Implosion Analysis For Targacept… What Lies Ahead? (TRGT, AZN)

November 8, 2011 · Filed Under Depression, R&D · 12 Comments 

Tuesday has been an awful day for shareholders of Targacept Inc. (NASDAQ: TRGT).  The company shares lost more than half of their value on news that initial test results from the Phase III antidepressant (TC-5214) failed to meet their endpoints in treating major depressive disorder.  Targacept is covered under a co-development pact with AstraZeneca PLC (NYSE: AZN) in the United Kingdom and this is supposed to be an add-on treatment for patients where primary treatment was not adequate.

Effectively, this was the first of four Phase III trials and more data on all of the results should come by the first half of 2012.  What is amazing is that the companies have said that they still hope to file for FDA approval in the United States during the second half of 2012.  Depression treatment is such a toss-up that a company’s primary endpoints might be well above what a minimum threshold is for FDA approval. 

Investors are speculating that Targacept does not die on the vine here.  Targacept is down almost 57% today but the stock is still at $8.25 and the market cap is still $275 million.  Shares hit a new 52-week low today and the new 52-week range is $7.93 to $30.47.  To show just how much optimism has been wiped out, the Thomson Reuters pre-news consensus price target was just above $30.00.  AstraZeneca ADRs are down 2% at $46,34 in New York trading.

The hope is that there could still be approval.  We won’t endorse that, but we did want to see what else Targacept has up its sleeve in the pipeline other than TC-5214:

  • TC-5619 for Residual Symptoms in Schizophrenia, Alzheimer’s Disease and ADHD 
  • AZD3480 – ADHD 
  • AZD1446 – Alzheimer’s Disease

As of June 30, 2011, Targacept had nearly $189 million in net tangible assets. If you just look at cash, cash equivalents, short-term investments and long-term investments, the figure is more than $290 million before backing out liabilities.


After Orexigen’s Implosion, Now What? (OREX, VVUS, ARNA, ABT)

February 1, 2011 · Filed Under Cardiac, Depression, Diabetes, fda, obesity · 1 Comment 

Orexigen Therapeutics, Inc. (NASDAQ: OREX) is beyond ugly after the FDA said that the company must now submit more trial data before its new diet pill Contrave may be cleared for sale.  The vote was 13-against versus 7-for votes and now the FDA is asking for another study on the drug’s cardiovascular risks.

Outside FDA advisers said back in early December that the benefits of the weight loss exceed the dangers of a higher pulse and blood pressure, with the indication that a larger study targeted on risks of the heart might until after the final drug approval.  That wasn’t so.

Both VIVUS Inc. (NASDAQ: VVUS) and Arena Pharmaceuticals Inc. (NASDAQ: ARNA) have been in a race with Orexigen to introduce the first approved diet pill for weight loss in a about a decade.  Now all of these products are on the back-burner and approval will not likely be seen in the near-term on any of these drugs.

Orexigen is down 71% at $2.63 and shares hit a new year low and the new 52-week range is $2.50 to $11.15.  VIVUS is down 15% at $7.57 and its 52-week range is $4.69 to $13.68.  Arena shares are flat at $1.58 as its hope was already diminished.

Abbott Laboratories (NYSE: ABT) recently pulled its Meridia weight loss pill off of the market due to heart risks.  Orexigen was expected to receive royalties from partner Takeda if it was approved.  At issue with all these drugs is that they all have the possibility of becoming blockbuster drugs with more than $1 billion in annual sales from America alone. The competing drugs Qnexa from VIVUS have concerns about birth defects tied to one of the ingredients, while lorcaserin from Arena has tumor risks associated with it.

Contrave uses two approved drugs as a cocktail and the target areas are different parts of the brain which influence appetite and influence cravings.  One is an antidepressant and one is a treatment for alcohol and opioid addictions.  While patients lost generally 5% of their weight after a year, the weight loss group had a higher pulse and higher blood pressure than the placebo.

What just happened is that Orexigen was put in a situation where it has to evaluate what to do with its lead candidate.  A new trial will easily run into the millions and millions of dollars and the time frame could easily run well over a year.  Just how big the costs and how long the time would be, well that is still up for debate.  Orexigen had just over $100 million in cash and short-term investments at the end of September-2010.  Chances are that this is not enough cash.

Things went from maybe to awful here.  Now it is dire.


Implosion Visits In Alexza (ALXA)

October 11, 2010 · Filed Under Depression, fda · Comment 

Alexza Pharmaceuticals Inc. (NASDAQ: ALXA) is witnessing a share implosion today with the loss of more than half its value.  The company was awaiting key data from the FDA and it turned out to be very unfavorable.  The FDA declined approving its AZ-004 drug candidate that was targeted to treat agitation in patients with schizophrenia and/or bipolar disorder.

The FDA cited safety concerns as study data showed adverse respiratory reactions to the drug in some cases.  Alexza said in response that the company plans to meet with the FDA to address the agency’s safety concerns and it took the stance that it continues to believe in the safety and efficacy of the drug where there exists a large often-unmet need of treatment options.

A complete response letter is issued by the FDA indicating that the new drug application review cycle is complete and the application is not ready for approval in its present form.  AZ-004 is being developed for the rapid treatment of agitation in schizophrenia or bipolar disorder patients.

The FDA’s primary clinical safety concern was related to data from the three Phase 1 pulmonary safety studies and was primarily based on “observed, dose-related post-dose decreases in forced expiratory volume in one second, or FEV1, a standard measure of lung function, in healthy subjects and in subjects with COPD and asthma.”  The agency also noted that decreases in FEV1 were recorded in subjects who were administered device-only, placebo versions of AZ-004.

Alexza had already signed a deal with Valeant earlier in the year that would have been to commercialize the drug in the U.S. and Canada. The company’s June 30 balance sheet listed more than $41.6 million in combined cash and short-term investments, although adding up the total assets and total liabilities showed a net tangible asset value in the red of -$28.65 million.

Shares had traded above $3.60 as recently as late-September, but the stock had slid to $3.03 on Friday’s close.  Shares hit a new 52-week low and the stock is down by more than 53% at $1.40 on nearly 10 million shares right at NOON EST.  Average volume is only about 820,000 shares.


Neurocrine, Depressed Over Major Depressive Disorder (NBIX, GSK)

September 15, 2010 · Filed Under Depression, R&D · 2 Comments 

Neurocrine Biosciences, Inc. (NASDAQ: NBIX) just got a black eye.  The company announced on Tuesday evening that its potential treatment for major depressive disorder was ineffective in a mid-stage study. The study on GSK561679, conducted with GlaxoSmithKline (NYSE: GSK), involved 150 patients and was lined up against and compared with a placebo.

This won’t make much difference now, but Neurocrine plans to hold a meeting with GlaxoSmithkline in the coming months after the full clinical data is avaialble and is reviewed.  Then it will discuss the next steps for the program.  Unfortunately, when drug trials are ineffective the next steps usually involve a handshake and a walking away.

The company further noted that CRF1 remains a difficult drug target for depression.

Shares closed at $6.25 on Tuesday and the after-hours session had shares down some 9.6% at $5.65 on more than 300,000 shares.


Cyberonics Beats Wall Street Sales Forecasts, Up 12%

June 3, 2010 · Filed Under Depression, Devices, Epilepsy · Comment 

Cyberonics Inc. (NASDAQ: CBYX) a neuromodulation company specializing in surgically implanted devices used to treat neurological disorders  is up nearly 12% to $20.89 after exceeding analyst estimates on fourth quarter earnings. Their primary product, a device which is uses vague nerve stimulation to treat epilepsy and depression, sold far better than expected.

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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Quest For 10-Baggers in BioHealth in 2010 (JAZZ, TRGT, VNDA, DNDN, HGSI, CGEN, BNVI, QCOR, ACHN, PSDV, ATHX, SNSS, AVNR, BIOD, ALXA, CTIC)

If one thing was noticed in biotech stocks, or BioHealth stocks as we often say, it was that investors, traders, and speculators all piled into the chase for the next ten-bagger late in the year.  When you have as many biotech and BioHealth stocks that ran over 1,000% in 2009 that is only to be expected…. hence the 10-bagger comments.  We had many biotech and biohealth shares rally from their lows significantly this year, with companies such as Jazz Pharmaceuticals, Inc. (NASDAQ: JAZZ), Targacept, Inc. (NASDAQ: TRGT), Vanda Pharmaceuticals, Inc. (NASDAQ: VNDA), Dendreon Corp. (NASDAQ: DNDN), and Human Genome Sciences, Inc. (NASDAQ: HGSI) all being in or having been in the 10-bagger club this year.

But late in 2009 we started seeing an onslaught of low-priced stocks with small cap or micro-cap values running rapidly higher on news.  In some cases these faded, and in some not.  We saw the traders run up shares of Compugen Ltd. (NASDAQ: CGEN), Bionovo, Inc. (NASDAQ: BNVI), Questcor Pharmaceuticals, Inc. (NASDAQ: QCOR), Achillion Pharmaceuticals, Inc. (NASDAQ: ACHN), pSivida Corp. (NASDAQ: PSDV), Athersys, Inc. (NASDAQ: ATHX), Sunesis Pharmaceuticals, Inc. (NASDAQ: SNSS), and AVANIR Pharmaceuticals, Inc. (NASDAQ: AVNR) on news late in 2009.  Also covered as potentials for this are Biodel Inc. (NASDAQ: BIOD), Alexza Pharmaceuticals, Inc. (NASDAQ: ALXA), and Cell Therapeutics, Inc. (NASDAQ: CTIC).

We have reviewed each of these and given a synopsis for each to see if these could be the 10-baggers for 2010.
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Cyberonics' VNS Depression Protocol Scores With FDA (CYBX)

July 24, 2009 · Filed Under Depression, fda · Comments Off 

Cyberonics, Inc. (Nasdaq: CYBX) is not a company without controversy.  Its implantable medical devices that provide vagus nerve stimulation therapy to treat refractory epilepsy and treatment-resistant depression have been under fire from multiple directions.  But this morning, the company announced that the FDA has approved the Cyberonics proposal to amend the protocol of its D-21 post-approval dosing study in depression patients treated with VNS Therapy.

The company noted that it submitted a proposal back in November 2008 to reduce the number of study subjects from 460 to 330.  It also noted that it had completed enrollment of 331 study subjects in February 2009.

With this decision from the FDA, the company expects to complete the follow-up on all patients enrolled in the study by March 2010.
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A New Potential Blockbuster in Major Depressive Disorder? (TRGT, AZN)

July 15, 2009 · Filed Under Depression, targacept · Comments Off 

Targacept, Inc. (NASDAQ: TRGT) is not exactly a household name.  But if things continue in the add-on treatment trial news for major depressive disorder then this may be more of a household name.  The company has announced that its TC-5214 has achieved all primary and secondary endpoints in its Phase 2b Trial.  This is an augmentation treatment (add-on treatment) study aimed for major depressive disorder.

The TC-5214 Phase IIb study is a a double blind, placebo controlled, flexible dose trial as an add-on treatment.  This disorder is at least a part of one of the top arenas for drug spending.  It met all endpoints in subjects who did not respond adequately to first-line treatment with citalopram alone.
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