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

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

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

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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Is Sunesis The Next 10-Bagger? (SNSS, DNDN, JAZZ, TRGT, VNDA, HGSI)

December 10, 2009 · Filed Under Cancer, fda, Financial · Comments Off 

Sunesis Pharmaceuticals, Inc. (NASDAQ: SNSS) has become the next small cap and low-prices biotech craze this week.  We have seen this occur this year in other stocks, and now it seems that investors and traders are ready to jump into many of these small-cap biotech stocks with the hope of catching the next 10-bagger (1,000% return on investment).  When you look at the amazing performance of many stocks in the sector, you probably won’t be too shocked to see why traders and speculating investors pile in:

  • Dendreon Corp. (NASDAQ: DNDN) is up 900% from its lows over the last year.
  • Jazz Pharmaceuticals, Inc. (NASDAQ: JAZZ) has jumped about 1,400% from lows.
  • Targacept, Inc. (NASDAQ: TRGT) has jumped over 1,000% from lows.
  • Vanda Pharmaceuticals, Inc. (NASDAQ: VNDA) has popped over 2,000% from its lows.
  • And the biggie…. Human Genome Sciences, Inc. (NASDAQ: HGSI) was under $0.50 in March, making those fortunate few who bought after the March price tank have a gain of 50-fold if had they still held on today.

Today’s action dwarfs what was seen on Tuesday after Sunesis announced positive data from its two Phase II clinical trials of its lead drug candidate called voreloxin.   The company said that the results showed strong efficacy and safety profile when used as a single agent or in combination with chemotherapy in patients with difficult to treat acute myeloid leukemia.

This data was presented at the 51st American Society Hematology Annual Meeting in New Orleans, LA.   Sunesis showed that the high rates of remission in both trials have translated into durable effects with meaningful preliminary overall survival results.

With an anticipated median survival of three and a half to six months on currently available therapies, primary refractory and first relapse AML patients are particularly in desperate need of more effective treatment options. The company said that it plans to discuss the data with the FDA in  End-of-Phase 2 meeting scheduled for the first quarter of 2010.

This stock closed at $0.44 on Monday before the data was released.  But then on December 8 it had trading volume of 10,042,800 and closed up at $0.53.  Yesterday it closed up at $0.60 on 4.1 million shares.  The 52-week trading range was $0.05 to $0.90, which shows how this was a dormant stock.  But then this morning traders began piling into the stock.  And piled and piled.  At 2:00 PM EST the stock is up a whopping 120% at $1.32 on 23 million shares having traded, but the stock traded as high as $1.84 on the day.

If you smooth out the most recent trading action and if you smooth out the exact lows you have an average share price of probably $0.30 or $0.35.  If we see one more day of this action, a 10-bagger is more than just theory.

Even after the run this week, this is a mere $45.4 million market cap stock.  At the end of September, it held $3.87 million in cash.  Always keep in mind that there is a nasty side to major price gains in small speculative biotech stocks that release positive study data.  That is the “news selling” where companies raise cash in private placements.  Don’t be too shocked if you see the company use the gains to raise cash.

JON C. OGG

Unusual Number of 52-Week Highs in BioHealth Stocks (BCRX, CRIS, NKTR, OGXI, SCLN, SVA, SPPI, TRGT, VICL)

August 31, 2009 · Filed Under daily, flu · Comments Off 

As you will see, there are many new 52-week highs out there in some drug and biotech names…. Some of this is on swine flu news despite a big drop in the stock market today, but here goes:

  • BioCryst Pharmaceuticals Inc. (BCRX) hit $13.24 today…. 52-week low is $0.85.
  • Curis Inc. (NASDAQ: CRIS) hit $2.25 today, the drug discovery company has a small cap at $140 million; 52-week low is $0.68.
  • Nektar Therapeutics (NASDAQ: NKTR) hit 8.29 but on very low volume, 52-week low is $8.29.
  • OncoGenex Pharmaceuticals, Inc. (NASDAQ: OGXI) hit a high of $42.99, also on fairly thin trading volume…. The 52-week low is all the way down at $2.00 on this cancer company.  In 2007, this was over a $100 stock…
  • SciClone Pharmaceuticals, Inc. (NASDAQ: SCLN) is up big on heavy block trading as it hit $4.90 vs. a 52-week low of $0.63.
  • Sinovac Biotech Ltd. (AMEX: SVA) is what led the flu names today after securing Chinese approval for its swine flu vaccine.  Shares are up over 40% at $8.90… but it hit $9,44 today versus a 52-week low of $0.75.
  • Spectrum Pharmaceuticals, Inc. (NASDAQ: SPPI) is up over 7% and hit $8.32 on strong volume… 52-week low is $0.55.
  • Targacept, Inc. (NASDAQ: TRGT) hit $14.69 today, but on thin trading volume, compared to a 52-week low of $1.40.
  • Vical Inc. (NASDAQ: VICL) hit a high of $4.93 versus a low of $1.04.  This is on strong volume and is after a rise of flu awareness stocks in China.

JON C. OGG
August 31, 2009

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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