candidate dubbed PBT2 for Alzheimer’s Disease.  New analysis shows that PBT2 is effective in reversing dementia symptoms.  To date, all market-approved Alzheimer’s and dementia drugs are aimed to slow the progression of the disease.

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Talking Biotech ETFs: iShares Nasdaq Biochnology to $100 (IBB, OSIP, MDVN)

March 3, 2010 · Filed Under alzheimer's, daily, Financial · Comment 

Today’s price moves in the biotech sector are quite different from what we saw earlier this week.  A hostile merger via tender from Astellas for OSI Pharmaceuticals Inc. (NASDAQ: OSIP) got everyone up in arms this week.  So much that other investors were going back over buyout candidate notes.  We also gave a list of those recently noted biotech buyout candidates this week.

But today’s news out of Medivation, Inc. (NASDAQ: MDVN) severely missing its endpoints in the Phase III targets for Dimebon as a new potential blockbuster to treat Alzheimer’s Disease has everyone reminded of the risks in betting on speculative biotech stocks with no products on the market.  That has a sentiment reversal taking place, and unfortunately Dimebon has become Dime-Bag.

But before this morning’s blow-up there was an interesting call that may have more merit than just the bet against the sector.  A chart analysis from OptionsZone.com on the iShares Nasdaq Biotechnology (NASDAQ: IBB) showing a potential break-out pattern on its chart.  If these levels hold, the call is for the “IBB” to head to $95 to $100….

JON C. OGG

Biotech Implosion: Medivation, Alzheimer’s Beats Drug (MDVN, PFE)

March 3, 2010 · Filed Under alzheimer's, Financial · Comment 

Medivation, Inc. (NASDAQ: MDVN) is the next biotech implosion.  The company’s highly awaited Phase III study on its Alzheimer drug called Dimebon did not meet expectations. It failed to meet primary and secondary endpoints. The problem is that this was hitting 52-week highs yesterday.

The company did note that a separate Phase 3 safety study demonstrated Dimebon’s tolerability when used alone or in combination with approved Alzheimer’s Disease medicines.  Just one more problem… if it doesn’t work it doesn’t matter how tolerable it is.  In some cases the placebo group even did better on the sugar pill, which is perhaps the worst endorsement a company can get.

Pfizer Inc. (NYSE: PFE) is also indicated lower this morning as well as it was Medivation’s partner on Dimebon for the Alzheimer’s treatment.  Shares are indicated down about 1% on the news.  Keep in mind that Pfizer has at least one other study in later stages in the fight against Alzheimer’s.

The real hit is in Medivation.  Share sare down almost 70% at $12.55 on almost 5 million shares as of 8:28 AM EST.  The prior 52-week trading range was $13.36 to $40.49.

Medivation had a market cap of $1.35 billion at yesterday’s closing bell.  Its most recent balance sheet showed north of $200 million in cash and investments.  It is now going to need every last of that cash.

This is one of those instances where everything failed to flag this.  Analysts had been positive, the charts and 52-week trading range were indicating a green light being likely, and there was not a huge imbalance between puts and calls in options trading.

JON C. OGG

Pfizer Outlines New Drug R&D Pipeline (PFE, MRK, NVS, GSK)

January 27, 2010 · Filed Under alzheimer's, Cancer, Depression, Diabetes, fda, M&A, obesity, R&D, rheumatoid arthritis · 1 Comment 

Pfizer Inc. (NYSE: PFE) is making a pipeline presentation today, and it is meant to address a serious and potentially severe issue affecting all Big Pharma companies from Merck & Co. (NYSE: MRK) after its Schering-Plough deal all the way down to where drug companies become biotech companies:  That is the billions and billions of dollars that may disappear from profits as key drug patents expire in the coming years.  This is also affecting Roche and companies like Novartis AG (NYSE: NVS) and GlaxoSmithKline plc (NYSE: GSK) on an international basis, which is why you have seen them make their own partnerships and acquisitions where possible.

Pfizer is giving a pipeline update showing its own efforts to address a whole new class of potential blockbuster drugs in the years ahead.  Today’s pipeline update from Pfizer is the first real update since the company close the acquisition of Wyeth back in October, 2009.

The new development pipeline has potential drugs from both legacy companies.  Pfizer is noting that this includes 133 programs from phase 1 studies through pipeline candidates in the registration process.

Pfizer is also noting that it has identified its six “Invest to Win” areas of research where there exist significant opportunities for innovation and market leadership.  The new pipeline demonstrates focused investment in these areas of significant unmet medical need as well as growth in the critical technologies of vaccines and biologics.  The six arena are as follows:

  • oncology;
  • pain;
  • inflammation;
  • Alzheimer’s disease;
  • psychoses;
  • and diabetes.

The combined Pfizer-Wyeth pipeline had 600 projects ranging from discovery through registration, and the new portfolio is roughly 500 projects.  Pfizer’s goal is to become a top-tier biotherapeutics company by 2015, meaning effectively that it wants to take over some of the dominance currently held in several areas by pure-play biotech companies.  Its pipeline now includes a total of 6 vaccines and 27 biologics in development.
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Biogen Idec Invests In Alzheimer’s Disease (BIIB)

November 3, 2009 · Filed Under alzheimer's, Financial · Comments Off 

It seems that Biogen Idec Inc. (NASDAQ: BIIB) is investing further into Alzheimer’s Disease.  A company called Probiodrug AG, a biotech with a particular focus on Alzheimer’s disease, announced on Monday that it had successfully closed a Series B financing round. The total round came to above 36 million Euros or more than $52 million today.  This group had previously raised around $52 million before this current round.

Biogen Idec New Ventures unit joined BB Biotech and Edmond de Rothschild Investment Partners, as well as LSP Life Science Partners.  Support also came from all existing institutional shareholders – IBG Fonds, TVM Capital, HBM BioVentures, CFH Group as well as private investors.

Rossella Medori from Biogen Idec New Ventures will join other appointees from the financing round with observer seats.  BB BIOTECH is listed in Switzerland, in Germany and in Italy.

This is not Biogen’s first entry into Alzheimer’s Disease.  In 2007, Biogen Idec announced an alliance with Neurimmune Therapeutics to develop novel, fully human antibodies for the treatment of Alzheimer’s disease.  But the current pipeline listed on the company’s website has nothing solid for Alzheimer’s Disease that is directly owned by the company.

This is a very small deal when you consider Biogen Idec’s $12.5 billion market cap and considering its expected revenues of almost $4.4 billion for its Fiscal-2009.  But this is one step among dozens that biotech companies use for establishing pipeline candidates or partnership opportunities for the future.

JON C. OGG

Prana Scores Alzheimer's Disease US Patent Protection (PRAN)

August 12, 2009 · Filed Under alzheimer's · Comments Off 

Prana Biotechnology (Nasdaq:PRAN) has received a key patent that will allow it to have more protection for its Alzheimer’s candidate.  The company said it received a Notice of Allowance from the United States Patent and Trade Mark Office (USPTO) over its clinical asset, PBT2, in the USA.

The patent  is titled ’8-Hydroxyquinoline derivatives’ and it covers the composition of matter of selected families of 8-Hydroxyquinoline compounds.  Prana noted that this includes  PBT2 and the pharmaceutical compositions containing these compounds.

The company said that the USA patent is expected to formally proceed to Grant by December 2009, after the payment of official fees. Prana noted that it has also secured the Grant of related patents in Russia, Singapore, South Africa, New Zealand and has a Notice of Acceptance in Australia. Previously, Prana has announced receiving a notice of Decision to Grant in Europe.  Each patent has a twenty year term expiring on July 16, 2023.  It noted that extensions of the expiration are possible under the legal provisions of some of these countries, which it noted includes the United States and Europe.

PBT2 is Prana’s lead Alzheimer’s Disease drug, and the company noted that it has the aim for this to become the first disease modifying drug for the treatment of Alzheimer’s Disease.

Prana further noted that its PBT2 has already completed a Phase IIa study in early Alzheimer’s Disease patients, and further noted that it has demonstrated safety and tolerability. On the efficacy, Prana noted that PBT2 showed improvement in executive function as an important aspect of cognitive performance.  It was also said to have reduced the levels of Abeta in the spinal fluid of patients, which has been linked as one of the key proteins associated with Alzheimer’s Disease.  Prana noted that these trial results were published earlier in The Lancet Neurology journal as well as presented at this year’s International Conference on Alzheimer’s Disease.

The hope is to prevent the formation of toxic forms of the Abeta protein and to restore metal homeostasis in the synapses of the aged brain for improved neurotransmission and cognition.

The Australian company was incorporated in 1997.  It first listed on the Australian Stock Exchange in March 2000 and then later listed on NASDAQ in 2002.  We have seen a rise of 10% on the news to $1.85 on the day and the 35,000 shares in an average daily volume has already been reached and then some.

JON C. OGG
AUGUST 12, 2009

Wyeth & Elan: More Questions in Alzheimer's Study Results (WYE, ELN)

July 29, 2008 · Filed Under alzheimer's · Comments Off 

Today was the long awaited Alzheimer’s drug data presented from Elan Corporation, plc (NYSE: ELN) and Wyeth (NYSE: WYE).  The companies presented detailed results from their 18-month Phase II study of bapineuzumab in patients with mild to moderate Alzheimer’s disease.

The study was on 234 randomized with findings reported on 229 patients, and efficacy was measured from a baseline of 78 weeks.  The data looked very positive on the surface with safety and efficacy results supporting the design of an ongoing global Phase III program.

Some data is mixed and shares were hit as a result.  It showed statistically significant and clinically meaningful effects were observed in multiple endpoints in ApoE4 non-carriers.  The company also noted that pre-specified efficacy analysis did not reach significance in the total population.

Favorable directional changes were seen in some endpoints in ApoE4 carriers, warranting further study.  The post-hoc anlysis showed statistically significant and clinically meaningful benefits in important subgroups.

You can read about the full results here.  There were measurements of less or slower brain shrinkage combined with better memory test results observed in the study, and if our data is correct that would be superior to any existing treatments and is probably above other study reports to date.

The problem is the pre-specified efficacy analysis as well as a few deaths in the trial (which were noted as “unbelieved to be from the drug” despite no deaths in teh placebo group.

This data was shown at the Alzheimer’s Association’s International Conference on Alzheimer’s Disease 2008 in Chicago, Illinois.

Shares are getting slapped down in after-hours.  Wyeth stock is down 8.5% at $41.25 and Elan stock is down 15% at $28.49 in after-hours trading.  Both stocks had been higher initially ahead of the data.  This looks more and more like mixed data, and unfortunately it looks like Alzheimer’s patients have a long way to go before even any meaningful help will arrive.

Jon C. Ogg
July 29, 2008 (5:45 PM EST)

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