While we have started mostly using The Wire at 247wallst.com for our biotech and active trader posts (among many other aspects 50 to 100 times per day), we have a question for BioHealthInvestor readers after VIVUS, Inc. (NASDAQ: VVUS) has basically doubled on news of Qnexa getting a recommendation for approval from a FDA panel…
If you were the CEO or CFO of VIVUS, wouldn’t you immediately go out and raise capital now?
Our take is not just “yes” but a resounding yes. With $150 million or so in net tangible assets as of September 30, 2011, with a ten-year history, and for many more reasons, this would seem like a shoe-in for a capital raise.
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Alimera Sciences, Inc. (NASDAQ: ALIM) is the latest of the drug implosions and this one looks even worse than just severely damaging. The FDA’s complete response letter is really a request for additional data. This is almost as bad as it could be, short of an outright rejection with an order of termination, for its diabetic macular edema (vision-loss for diabetics) drug candidate called ILUVIEN.
The reason the stock was down so much (almost 75%) is because we can’t see how the company can adequately fund the next trial and the next trial after that. One trial, maybe. Two, no way. The company had less than $39 million in cash on hand as of the end of September and its quarterly loss was $6.5 million in the last quarter even though its R&D expenses were lower.
This killed co-development partner pSivida Corporation (NASDAQ: PSDV) as well as the intravitreal insert was aimed at providing a therapeutic effect delivering a sustained release of the drug. pSivida was down 48% at $2.02 on the news as is supposed to get 20% of the profits. Alimera would have owed an additional milestone payment of $25 million to pSivida had ILUVIEN been approved.
We hate to see companies with drug candidates that are so needed fail. This is one of those cases where a new treatment could really come in use. Sadly, unless this drug has some very clear cut benefits on other indications, this could be the beginning of the end.
Alimera has only been public for a year and a half. Welcome to the biotech stock market. This stock fell 73% to $1.96 on Friday and it still has a $61 million market cap. A 73% drop is never a good thing unless you are a short seller. Alimera has a very tough road ahead.
JON C. OGG
Cell Therapeutics, Inc. (NASDAQ: CTIC) is a controversial stock in the field of cancer and the company is still aiming for a 2012 debut market launch for its pixantrone drug candidate. In the last couple of weeks it had reported more positive data and the FDA had earlier this year noted that pixantrone would need a review using a new panel of independent radiologists. Pixantrone is to be a new treatment for non-Hodgkin Lymphoma.
This morning we saw a very unlikely and very unusual support or endorsement of Cell Therapeutics. This came from Zacks Investment Research where the outfit was called The Bull of The Day. That is generally considered a stock that has strong winds behind it and Zacks raised the rating to Outperform.
Zacks noted, “we believe pixantrone is getting closer to approval… We are encouraged by the FDA’s decision to allow Cell Therapeutics to re-submit the NDA for pixantrone for review without the need for an additional trial.” The report also noted that Opaxio is its second most advanced pipeline candidate as a potential maintenance therapy for women with advanced ovarian cancer who achieve complete remission following first-line therapy with paclitaxel and carboplatin.
The full Zacks report is available here. Shares are at $1.19 and the adjusted 52-week trading range is $0.95 to $3.30.
JON C. OGG
VIVUS Inc. (NASDAQ: VVUS) is getting yet one more sign of life for its Qnexa drug aimed at treating obesity. The emerging drug outfit has reached an agreement with the FDA on resubmitting its new drug application as an obesity treatment.
Here is the plan: “VIVUS intends to resubmit the QNEXA NDA by the end of October 2011, prior to completion of the FORTRESS study. Top-line results from FORTRESS are expected in December 2011, with validation of FORTRESS expected in the third quarter of 2012. The FDA also stated that an Advisory Committee meeting for QNEXA will be held in the first quarter of 2012.”
It was also just earlier this week that its Avanafil phase III study results were shown again to be positive in its REVIVE study in diabetes.
What helps VIVUS here is that treating obesity also in effect treats diabetes, heart and respiratory conditions, hypertension, dyslipidemia, allows for more active lifestyles, and more. It also needs to be noted that the FDA has treated most obesity treatments as taboo due to side-effects and and due to a lack of results in many instances. The history of obesity drugs is a marred one.
Orexigen Therapeutics, Inc. (NASDAQ: OREX) and Arena Pharmaceuticals, Inc. (NASDAQ: ARNA) are also both up a limited amount as they are “the other obesity drug contenders” by Wall Street’s eyes. Those are not as close, not by a mile, if you note the share prices. Orexigen is up 2.5% at $1.41 and Arena is up 3% at $1.43.
VIVUS stock is up almost 8% at $9.14 but the stock was up in the double-digits at $9.62 earlier. As of 11:15 AM EST there have also been more than 2.7 million shares traded when the average volume is only 1.5 million shares.
Before the effects of this news pop, Thomson Reuters had a consensus price target objective of $11.69 on VIVUS and the 52-week trading range has been $5.28 to $11.48.
JON C. OGG
This morning we gave a full preliminary analysis of the implosion happening at Dendreon Corporation (NASDAQ: DNDN) at 24/7 Wall St. What is obvious as a heart attack, or as obvious as metastatic prostate cancer, is that the market is bracing for far worse news than what has been seen so far. The price drop after withdrawal of guidance and the cost cutting only happens this far when another shoe is expected to fall.
We have seen many analysts come in on this today, mostly calls which are blow-ups. To say that Dendreon caught most of the market off balance would be a severe understatement. We also believed that this was going to become the standard for final-stage prostate cancer care.
Here is what Wall Street analysts are making calls on today:
- Raised to Neutral at Credit Suisse, but the target was cut to $22.00 from $29.00 as they were actually very negative ahead of the blow-up here.
- Robert W. Baird downgraded Cut to Neutral from Buy and the new target is $20.00.
- Collins Stewart cut the rating to Neutral from Buy and the new target is $19.00.
- RBC Capital Markets cut the rating to Sector Perform from Outperform and took the target down to $15.00 from $50.00.
- Needham cut the rating to Hold from Buy.
- Cowen & Co. cut its rating to Neutral from Outperform.
- Gleacher & Co. cut the rating to Neutral from Buy.
- Canaccord Genuity lowered the price target 70% to $19.00 from $65.00 on “significantly diminished expectations for Provenge commercial penetration” but the company maintained a ‘Buy’ rating.
- Bank of America Merrill Lynch cut the rating to Underperform from Buy and cut the target to $16.00 from $50.00 previously.
- Brean Murray lowered the rating to Sell from Buy and issued a dismal $6.00 target. Ouch!
After only 40 minutes of trading (plus pre-market trading), Dendreon shares are down a whopping 64% at $12.92 and shares hit a new low of $12.48 this morning. We are now at ten-times volume on Dendreon as more than 24 million shares have already traded hands.
Again, withdrawing guidance and cutting the costs with employees and more is one thing, even if it is a really bad thing. What the market is telling you is that more negative news is going to put a lid on this one in the near future. Otherwise, Dendreon would be down ‘only’ 25% or so.
Many considered this to be a buyout candidate. That will not be met by much enthusiasm today as investors worry about worse news yet to come.
As far as what to expect next, lawsuits are the first thing to expect. Shareholders can accuse the company of over-inflating expectations. Medicare and Medicaid pricing might be an issue, or maybe more doctor reports of considering alternative treatments will come. Picking the next shoe to drop is difficult, but a drop of this magnitude is rarely a one-time event. Most people got this one very wrong.
JON C. OGG
Dendreon Corporation (NASDAQ: DNDN) is indicated higher this morning on news that came out last night. The company announced support for broad availability for on-label use of Provenge for asymptomatic or minimally symptomatic metastatic castrate resistant prostate cancer. The FDA also this week approved Dendreon’s Los Angeles immunotherapy manufacturing facility with 36 workstations. The big win is Medicare coverage.
Dendreon reported that the Centers for Medicare and Medicaid Services issued a final coverage decision for PROVENGE that will require Medicare contractors to cover the use of PROVENGE for treatment of asymptomatic or minimally symptomatic metastatic castrate resistant prostate cancer. The coverage decision will standardize coverage processes across the country for all Medicare patients in need of the drug.
The move provides local Medicare Administrative Contractors the specific criteria, which is said to be “consistent with the label,” on how PROVENGE should be covered. PROVENGE was also issued a product specific Q-code effective July 1, 2011.
Dendreon will also support programs to provide comprehensive assistance for eligible patients seeking access to treatment with PROVENGE. This will include grants to independent foundations and establishment of a patient assistance program for uninsured patients.
PROVENGE was approved by the FDA in April 2010, but what had been under attack was the $93.000 price tag for the treatment. Many felt that was too high. We do not have a formal “sale price” per treatment yet under Medicare coverage that will be paid to Dendreon but this is being treated as a win for PROVENGE and a win for Dendreon.
Dendreon shares closed at $39.44 on Thursday and the 52-week trading range is $25.78 to $43.96. Volume is thin so far with more than two hours until the market opens but shares are indicated up around $41.00 in pre-market trading.
In early May came a report that Dendreon was given an “Underperform” rating by Credit Suisse; late in May came a “Buy” rating from ISI Group. Goldman Sachs also initiated coverage with a “Buy” rating in early June.
JON C. OGG
Against a backdrop of falling stock prices, Pfizer Inc. (NYSE: PFE) and Bristol-Myers Squidd company (NYSE: BMY) have bucked the trend of the day and both are seeing a rise in their share prices after reporting that “apixiban” has tested as being superior to and safer than the generic drug “warfarin.” Both drugs are intended to aid in preventing strokes in patients with dangerously irregular heart rhythms. “Apixiban” is the experimental blood thinner being developed by both Pfizer and Bristol Myers. “Warfarin” is the generic version of Coumadin, whose patent expired more than 10 years ago.
The hope is that this will lead to another blockbuster drug with more than $1 billion in sales. The timing couldn’t be better for the two companies as Big Pharma companies are generally facing an industry-wide patten cliff, where a number of significant pattens will soon expire. As a result, less expensive and far-less-profitable generics will soon displace proprietary pharmaceuticals along with much off the revenues these products generate. This has so far not managed to keep these companies from being able to offer extremely high dividends.
The news of apixiban’s successful tests negatively impacted the prices of companies manufacturing competing blood thinners. Bayer AG (BAYRY.PK) and Johnson & Johnson (NYSE: JNJ ) are seeking FDA approval for “xarelto,” their own blood thinner, traded lower. In mid-day activity, Bayer traded at $77.15, down 7.26%, while Johnson and Johnson traded at $64.85, down 1.85%. Sanofi-Aventis (NYSE: SNY) who partners with Bristol-Myers in co-marketing, the hugely successful blood thinner, “Plavix” traded down over 2% at $37.08. “Plavix” will lose its patent protection in the near future.
The successful tests of “apixiban” effectively make Bristol-Myers a double winner by compensating for the impending expiration of its proprietary position with a promising new blood thinner. In mid-day activity, shares of Bristol-Myers traded up 5.4% at $29.25, while Pfizer traded up 2.1% at 20.72. Shares of both companies are near their highs for the day.
Before today’s announcement, the consensus price target for Pfizer was $23.37 per share, giving the shares an implied upside a tad less than 13%. With today’s gains, Bristol-Myers Squibb has essentially surpassed its posted consensus target price. Keep in mind that unforeseen and significant new product introductions like “apixiban” have the potential of powering upside adjustments in consensus price targets, earnings and revenue estimates, and even in the overall bias. The question is, how much of a game changer will “apixiban,” prove to be . . . not merely in “targets” but in realized revenues and profits.
Morgan Stanley has now boosted its rating on Bristol-Myers Squibb to Overweight and said they win from this much more than Pfizer due to relative size.
JON C. OGG
Gilead Sciences, Inc. (NASDAQ: GILD) has been fighting an image of being “dead money” for biotech investors for a year. Now the company has disclosed after the close on Friday that it has received a subpoena from the Department of Justice.
The exact office is the United States Attorney’s Office for the Northern District of California.
We actually have very little as to what the details are but the company said that the DOJ has requested documents related to the manufacture, and related quality and distribution practices of the company. Specifically noted were Atripla®, Emtriva®, Hepsera®, Letairis®, Truvada®, Viread® and its investigational fixed-dose combination of Truvada and EdurantTM.
Here is where the issues is going to arise… Gilead said that it “is cooperating in this civil and criminal investigation.”
CRIMINAL?????? When investors see a civil charge that is one thing. Including “criminal” in the wording with the documents pertaining to just about all of its major products and some of its research candidates is not going to fly well.
That is not exactly what shareholders want to hear about. Shares closed down 2.26% at $40.23 and its 52-week trading range is $31.73 to $42.93. The after-hours has shares trading down some 2.25% more around $39.25.
It appears that someone was concerned, or worse, today in the options trading. There was not a highly unusual share trading volume in stock during the trading day but there is elevated trading in the following PUT options:
- JUNE $40 PUTS 2,264 contracts versus a prior open interest of 2,552 contracts;
- JULY $38 PUTS 2,295 contracts versus a prior open interest of 1,361 contracts;
- JAN12 $37.00 PUTS 500 contracts versus a prior open interest of 500 contracts.
This is not highly unusual options contract trading but it does stand out at least some.
JON C. OGG
When you hear about the oncology conference of the American Society of Clinical Oncology annual meeting in Chicago each year, you are probably drawn to what may be the next Genentech. This is the conference that if good cancer and oncology study data can come out then it is likely to be presented here.
We have broken down some of the key ASCO news bits, but these are in very abbreviated summaries in order to keep it from going on and on. Antigenics Inc. (NASDAQ: AGEN), ARIAD Pharmaceuticals Inc. (NASDAQ: ARIA), BioSante Pharmaceuticals, Inc. (NASDAQ: BPAX), Celgene Corporation (NASDAQ: CELG), Genomic Health Inc. (NASDAQ: GHDX), Geron Corporation (NASDAQ: GERN), Incyte Corporation (NASDAQ: INCY), Oxigene Inc. (NASDAQ: OXGN), RXi Pharmaceuticals Corporation (NASDAQ: RXII), Seattle Genetics Inc. (NASDAQ: SGEN), Sunesis Pharmaceuticals Inc. (NASDAQ: SNSS), and Vical Incorporated (NASDAQ: VICL) are just some of the companies reacting to ASCO and oncology news this morning.
Antigenics Inc. (NASDAQ: AGEN) has disclosed data on from Phase 2 Brain Cancer Study with Prophage Series G-200 (HSPPC-96) showing improved overall survival as a vaccine in glioblastoma multiforme at ASCO. Trial results showed that 93% of the patients were alive at greater than or equal to 26 weeks after surgery and a median overall survival of 47.6 weeks. Results from pre-defined exploratory analyses showed a median progression free survival of 20 weeks. Measures of immune response post vaccination demonstrated a significant tumor-specific CD8+ T-cell response and also showed an innate immune responses as marked by a significant increase in levels of circulating NK cells. Unfortunately, shares are now in the red and down almost 5% at $0.964. Update after 4 PM EST: shares closed down 11.4% at $0.895.
ARIAD Pharmaceuticals Inc. (NASDAQ: ARIA) is higher after coming on CNBC saying it is not for sale after presenting data that its sarcoma drug with Merck reduced the risk of the disease progressing. Merck & Co. (NYSE: MRK) is its marketing partner and it plans to apply for FDA and E.U. approval this year. ARIAD shares are up 1.9% at $8.04 after the open. Update after 4 PM EST: shares closed up only 0.25% at $7.91.
BioSante Pharmaceuticals, Inc. (NASDAQ: BPAX) is more general cancer news than ASCO but important nonetheless…. The company announced the lifting of clinical hold on its GVAX prostate cancer vaccine by the FDA. Manufacturing is complete and planning for a Phase II clinical trial at the Johns Hopkins Kimmel Cancer Center is underway. Shares are up 2.6% at $3.09 after the open. Update after 4 PM EST: shares closed down 0.3% at $3.00.
Celgene Corporation (NASDAQ: CELG) is not reacting to news that Abraxane has improved the response rate in non-small cell lung cancer patients compared to the generic chemotherapy drug paclitaxel. It appears that Abraxane did not delay tumor growth or help lung cancer patients live longer in phase III study data. The company believes that increasing the rate of tumor shrinkage will be enough to get FDA approval in 2012. Shares are down $0.09 at $58.77 right after the open. Update after 4 PM EST: shares closed down 0.7% at $58.46.
Genomic Health Inc. (NASDAQ: GHDX) is supposed to be a winner on the front of personalized cancer care but we are not seeing that today. It presented 10 New studies in breast, colon and prostate cancers. The results included a second large validation study confirming the performance of the Oncotype DX colon cancer recurrence score. The goal is to make a test for biopsy specimens available in 2013. Shares are actually down 1% at $26.23 right after the open. Update after 4 PM EST: shares closed down 1.6% at $26.07.
Geron Corporation (NASDAQ: GERN) is the stem cell leader and it reported presentations at the ASCO/AACR joint session regarding Telomeres and Telomerase in Cancer are taking place today at the 2011 ASCO Annual Meeting. Shares are only up $0.01 at $4.28 right after the open. Update after 4 PM EST: shares closed down 0.9% at $4.23.
Incyte Corporation (NASDAQ: INCY) has two bits of news. It announces Ruxolitinib (INC424) showed a significant clinical benefit for Myelofibrosis patients in two Phase III studies at ASCO. The company also announced this morning that it did submit a new drug application for Ruxolitinib in Myelofibrosis to the FDA. Shares are up 4% at $17.17 right after the open. Update after 4 PM EST: shares closed up 2.3% at $16.90.
Oxigene Inc. (NASDAQ: OXGN) presented updated safety and clinical activity data from the FALCON trial, a stratified randomized, controlled Phase 2 study of ZYBRESTAT in patients with non-small cell lung cancer at ASCO. An updated analysis conducted approximately 11 months after the enrollment of the last patient in June 2010 showed that the combination regimen of ZYBRESTAT plus bevacizumab, carboplatin and paclitaxel (ZYBRESTAT Arm) was observed to be well-tolerated with no significant cumulative toxicities when compared with the control arm of the study. Shares are up 16% at $4.96, but it also regained NASDAQ compliance. Update after 4 PM EST: shares closed up 7.5% at $4.59.
RXi Pharmaceuticals Corporation (NASDAQ: RXII) is one of the larger ASCO winners so far. It showed positive NeuVaxTM Phase 2 efficacy results for the adjuvant treatment of low to intermediate HER2 expressing breast cancer. The Phase II trail did show statistically significant increase in disease free survival at 36 months versus the control group for the planned Phase 3 patient population. The new timeline is to initiate the Phase 3 trial in the first half of 2012 to accelerate this treatment for women who are not eligible for other HER2 directed therapies. Shares are up 14% at $1.495 after the open. Update after 4 PM EST: shares closed down 8.5% at $1.17.
Seattle Genetics Inc. (NASDAQ: SGEN) is marginally after presenting SGN-75 clinical data… two patients achieved a partial response, eight patients had stable disease, 11 patients had progressive disease and four patients were not evaluable for response in non-Hodgkin lymphoma patients. The every-three-week dosing schedule has been selected for further study. Shares are up 1.5% at $19.23. Update after 4 PM EST: shares closed up 2.2% at $19.37.
Sunesis Pharmaceuticals Inc. (NASDAQ: SNSS) is down after its presentation of its adaptive study design for Vosaroxin Phase 3 VALOR trial in acute myeloid leukemia. VALOR is expected to enroll 450 evaluable patients at leading sites in the U.S., Canada, Europe, Australia and New Zealand. Shares are down 12% at $2.63 after the open. Update after 4 PM EST: shares closed down 17.9% at $2.47.
Vical Incorporated (NASDAQ: VICL) was initially up 3% after the open but is now flat. The company showed reports of a positive correlation between the response and survival for completed Allovectin melanoma trials at ASCO. Update after 4 PM EST: shares closed up 0.25% at $3.87.
Unfortunately, 2011 has so far failed to yield any massive winners. Our view is that the personalized angle will probably continue to draw the most interest. Keep in mind that any large or small company comments throughout the conference can make or break a stock.
JON C. OGG
When we first covered the rebirth of KV Pharmaceutical Co. (KV-A) for its Makena drug aimed to prevent premature birth, we knew this was going to be a home run due to FDA market exclusivity. Premature births result in costs that run into the billions yearly to healthcare providers and insurers. Now it seems very likely that there is going to be a backlash in the form of public outrage that works its way into both the legal system and the political outrage venues against the company. A price hike seemed certain after getting FDA approval for exclusivity, but the degree of the gouging is going to be where the line gets drawn in the sand between high stakes capitalism and grand larceny. Keep in mind that yours truly believes in and supports the belief that capitalism is the incentive behind most creation. In this case, it does not take a rocket scientist to realize that KV is very likely going to have yell a “Do over!” on its pricing.
It seems that KV decided that the price per patient should now be $1,500.00. The price was about $15.00 per patient before KV got this exclusive in an off-label use regime. What do you think is going to happen when politicians arguing against the cost of medicine start bashing a company for literally a one-hundred-fold increase in the price of a drug?
Forbes’ David Whelan wrote in his Health Dollars blog “Is KV Pharmaceutical A Flat-Out Evil Company?” and Derek Lowe outlined a more balanced or methodical approach to this called “KV Pharmaceuticals Gets Away With Pricing on Makena” at Seeking Alpha.
Here is the take from a capitalist-minded centrist who would generally rather have less government involvement in most cases. There is going to be more backlash against KV on this in the weeks ahead. It is one thing when reporters and patients are angered by what they see, but companies generally tend to not do as well when they are the target of politicians and consumer activists. KV will probably take a lot more incoming heat from this move.
KV shares have already risen exponentially from the bottom. This stock was above $20.00 in 2008 before it woes began, yet it literally fell to under $1.00 at the lows in 2010. Shares closed on Friday at $11.99 with a 5.14% drop on that day.
JON C. OGG