As you have grown accustomed to, the FDA is hitting a company before its PDUFA date. Orexigen Therapeutics, Inc. (NASDAQ: OREX) is under pressure after FDA briefing documents ahead of next Tuesday’s FDA panel meeting that is meant to recommend whether the FDA should or should not approve Orexigen’s diet drug called Contrave.
Orexigen shares are down as FDA staff comments question whether or not the diet pill is safe and effective. Contrave has reportedly satisfied only one of two efficacy measures in the FDA studies. The safety profile is also under the microscope as Contrave has been linked to higher blood pressure, dizziness, psychiatric events and kidney dysfunction.
The concerns here seem to be more legitimate concerns than others. It also feels like it is just Orexigen’s turn to be inside the barrel as Arena Pharmaceuticals, Inc. (NASDAQ: ARNA) and VIVUS, Inc. (NASDAQ: VVUS) have both faced some of the same FDA hurdles at the panel reviews.
About 5 minutes after the market open, Orexigen is down 9.9% at $4.93 on more than 800,000 shares versus an average volume of 1.467 million shares and versus a 52-week range of $3.81 to $8.88. Arena shares are up less than 0.7% at $1.40 and VIVUS shares are up 3.3% at $6.95.
Abbott Laboratories (NYSE: ABT) recently withdrew its diet pill Meridia in the U.S. and in Canada due to higher risk profiles of heart attack and stroke.
The diet saga continues. Maybe the reality is that the cure relies more on diets and visits to the gym rather than just in a pill.
JON C. OGG
Things have changed in the last week. The mid-term elections took away the majority of the House of Representatives, and the Senate now no longer has the super-majority which could get laws passed no matter what they included. Now it seems that the tax cuts may be extended for another year or maybe two years, which could imply a permanent change ahead if the 2010 election trends remain close to the same in 2012. Quantitative easing from the FOMC is meant to drive investors into riskier assets and create a higher pricing environment to avoid deflationary pressure. Generally speaking, those riskier assets are commodities, and broader stocks tied to industrial, exports, financials, and more. But what about biotech and emerging pharma? So far, QE2, tax extension, and the reversal of ‘the new normal’ has not highlighted biotech in the slightest.
Biotech HOLDRs (NYSE: BBH) and SPDR S&P Biotech (NYSE: XBI) are classic examples of underperforming ETFs in the last week as you can see in the chart below. The Biotech HOLDRs actually fell during the rest of the market gains, while the SPDR S&P Biotech ETF significantly underperformed the PowerShares QQQ (NASDAQ: QQQQ).
A research call this last Thursday came from Goldman Sachs and it was cautious in Celgene Corporation (NASDAQ: CELG) and Gilead Sciences Inc. (NASDAQ: GILD); and the call was very cautious in Amgen Inc. (NASDAQ: AMGN) and Biogen Idec Inc. (NASDAQ: BIIB). Alexion Pharmaceuticals, Inc. (NASDAQ: ALXN) was the one that Goldman Sachs liked, and despite its large gains so far in 2010 the stock performed well after rising from about $68 early Tuesday to close the week out at $72.72.
MannKind Corp. (NASDAQ: MNKD) is one of those companies that will have nearly zero impact from Quantitative Easing nor from who is in control of the House, Senate, or White House. Alfred Mann’s inhalable insulin candidate took a hit because of fraud allegations from a terminated employee who brought up study misconduct concerns. Shares went from $6.20 on Thursday early morning to close the week out at $5.54 for roughly a 10% drop. The 52-week range is $4.76 to $11.12, and the general theme is that AFREZZA is farther and farther away from approval.
Human Genome Sciences Inc. (NASDAQ: HGSI) has lost some of its high-flyer status compared to 2009 and early 2010, and this week brought about a negative cloud on teh company even though the company itself was not at fault. The SEC charged a French research doctor with insider trading that allowed a hedge fund to dump 6 million shares after a tip that the drug Albuferon for Hepatitis C had negative test results. The problem is that the incident goes back to 2007. Human Genome shares were nearly at $27.00 at the start of the week and they closed at $25.31 versus a 52-week range of $20.56 to $34.49.
VIVUS Inc. (NASDAQ: VVUS) was started as Buy at Roth Capital this last week with a $12 price target, yet it did not hold much of the large gains from the week before. VIVUS shares rose a week earlier from $6.13 ti $7.75 after the FDA denied its Qnexa weight loss drug but after most issues seemed to be within working conditions without the need for a new round of drug trials. Shares did not close on the lows Friday, but the loss was close to 10% at $7.12 on the week. If this is approved, we have seen some research that indicates many patients will probably pay out of pocket on their own for this if insurance reimbursement rates do not cover it.
Dendreon Corporation (NASDAQ: DNDN) was another dud this week. The company’s loss was more than $79 million due to ongoing product expansion and promotion costs for PROVENGE. The drug is selling less than expected so far. The company sold $20.2 million and sales grew each month, but analysts were looking for nearly $24 million in sales. Dendreon gave sales projections of $46 to $47 million in 2010 revenue. It said it expects $350 to $400 million in revenue in 2011, but 2011 is expected to be very back-end loaded as capacity comes on line. That implies that any delay will push revenues further and further out, perhaps as more prostate cancer competition can come on the market. Analyst expectations were more like $62.6 million in 2010 and over $400 million in 2011. Shares peaked at $39.00 during the week but closed down at $35.07; its 52-week range is $25.05 to $57.67.
Most investors consider biotech and emerging pharma to be risk-based assets. These are a different sort of risk. Some of the pressure from Washington D.C. may abate, but Republicans have vowed to address some of the cost side of the equation when it comes to healthcare. If Washington can figure a way for hospitals to not charge $25 for administering an aspirin tablet or an ibuprofen pill, it seems logical that $20,000 to $90,000 treatment regimens could remain under scrutiny.
So far, biotech and emerging pharma is being discounted entirely despite the winds of change feeling a tad less abrasive.
JON C. OGG
VIVUS, Inc. (NASDAQ: VVUS) is doomed. That is what you would think if you just saw the FDA denial to approve Qnexa for weight loss. Most of the headlines on financial aggregation sites are full of negative headlines…. FDA Nixes VIVUS’ Qnexa, FDA Rejects VIVIS ObesityDrug, VIVUS Fails to Win U.S. Approval; US rejects Highly-Anticipated Diet Drug… and on and on. While the FDA did not approve Qnexa and has asked for more data, the underlying belief now appears to be that despite the headlines Qnexa WILL ultimately be able able to secure FDA approval.
VIVIS received a Complete Response Letter from the FDA on its New Drug Application for the investigational new drug QNEXA Controlled-Release Capsules, with the communication that the NDA cannot be approved in its present form. QNEXA is VIVUS’ big hope and is a once-a-day formulation for the treatment of obesity.
The indication includes weight loss and maintenance of weight loss, in patients who are obese or overweight with co-morbidities such as hypertension, type 2 diabetes, dyslipidemia or central adiposity.
In the clinical section of the CRL, the FDA requested a comprehensive assessment of topiramate’s and phentermine/topiramate’s teratogenic potential, including a detailed plan and strategy to evaluate and mitigate the potential teratogenic risks in women of childbearing potential taking the drug for the treatment of obesity. The FDA also asked VIVUS to provide evidence that the elevation in heart rate associated with phentermine/topiramate does not increase the risk for major adverse cardiovascular events. Apparently, the investment community and VIVUS believe this can be overcome.
The FDA requested that VIVUS formally submit the results from the already completed SEQUEL study (OB-305), a 52-week extension study for a subset of 675 patients who completed the previously reported 56-week CONQUER study. Top-line results from the two-year SEQUEL study were announced by VIVUS on September 21, 2010 and a final study report is being prepared for submission to the NDA.
The FDA reserved the right to comment further on proposed labeling. On REMS, the FDA requested that a discussion of an already submitted REMS plan be continued after the written response from VIVUS has been submitted. The agency also requested a safety update of any new adverse events be submitted to the NDA. Finally, the FDA stated that if approved, phentermine/topiramate would be a Schedule IV drug due to the phentermine component. Again, the belief here appears to be that this can be overcome.
VIVUS said that it plans to compile analyses integrating existing nonclinical and clinical data to provide a comprehensive assessment of the teratogenic potential of topiramate. The company also plans to provide several new analyses to demonstrate QNEXA does not increase the risk for major cardiovascular events, which would include data from our OB-305 and OB-204 studies.
More importantly, VIVUS noted that the CRL does not indicate that new clinical studies were requested. The company did still hedge a bit by noting that if any of the FDA concerns are not alleviated, additional clinical studies may be required.
Investors are hanging on the company’s comments as well. The response release noted, “We remain confident in the efficacy and safety profile of QNEXA demonstrated in the clinical development program and look forward to continue working with the FDA towards the approval for the treatment of obesity,” said Leland Wilson, chief executive officer of VIVUS. “We are preparing a comprehensive response to the CRL for submission to the FDA in approximately six weeks.”
If this is only six weeks, then there is hope. If there are no additional trials that need to be conducted, then there is hope. VIVUS shares are up 32% at $8.11 this morning right before the open and the average volume has been hit even without the market yet open. There have been 3.6 million shares traded and the average volume is only about 3.1 million shares. VIVUS has a 52-week range of $4.69 to $13.68.
The FDA has not exactly been receptive to weight loss drugs from many companies. So far hope is prevailing over caution. Stay tuned!
JON C. OGG
Abbott Laboratories (NYSE: ABT) is the latest casualty in the war on obesity. The company agreed this afternoon to voluntarily withdraw its obesity drug Meridia from the U.S. market. Obesity drugs are just scorned by the FDA as side effects are being put ahead of the key benefits. We are watching shares of VIVUS, Inc. (NASDAQ: VVUS), Arena Pharmaceuticals, Inc. (NASDAQ: ARNA), and Orexigen Therapeutics, Inc. (NASDAQ: OREX) as obesity-related secondary names.
The reason: clinical trial data indicated an increased risk of heart attack and stroke, according to the FDA. Here is the problem though. The FDA approved Meridia all the way back in November 1997. The approval was given for weight loss and maintenance of weight loss in obese people. The problem is that the FDA also approved this for use in certain overweight people with other risks for heart disease.
The FDA was quoted as saying, “Meridia’s continued availability is not justified when you compare the very modest weight loss that people achieve on this drug to their risk of heart attack or stroke. Physicians are advised to stop prescribing Meridia to their patients and patients should stop taking this medication. Patients should talk to their health care provider about alternative weight loss and weight loss maintenance programs.”
Obesity drugs are a huge unmet and under-served sector of biohealth by pharmaceutical companies and biotech companies alike. The FDA is VERY hard on these drug candidates, and sometimes the side effects are about all that is ever discussed despite how well some tests have been. Despite the issues and a lack of interest for the drug, Meridia sales hit $340 million globally in 2008 but fell to $311 million in 2009.
VIVUS, Inc. (NASDAQ: VVUS) has Qnexa, which the FDA has been hard on, under development and more data is expected on the results of its ongoing studies. VIVIS shares are up 1.9% at $6.99 and the 52-week range is $4.69 to $13.68. When the company just this week sold off its MUSE for erectile dysfunction the company said that Qnexa’s commercialization was one of its two top priorities going forward.
Arena Pharmaceuticals, Inc. (NASDAQ: ARNA) and Eisai Inc. have upcoming lorcaserin presentations at Obesity 2010, the 28th Annual Scientific Meeting of The Obesity Society, in San Diego, California. Lorcaserin is intended for weight management, including weight loss and maintenance of weight loss, in patients who are obese with a Body Mass Index of 30 or greater AND in patients who are overweight with a Body Mass Index of 27 or higher and which have at least one weight-related co-morbid condition. Lorcaserin’s has an October 22 PDUFA date at the FDA. Its shares are up 3% at $1.69 and the 52-week trading range is $1.51 to $8.00.
Orexigen Therapeutics, Inc. (NASDAQ: OREX) has Contrave in development and has presentations taking place at the 28th Annual Scientific Meeting of The Obesity Society at the San Diego Convention Center from October 8 to October 12. Its shares are up 15 at $6.32 and the 52-week range is $3.81 to $9.50.
Abbott shares are still up 0.35% at $52.77 versus a 52-week range of $44.59 to $56.79. With an $81+ billion market cap, Abbott does not have any related drug woes where one product wrecks the company.
The big question is whether a pill is the answer. Sustained weight loss will probably never come from a pill or an injection alone. Chances are, even in a hundred years that the answer is going to come down to low fats and low sugars, lots of fiber and vegetables, portion control, less processed foods, and a strict exercise regimen.
JON C. OGG
MannKind Corporation (NASDAQ: MNKD) is not without controversy. So what happens when you hear ‘buyout rumors’ driving the stock higher?
Barron’s reported a rumor first being published by TheFlyOnTheWall that MannKind could be a takeout buyout candidate. Eli Lilly & Co. (NYSE: LLY) was noted as the buyer, and $12.50 was the price hinted at.
The problem is that it is still an outstanding issue over whether or not MannKind will get its inhaled insulin approved by the FDA. The company has raised money and it has even gone as far as changing the name for AFREZZA.
To make matters even more complicated, MannKind is a highly-shorted stock. The most recent settlement date of September 15, 2010 showed that the short interest was down to 14.215 million shares. That was actually the lowest short interest since mid-April, but that represented 13 days to cover at the most recent time.
Recent financing has not been without criticism, and share lending arrangements are often hated by shareholders. The big catch here is that the inhalable insulin market will be huge if the safety risks can ever be overcome. Imagine no more needles for diabetics taking insulin. Pfizer Inc. (NYSE: PFE) has gone down this path before. It failed.
Novo Nordisk A/S (NYSE: NVO) has one monster insulin franchise, and it would likely do anything it could to protect its market share and its market cap is a whopping $57+ billion. Not bad for a Danish company, not bad at all. Its shares hit a new 52-week high of $99.75 today.
Options trading has been elevated today as well in MannKind trading, but the options expirations of JAN-2011 are the first month where the options start to price in any FDA event decisions.
In late-day trading, MannKind shares were up over 8% at $6.59, but the 52-week trading range is $4.76 to $11.12. The bet is an obvious one: inhalable insulin, if ever approved, is an easy blockbuster treatment.
Keep in mind that rumors have been out on MannKind before. Of course, most rumors turn out to be nothing more than unfounded rumors. The risks of acquiring a company without FDA approval are often too large for a large for a Big Pharma player. With a sub-$1 billion market cap, anything is possible.
JON C. OGG
September 29, 2010 (3:30 PM EST)
Is VIVUS Inc. (NASDAQ: VVUS) the next stock that could double in emerging pharma and biotech? It depends upon whom you ask. The stock was started as “Buy” at Wedbush with an price target of $20.00 per share. This follows a long line of positive research initiations from last year and this year, but $20.00 is now the highest target we see from the recognized research outfits in Thomson Reuters. The prior highest target was $18.50, and the average target was roughly $14.00.
Wedbush’s note calls VIVUS as being one of the most attractive in the mid-cap biotech space. The firm noted that the $775 million market cap is well below what it should be and could be for a drug that addresses such a large and virtually unmet need of treatment. The company also still holds all of its own rights, and we’d throw in the note that this puts it among the potential pool of biotech acquisition candidates out there.
After Amgen Inc. (NASDAQ: AMGN) and Sonofi-Aventis (NYSE: SNY) are both reportedly out looking for target acquisitions, it is hard to leave VIVUS entirely off the list of potential buys. The issue is that the FDA decision is still pending.
Arena Pharmaceuticals, Inc. (NASDAQ: ARNA) was up $0.29 (9.45%) this morning to $3.36 on news that the company has obtained a US licensing deal for its obesity treatment Iorcaserin.
Arena Pharmacauticals, Inc. is a biopharm company which deals primarily with the creation and commercialization of drugs dealing with cardiovascular, central nervous system, inflammatory, and metabolic diseases.
VIVUS Inc. (NASDAQ: VVUS) is seeing some bullish action in options….
Joe Kunkle of OptionsHawk.com noted: VVUS saw a late day spread as 20,000 September $20 calls are sold at $0.80 and 10,000 December $20 calls are bought at $1.60, a zero cost ratio calendar spread. The trade plays off the 129% vs 115% IV spread and is also playing for a positive reaction to July 4th FDA PDUFA for its obesity drug, although seeing near term upside at $20 come September, but potential for further upside with partnerships, takeover, etc. later this year. Vivus has seen some bullish buying in OTM May calls today and has recently been rumored as a potential partnership coming, shares near recent highs at $12.50, looking to breakout. The trade is profitable in September all the way to $22.50 for shares. Vivus has 4 upcoming presentations at Investment Conferences this month, and it’s Qnexa looks to have the early edge for the most effective and safest obesity drug.
Shares closed up about 5.6% at $12.10 on the trading day on over 8 million shares. That is more than twice-normal trading volume and the 52-week range is $4.18 to $12.88.
JON C. OGG
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:
- Alzheimer’s disease;
- 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.
Top 2010 Established Biotech Stock Picks for Upside (MNKD, THRX, DNDN, INCY, ILMN, ALNY, GILD, SVNT, AMGN, ONXX, PDLI, OSIP, CELG)
BioHealthInvestor.com wanted to put together a list of key biotech and BioHealth-related stocks that had the most upside for 2010 according to consensus analyst price targets. This is of course no exact science for many reasons, but getting a lot of consensus price targets together is often a sign of at least where to start when looking for upward price targets in stocks. And we all know that BioHealth and biotech stocks often offer the upside of the century as these companies all hold a bit of your own personal lottery ticket in all of their share prices.
After taking a look at our normal universe of biotech and biohealth related stocks. it was obvious that MannKind Corp. (NASDAQ: MNKD) still has the most upside from the consensus price targets IF it is hit. Then in order of expected share price appreciation comes Theravance Inc. (NASDAQ: THRX), Dendreon Corp. (NASDAQ: DNDN), Incyte Corporation (NASDAQ: INCY), and then came Illumina Inc. (NASDAQ: ILMN), Alnylam Pharmaceuticals, Inc. (NASDAQ: ALNY), and Gilead Sciences Inc. (NASDAQ: GILD).
The stocks above all had upside of over 25%. The other stocks here are the ‘lower rung’ of upside expectations but are all still offering over 20% upside to the consensus analyst price targets (again IF they are hit). Of the 13 stocks with markets caps of $750 million (or almost $750 million) which we cover, these still had upside of over 20% except a few: Savient Pharmaceuticals, Inc. (NASDAQ: SVNT), Amgen Inc. (NASDAQ: AMGN), Onyx Pharmaceuticals Inc. (NASDAQ: ONXX), PDL BioPharma, Inc. (NASDAQ: PDLI), OSI Pharmaceuticals Inc. (NASDAQ: OSIP), and Celgene Corporation (NASDAQ: CELG).