Cell Therapeutics Facing Tougher FDA (CTIC)
Cell Therapeutics, Inc. (NASDAQ: CTIC) is getting clipped on Pixantrone this morning. The company was told by the FDA that there is limited clinical data on its proposed cancer drug, and that there were higher side effects and higher death incidents. Unfortunately, this comes ahead of a panel review date that is set for Wednesday, February 10, 2010. We have late April, on or about April 23, 2010, as the final decision date from the FDA for Pixantrone.
Pixantrone is the company’s pending treatment of relapsed and refractory non-Hodgkin’s lymphoma, although this is indicated for those who have seen their disease progress after having received treatment with at least two other therapies.
Cell Therapeutics had raised about $30 million in January via securities sales. Pixantrone was under FDA Fast Track and it has an Orphan Drug designation under EMEA in Europe.
The FDA noted that the main trial arm ended early due to a smaller number of enrollment, which is always a concern. This may not be a dead outcome yet, but this sets a bias of extreme caution going into Wednesday’s event.
At 9:45 AM EST we have shares down 29.4% at $0.743 on 23 million shares. Average volume is 12 million shares and the 52-week trading range is $0.05 to $2.23.
JON C. OGG
New Restless Leg Syndrome Review for XenoPort (XNPT, GSK)
XenoPort, Inc. (NASDAQ: XNPT) has a big day coming for its GSK1838262/XP13512 (gabapentin enacarbil) next week. The company has a date of February 9 for an FDA Prescription Drug User Fee Act (PDUFA) decision on its Horizant. This is the dated goal for the company’s New Drug Application for Horizant for the treatment of moderate-to-severe primary restless legs syndrome. Horizant is licensed to GlaxoSmithKline (NYSE: GSK) in the United States and several other countries.
There is one concern here… The company’s release last week noted that the GaxoSmithKline partnership may be in doubt because Glaxo has noted that it may end research on depression and pain treatments. GSK and XenoPort are discussing the next steps in the development plan for XP13512 in the neuropathic pain area and will disclose this development plan at a future date.
XenoPort shares closed up 3.4% at $19.01 Friday on 422,000 shares. Average volume is 337,000 shares, but the stock trading has been elevated over the last week.
Date Volume Close
5-Feb 422,100 $19.01
4-Feb 504,800 $18.38
3-Feb 373,200 $19.90
2-Feb 420,200 $19.99
1-Feb 216,400 $18.50
There is also a binary options event factored in here, although on far fewer options contracts than what you normally see. Here is the CALL and PUT volume for Feb-2010 expiration that expire on February 19, with data on the Friday volume and the open interest:
CALL Volume OpInt
17.50 44 1,006
20.00 167 1,995
22.50 170 1,938
PUT$ Volume OpInt
12.50 209 1,062
15.00 95 1,467
17.50 114 2,055
20.00 170 2,812
The stock did manage to close up for the week, which might be impressive considering the weak stock ticker tape action we saw this last week. It looks like the company still has $150 million or so in liquidity with revenues from partnership income looking very spotty and also looking like they are in the rear-view mirror. Analysts expect losses in 2010 and revenues of only about $63 million per Thomson Reuters consensus data.
XenoPort will be able to survive without GSK if push comes to shove. But the restless leg syndrome is not an area without controversy. Ask someone with it if they think it is real or not. Then ask one of their younger family members if they think it largely from inactivity or what the RLS patient consumes daily.
This PDUFA date may not seal the fate of XenoPort, but a very positive review will be of help. The stock has a 52-week trading range of $13.36 to $28.33 and a market cap of about $576 million.
JON C. OGG
AMAG Fights Back (AMAG)
AMAG Pharmaceuticals, Inc. (NASDAQ: AMAG) has had a very tough week, whether it was a market with a bad trading tape or not. The stock’s weakness was after an analyst from a relatively unknown firm called Summer Street downgraded the stock to Neutral from Buy over concerns that Feraheme patients are being hospitalized with severe allergic reaction events. Shares were above $45.00 on Wednesday, yet the stock went as low as $35 today before word that a rebuttal was coming. Then after the close, the company is out defending itself showing that the risks here are very low and may not be any different than previously thought.
After the close of trading today, the maker of treatments for anemia and imaging agents provided a safety update on Feraheme®. The company noted, “Since the commercial launch of Feraheme in July 2009, serious adverse events have been reported at a rate consistent with that contained in the U.S. package insert. Of the estimated 35,000 patient exposures to date, 40 serious adverse events have been reported, an approximate rate of 0.1 percent. No mortality signal has been observed. A single reported death occurred in a patient two days post-Feraheme treatment, which the Company does not believe was the result of Feraheme.”
Shares closed down 0.9% at $37.77 today, and shares are now up 5% at $39.75 in the after-hours trading session. Including the after-hours trading this one has traded 4.6 million shares today versus an average volume of 630,000 shares.
The drop today was not with as much volume as the stock traded over 8.5 million shares on Thursday. The 52-week range is $22.20 to $58.23 and the market cap here is $647 million as of the closing price.
JON C. OGG
Human Genome Sciences… When Insiders Sell Stock (HGSI)
Human Genome Sciences, Inc. (NASDAQ: HGSI) has been one of the great biotech success stories, with returns far dwarfing the 10-bagger or 1,000%. This went from a small genomics company to a company with what seems to be or likely to be the newest lupus treatment in a generation after (and if) the FDA approves of it. While management has been quick to quiet buyout rumors, the investment community for most of 2009 was betting or hoping that the company would be acquired.
Yet when you see insiders making share sales, and some significant share sales, it probably makes you think no real deal is on the table. In short, buying Human Genome Sciences here now better be for that pending FDA approval and for its pipeline rather than for a hope of a buyout. Here were the insider sales we have seen so far this month:
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10-Bagger Hunt Heads Back to Repros (RPRX)
Repros Therapeutics Inc. (NASDAQ: RPRX) is soaring in the quest for the next ten-bagger…. This is a micro-cap stock that had a $19.1 million market cap before this morning’s news. The company reported that it has received verbal confirmation from the FDA’s Division of Metabolic and Endocrine Drug Products. According to this, the company may initiate its Investigational New Drug Application for the study of oral Androxal as a potential treatment of hypogonadal men with Type II Diabetes with a Phase IIa trial. While the move to chase the next 1,000% potential gainer is often on hype, it is at least easy to see why traders, speculators and investors would be chasing this stock.
According to the press release, The FDA noted no clinical hold issues. It did add that the agency may have some comments on the specifics of the Phase II design. But the company also noted that doses to be tested in the Phase IIa study have been safely tested for longer durations in trials in men for the treatment of secondary hypogonadism.
Repros plans to enroll a total of 60 men into three balanced parallel arms at several clinical sites comparing placebo to two active doses. In a 200 patient study of Androxal in hypogonadal men it was noted that fasting glucose levels were reduced in a significant manner in men whose glucose levels were greater than 104 mg/dL. It was further noted that the higher the glucose level the greater the reduction.
The market is not quite open and at 9:22 AM EST we have seen a 35% gain to $1.01 on 322,000 shares. The average daily volume is 989,000 shares and the 52-week trading range is $0.64 to $10.60.
As of September 30, 2009, the balance sheet here was tiny at 2.5+ million in cash. Just keep in mind that it already announced a capital raise in October, shortly after good news.
We noted that it is at least easy to see why traders, speculators and investors would be chasing this stock. Even at $1.01 after such a large pop… Even considering its news-bump followed by a capital raise, this was a $10 stock just a year ago. This company has also been around since the early 1990’s and used to trade at significantly higher prices.
JON C. OGG
FEBRUARY 2, 2010
InterMune Volatility Bets Through the Roof (ITMN)
We noted last week that there had been some extra options activity over in InterMune, Inc. (NASDAQ: ITMN) ahead of a date-review decision. Today saw excess trading in the stock, and explosive trading volume in both the put and call options as traders made their volatility bets for a binary trading event scheduled for March 9. The stock traded over 3.4 million shares versus 683,000 shares on average. The stock closed up 5.7% at $16.50 and the 52-week trading range is $10.48 to $19.12. We do not care about the FEB-2010 options as they are before the date, but MAR-2010 options expiration date is on March 19, 2010.
CALL Volume OpInt Last
15.00 1,755 5,074 $5.40
17.50 14,991 7,596 $4.50
20.00 8,065 2,863 $3.70
22.50 2,375 158 $3.00
PUT$ Volume OpInt Last
10.00 6,610 541 $1.85
12.50 1,745 1,101 $2.70
15.00 3,521 2,136 $4.00
We’ll save on the technical jargon, but the closest speculative volatility bet being long the closest CALL and PUT effectively puts this stock having to go above $27.00 or below $5.50… The combined premiums are roughly $9.50, up almost $5.50 from when we looked ta this last week. Keep in mind that those are major price changes from what was seen last week and those spreads should compress over the coming days…. barring any real new news.
Joe Kunkle of OptionsHawk.com pointed this one out last week and gave a brief heads-up alert on this one again.
Keep in mind that there is a huge discrepancy over analyst price targets as this is a battleground stock with many bears and many bulls on both sides of the fence. To show just how active the bets are for and against this one…. it had 6.425 million shares listed in the short interest based upon the settlement date of January 15, 2010.
The company announced this morning that the FDA Pulmonary-Allergy Drugs Advisory Committee (PADAC) is scheduled to discuss the company’s New Drug Application (NDA) for pirfenidone on March 9, 2010.
This covers InterMune’s investigational drug candidate for the treatment of patients with idiopathic pulmonary fibrosis, a uniformly fatal disease that affects about 100,000 Americans. More than 30,000 new cases are diagnosed annually. The company even noted that this has a higher mortality rate than colorectal cancer, breast cancer or prostate cancer, but noted that there are currently no approved medicines to treat IPF.
JON C. OGG
Generex Files To Raise Cash (GNBT)
You have seen us talk about companies in the BioHealth and biotech space after big pops of news lately. But some companies are also just raising cash, or leaving room to raise cash if needed. It is the second group that today’s filing from Generex Biotechnology Corp. (NASDAQ: GNBT) for up to $150 million falls into.
What is interesting here is that this is effectively the same size of the company today. Generex has a market cap after a 6.8% gain to $0.63 today of only about $156 million. Its 52-week trading range is $0.08 to $1.14 and the average daily volume is only about 2.94 million shares.
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InterMune Sees Pre-Event Options Activity (ITMN)
InterMune, Inc. (NASDAQ: ITMN) is up today despite the soft markets. This would actually make this the third day of gains in a row. The options trading continues to be very bullish, as shares gain 3% and implied volatility pops another 4% today. There is options trading building up here as well.
The Company recently raised cash through a 5 million share issuance. It’s key drug pirfenidone was granted fast track status at the FDA in early January, 6 month review period. It treats IPF, a fatal lung disease. Data is expected in the first from Phase2b studies of RG7227 plus SOC, for HCV.
Today there was a buyer of 2,500 March $17.50 calls at the offer on wide spreads, and now a 1,250 contract March $17.50/$15 bullish risk reversal trades for a 5 cent credit.
On Wednesday implied volatility spiked 16% higher and calls traded 3-times average with 3,000+, buyers in out-of-the-money March $17.50 and $20.00 calls. On the day 6,200 calls traded, 6X average. On a 50/95 bid-ask spread a trader bought more than 800 March $20 calls at 80 cents, 50% out of the money, extremely bullish. InterMune has a 12.6% short float, 9.8 days to cover. March implied volatility is 102% compared to Feb of 55%, while April is 155%, so traders are positioning for a catalyst.
Today call volume is approaching 6,000 once again.
Joe Kunkle, OptionsHawk.com
GenVec Shows Again the Risks of Biotech Trophy Hunting (GNVC, ROSG, MRNA, CYCC)
We have covered over and over in recent months about the news flow of biotech and emerging biohealth companies creating an avenue that is causing traders to chase many speculative stocks up exponentially on news. In 2009 we had perhaps a dozen biotech and biohealth related stocks which posted gains of 1,000% or more, and this is where that term of a ‘ten-bagger’ comes from. In recent weeks we have seen shares of GenVec Inc. (NASDAQ: GNVC) rise exponentially.
The 52-week low is $0.33 and this was effectively at $1.05 to $1.20 at the very end of 2009. In recent weeks and recent trading days we have seen news that allowed this to run even above $3.00. Then today came the share price haircut after the company entered into a registered offering of $28 million in agreements with institutional investors for the sale of 14 million shares of its common stock and warrants to purchase 4.2 million shares of common stock. At 1:05 PM EST GenVec shares are down 24% at $1.87 on more than 18 million shares.
We have referred to chain of positive news followed by more positive news, followed by a highly dilutive capital raise on several occasions as “Three-Card Monty.” That does not mean that all biotechs should be avoided nor does it mean that all biotechs raise cash after a big move, but it is the umpteenth reminder of how biotech investors and traders need to be careful what they are getting into when they chase after stocks in a trophy-hunting strategy.
We have recently seen this happen in both Rosetta Genomics, Ltd. (NASDAQ: ROSG) and in MDRNA, Inc. (NASDAQ: MRNA). Cyclacel Pharmaceuticals (NASDAQ: CYCC) took a big hit after it raised cash following its big news that drew in trophy hunting biotech traders.
Here was the full report from the end of 2009 showing how and why so many traders are willing to chase the 10-baggers or 1,000% possibilities. Stocks noted are JAZZ, TRGT, VNDA, DNDN, HGSI, CGEN, BNVI, QCOR, ACHN, PSDV, ATHX, SNSS, AVNR, BIOD, ALXA, and CTIC.
This is just one of the risks involved in chasing a biotech stock that is up big after a news dissemination of after a run up has been seen after waves of good news. Many companies in the biotech sector need capital to operate and some need it for satisfaction of listing requirements. You cannot blame a company for wanting to raise capital after a move up rather than when they are down and out. You just need to keep track of which companies need capital when chasing after the next ten-bagger.
There is also some good news here that occurs for those who may have wanted to get into some of these companies but may have missed their chance. Usually we see large price drops, and that gives investors and traders a chance to buy into these stocks at a discount if they believe that the news flow ahead is substantial and is not just a series of press releases geared toward generating short-term price pops.
JON C. OGG
Pfizer Outlines New Drug R&D Pipeline (PFE, MRK, NVS, GSK)
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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