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

November 8, 2011 · Filed Under Depression, R&D · 8 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.

JON C. OGG

Top BioHealth Analyst Upgrades & Downgrades (AMGN, AZN, BAY, BIIB, CELG, EXAM, GILD, GSK, HGSI, LH, NVS, PFE, UTHR, WCRX)

December 7, 2010 · Filed Under analyst calls, Research · 9 Comments 

We have seen many research calls from Wall Street analysts with upgrades, downgrades, and initiations this Tuesday in the world of biotech, pharmaceuticals, and biohealth.  Some of the key calls we have seen are as follows:

Amgen Inc. (NASDAQ: AMGN) Started as Neutral w/ $58 target at Credit Suisse.
AstraZeneca (NYSE: AZN) Cut to Underperform at Credit Suisse.
Bayer AG (NYSE: BAY) Raised to Outperform at Credit Suisse.
Biogen Idec Inc. (NASDAQ: BIIB) Started as Neutral w/ $68 target at Credit Suisse.
Celgene Corporation (NASDAQ: CELG) Started as Neutral w/ $60 target at Credit Suisse.
Celgene Corporation (NASDAQ: CELG) Maintained Buy with $68 price target at BofA/ML.
Examworks Group Inc. (NASDAQ: EXAM) Started as Outperform w/ $22 target at Credit Suisse.
Gilead Sciences Inc. (NASDAQ: GILD) Started as Outperform w/ $52 target at Credit Suisse.
GlaxoSmithKline plc (NYSE: GSK) Raised to Neutral at Credit Suisse.
Human Genome Sciences Inc. (NASDAQ: HGSI) Started as Outperform w/ $31 target at Credit Suisse.
Lab Corporation of America (NYSE: LH) Started as Neutral w/ $89 target at Credit Suisse.
Novartis (NYSE: NVS) Raised to Outperform at Credit Suisse.
Pfizer Inc. (NYSE: PFE) Maintained Outperform at Credit Suisse.
United Therapeutics Corp. (NASDAQ: UTHR) Started as Neutral w/ $57 target at Credit Suisse.
Warner Chilcott plc (NASDAQ: WCRX) Reiterated Buy at BofA/ML.

You can join our free daily email distribution list from 24/7 Wall St. to hear more about broader analyst upgrades and downgrades, top day trader and active trader alerts, news on Warren Buffett and other investment gurus, IPOs, secondary offerings, private equity, and more.

JON C. OGG

New AstraZeneca Drug Does Well With FDA

July 27, 2010 · Filed Under Uncategorized · Comment 

AstraZeneca PLC (NYSE: AZN), a biopharm company which develops drugs for cancer, cardiovascular, gastrointestinal, infection, neuroscience, and respiratory and inflammation illnesses, has encountered steadily rising shares following positive reviews from the FDA with regards to Brilinta, an experimental blood thinner that will face an FDA advisory committee tomorrow.  Aside from the generally positive reactions, however, were certain concerns within the FDA over the drug’s efficacy within the United States, where test groups responded much more poorly than those tested abroad.

This news comes at a crucial time for investors as Plavix, the current market-leader, will be losing patent protection in 2011.  Depending on how well Brilinta does before the advisory committee tomorrow will determine AstraZeneca’s future movement.

-Michael B. Sauter

Winning from Boosting Good Cholesterol (RVXCF, RVX, PFE, AZN, MRK)

March 5, 2010 · Filed Under Atherosclerosis, Financial, Heart, R&D · 2 Comments 

BioHealthInvestor usually sticks to US companies or at least sticks to ADRs for investors.  But sometimes there is a much larger bit of data either north of the border or in Europe.  There is a company called  Resverlogix Corp. which trades in Canada under the ticker ‘RVX’ and the stock also trades in the US on the Pink Sheets under the ticker ‘RVXCF.’  The stock is soaring today after Bloomberg gave a very positive article highlighting the merits of the company’s RVX-208.  This potential drug candidate is targeting atherosclerosis in acute coronary syndrome patients.  The target is to raise HDL levels to effectively reverse arterial plaque buildup.  The company noted that there are approximately 350 million patients that require treatment for atherosclerosis.

We wanted to take a look at the potential for this drug candidate outside of what the article has to offer.  Resverlogix is a clinical stage Canadian company which currently has no real products.  The company has been public since late 2004.  It has traded well under $5.00 and at ome point briefly rose to north of $20 per share in 2007.

Late in February, the company officially activated the first site for the ASSURE 1 trial and commenced enrollment of patients for dosing of RVX-208. This is the second Resverlogix Phase 2 clinical trial, led by Cleveland Clinic, and it will examine and evaluate this oral small molecule therapy for the treatment of atherosclerosis in patients with acute coronary syndrome.

As per the trial data:
This IVUS study is comprised of 15-20 US sites will dose approximately 120 ACS patients on standard of care therapy and examine lipid effects by RVX-208 compared to placebo control. In half of the patients a change in atherosclerosis will be assessed, i.e. change in plaque volume and plaque composition. The primary objective of this study is to determine the 3 month effect of RVX-208 on change in the plasma levels of ApoA-l in patients with a recent ACS event who require coronary angiography versus placebo. The secondary objectives for this study include assessing the safety and tolerability of the drug through evaluation of adverse events as well as to evaluate the effect of RVX-208 on other lipid parameters.

Here is the catch, and the ultimate factor which makes this a potential Holy Grail… Most cholesterol medications today are used as preventative medicine rather than just for treating those who have already had a stroke or heart attack or those who already have severe blockage.  Statins and other lipid lowering agents account for billions and billions of dollars per year in revenues for Big Pharma.  If this drug is ultimately approved for preventative measures the sky is the limit.

AstraZeneca (NYSE: AZN) has Crestor; sales of Crestor are forecast to reach $6.5 billion in 2013, up from $4.5 billion in 2009, per Thomson Reuters.
Pfizer Inc. (NYSE: PFE) has Lipitor; Lipitor brought in approximately $11.4 billion in revenue in 2009.
Merck & Co. (NYSE: MRK) has Vytorin; Annual worldwide sales for 2009 were $2.2 billion for ZETIA and $2.1 billion for VYTORIN.

The statin market is also coming under some generic pressure.

There are risks here.  Many have tried this HDL raising tactic and targeting plaque. None of the existing drugs have effectively proven to be the ultimate plaque-eater.  Pfizer has so far spent billions.  This is a hopeful treatment but it is going to be some time before the results of a larger study are known and it will be far longer before the side effects are known.

Stay tuned.

JON C. OGG

Rigel Attacks Rheumatoid Arthritis with AstraZeneca (RIGL, AZN)

February 16, 2010 · Filed Under Financial, R&D, rheumatoid arthritis · 3 Comments 

Rigel Pharmaceuticals (NASDAQ: RIGL) may be the biotech winner this Tuesday.  The company has signed a pact with AstraZeneca (NYSE: AZN) which could ultimately bring in about $1.25 billion if all targets are met.  This pact is a licensing agreement for Rigel’s rheumatoid arthritis drug R788 or fostamatinib disodium.

Rigel said last year that its R788 significantly improved rheumatoid arthritis symptoms in patients in a phase II study and Rigel has been seeking a development partner to help finance phase III studies.

AstraZeneca will design a global phase III study for the RA drug and believes that the study will be initiated in the second half of this year.  We will double-check the goal dates here because the new drug application target date appears to be 2013 for the FDA and European Medicines Agency.

AstraZeneca is making an upfront payment of $100 million as the first part of the pact.  There is also an additional amount which can go up to an additional $345 million if certain milestones are achieved.  But the big kicker here for Rigel comes in the form of up to an additional $800 million if specific sales are achieved as well as significant stepped double-digit royalties on global sales.

Rigel had a market cap of about $488 million based on a close of $9.43 on Friday.  The company effectively has no sales and its September-2009 balance sheet lists approximately $156 million in cash and short-term investments with effectively no considerable long-term debt.

Rigel closed at $9.43 on Friday and we have shares trading up 6% at $10.00 ahead of the opening bell.  Its shares have traded in a range of $4.19 to $14.75 over the last 52-weeks.

JON C. OGG
FEBRUARY 16, 2010

Diabetes & Insulin War About To Heat Up (MNKD, LLY, NVO, PFE, BMY, AZN, GERN)

January 6, 2010 · Filed Under Diabetes, fda, Financial, stem cells · 2 Comments 

MannKind Corp. (NASDAQ: MNKD) has not gone without its critics over the company’s inhaled insulin.  The company has an upcoming review that will be a make or break event for the company.  The company is about to face a potential do or die test next week as the FDA is set to decide the fate of the company’s inhaled insulin.  MannKind’s Afresa is designed to deliver a fast acting insulin that is supposed to be more effective than the injected products.  This would put the company in competition for insulin with Eli Lilly & Co (NYSE: LLY) and Novo Nordisk (NYSE: NVO) for their insulin delivery.

One of the biggest hurdles MannKind faces is that inhaled insulin products have been tried and tested by others, and they have failed or have fallen far short of the expectations set ahead of time.  Pfizer Inc. (NYSE: PFE) discontinued its Exubera as an inhalable insulin.

The FDA is set to make a ruling on Afresa’s approval by January 16, which means that the JAN-2010 CALL options may or may not expire before such ruling is made.  The FDA can always delay, and some reports hint at a later date now.
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Do Flu Vaccines Need to Worry About Pain Killers? (GSK, AZN, SNE, NVS)

November 3, 2009 · Filed Under flu, vaccine · Comments Off 

There is an interesting release out today showing that research from the University of Rochester Medical Center shows an inverse relationship between some of the more common pain killers or relievers and the effectiveness of flu shots.  While this does not impact the need for flu vaccines and while this probably won’t impact the sale of flu vaccines by any doses, it does highlight that flu vaccines might not be as effective under a very common circumstance.  It also shows how these pain killers might inhibit some of the body’s defenses in general.  The study shows that the use of common pain killers to the likes of Advil, Tylenol, and aspirin at the time of a flu shot injection may actually blunt the effect of the shot.  It also noted a negative immune system response.

This has been studied for years by a Dr. Richard Phipps and the findings were presented at an international conference on inflammatory diseases.  The study data also corresponds to a report in The Lancet from last month by researchers out of the Czech Republic.

The companies most tied to seasonal flu vaccines are large diversified international conglomerates GlaxoSmithKline Plc (NYSE:GSK), AstraZeneca Plc (NYSE: AZN) via MedImmune, and Sanofi-Aventis (NYSE: SNY).  Novartis (NYSE: NVS) also recently said that the backlog Of Swine-Flu vaccine orders would be filled by January, but unfortunately that is after many flu contractions will have been seen. It is a flu vaccine supplier.

Again, this won’t likely have any impact on the sales of vaccines that are already in very short supply.  But it is important to consider if you are taking a flu vaccine or if you are ill.  Particularly so when you consider that many ill and not so ill people take these three pain relieves and pain killers routinely.

JON C. OGG

BioHealth Job Cuts Keep Coming (AZN, PFE, BSX, BMY, LLY, JNJ)

October 20, 2009 · Filed Under Uncategorized · Comments Off 

It used to be that pharmaceutical jobs and medical device maker jobs were among the best and most immune of all sectors in the economy.  They paid well, there was job security, the benefits were solid, stock option and retirement plans were always growing, and on.  That is still the case in many positions inside those companies.  But mergers, competition, efficiency, redundancy, and a new spending environment are changing this for many jobs in these once-safe sector.

Mergers have led to many “efficiencies” to be realized, and allowed “redundancies” (i.e. low-yield jobs and departments) to be eliminated.  And now there is an ongoing threat to the sector from Washington.  While the target has gone away from all of healthcare to health insurance, we are still seeing the announcement from major companies of more job cuts.  We have compiled a few of the latest found announcements, ad this is just a part of the whole pie.

AstraZeneca PLC (NYSE: AZN) is reportedly offering buyouts “to thousands of its near-5,000 workers” from its U.S. sales force.

Pfizer Inc. (NYSE: PFE) has outlined more job cuts from its Wyeth combination as part of a projected 15% cut to the combined Pfizer-Wyeth team.  What this number will ultimately come to is still unknown, and Pfizer’s head count had already fallen by over 6,000 to 75,400 at the end of last quarter.

Boston Scientific  (NYSE: BSX) had job cuts a couple years ago, and it appears that the job cuts may not be over.  Recent health reform legislation from the Senate Finance Committee was noted by its CEO as being an event which could potentially trigger another 1,000 to 2,000 job cuts.

Bristol-Myers Squibb Co. (NYSE: BMY) has been in an ongoing 10,000 layoff mode since last year, but in the last week came word that about 25% of its Abilify antipsychotic drug sales force after an evaluation from its co-marketing pact with Otsuka Corp.  These were recent cuts and are still unquantified.

Eli Lilly and Co. (NYSE: LLY) announced last month that it is targeting $1 billion in savings… with the elimination of up to 5,500 jobs total by some time in 2011.

This summer came the announcement from Johnson & Johnson (NYSE: JNJ) about its plan to cut up a range of 3,615 to to 4,800 jobs.  That is a small amount considering the number of deals it has made and considering it has 120,000 employees.

JON C. OGG
OCTOBER 20, 2009

Dendreon Merger Rumors Stay Alive (DNDN, SNY, AZN, RHHBY)

September 17, 2009 · Filed Under Uncategorized · Comments Off 

As far as whether a deal is really imminent for Dendreon Corp. (NASDAQ: DNDN) in this rumored buyout is coming is still a topic up for debate.  We still have a Caveat Emptor flag here, but the trading in this name is just too hard to not notice now that the stock price and market cap is getting so high.

We saw a greater than 10% gain on Monday to where it closed at the highest closing of the year at $27.43.  Of course it sold off, but throughout the day Dendreon shares have climbed and the stock is now up 9% at $29.23 on well above average volume.

We have seen over 30,000 options contracts trade hands for the September Calls alone against almost no Put volume.  That is over 3 million shares on a fully leveraged basis.  What is so interesting is that these options are all set to expire in just over 48 hours.  If no deal is announced or leaked out early Friday, then those will all expire as worthless if out-of-the-money or at the intrinsic value if they are in-the-money.  So again, this suggests that something is imminent if you only watch stock options.

Again, Sanofi-Aventis (NYSE: SNY) is the most widely thrown out name as a European buyer that can get companies on sale in the U.S. over a weak US Dollar.  But Roche (RHHBY) for its Genentech unit and AstraZeneca plc (NYSE: AZN) have been pondered before.

PROVENGE is believed to be getting FDA approval, but this is still not a formally approved event.  Roche already took that chance on Genentech ahead of a key independent study ahead of the panel releasing data that was shocking as Avastin turned out to not be good at using in patients with the aim of maintenance or future cancer prevention.  The market cap here is now $3.3 billion, and the price is getting to be in the realm of gambling when considering the FDA-risk that is inherent in any pre-revenue stock in the biotech realm.  And any merger has to come at a premium to get shareholder approval.

Caveat Emptor!

JON C. OGG

Exploring Chances of Dendreon Rumors (DNDN, SNY, AZN)

September 14, 2009 · Filed Under Cancer, dendreon, M&A · Comments Off 

We have been digging into ‘rumors’ of a Dendreon Corp. (NASDAQ: DNDN) buyout.  We would stress that Dendreon has been the subject of rumors before as both a partnership or stake-taken deal, and sometimes as merger-buyout bait, several times in the past.  As with all rumors and with all ‘hope’ trades like this, Caveat Emptor!

That being said, the stock volume is exponential, but the most impressive activity is in the SEPT-2009 call options.  The reason this is of such notice is because the September options expiration date is only four short days out, meaning that the bets for or against a deal would suggest an “imminent” timing if it was accurate.

We noticed a blurb out there today noting that Sanofi-Aventis (NYSE: SNY) was the likely party…IF… the rumor is correct.  In the past we have also heard of Roche/Genentech as a potential rumored buyer.  One name also thrown out as an acquirer of small to mid-cap biotech companies is AstraZeneca plc (NYSE: AZN). To date, all such rumors have been unfounded and never materialized.  We would also note that with shares up above $26.50, they are also back very close to the old intra-day high of $27.40.  The old high closing levels were $26.08 on June 19… On April 29 this hit the $27.40 intra-day high but the close was $22.94; and the last day this hit $27.00 was June 7, but it closed at $25.74.

The biggest hurdle to date is that a buyer would be forced to pony-up much more cash than today’s price.  The buyer is also taking a big FDA event-risk as PROVENGE is still ‘believed to be approvable’ and has not received FDA approval as a last line of defense for men with advanced prostate cancer.  Roche took that risk with Genentech, and while everyone believed that the endpoint was likely it turned out to not be the case.

Anything is of course possible in the land of the biotech rumor-mill.  Again, Caveat Emptor!

JON C. OGG

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