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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PharmAthene (PIP) Higher On Terrorist News?
PharmAthene (AMEX:PIP) is up over 25% on no news. It may be that it is an insane rush into the shares by investors. The firm is a biodefense company developing medical countermeasures against biological and chemical threats. It may be that Wall St. thinks it will benefit from the new climate of fear of terrorism.
Not likely to be a good place to put money. Shares trade at $1.79 for a market cap of $54 million.
Douglas A. McIntyre
Compugen’s (CGEN) Second Home Run
After a huge run-up last Thursday, Compugen (NASDAQ:CGEN) is up over 35% today to $5.86, a 52-week high.
Compugen disclosed discovery and experimental validation of CGEN-671, a new drug target for multiple epithelial tumors. CGEN-671 is a membrane splice variant of CD55, a known drug target for gastric cancer for which monoclonal antibody (mAb) therapeutics are in clinical development by others. The potential application of CGEN-671 as a drug target was initially predicted in silico by Compugen through the use of its Monoclonal Antibody Targets Discovery Platform; the predicted molecule was then validated experimentally in multiple epithelial tumors. Epithelial tumors, also referred to as carcinomas, account for approximately 85% of all cancers, including the ten most prevalent cancers in the western world, such as breast, colorectal, lung, ovary, prostate and skin. Compugen has filed patent applications covering this novel splice variant and its various therapeutic and diagnostic utilities.
Initial experimental studies confirmed the existence of the predicted CGEN-671 transcript (mRNA) and demonstrated that, compared with normal tissue samples, it is highly expressed in colon carcinoma tissue. Furthermore, in these mRNA experiments, CGEN-671’s expression level in various healthy tissues was up to 200 times lower than the expression level of the previously known cancer target CD55, suggesting that the Compugen discovered splice variant should be a superior drug target candidate for cancer treatment. In addition, the in silico prediction of CGEN-671 identified a unique sequence present in CGEN-671’s extracellular domain that is not present in CD55. This sequence allows for the development of antibodies that specifically bind to CGEN-671 and do not recognize CD55.
Last week, the company announced a venture with Pfizer (NYSE:PFE)
Douglas A. McIntyre
BioHealth IPO Focus: Tengion, Organ Replacements (TNGN)
If you have heard horror stories about real human kidney theft, that may be a thing of the past. If this actually works. An IPO filing this week revealed a rather interesting company that we will look forward to how it prices in 2010. Tengion, Inc. filed for an initial public offering of its common stock. While no terms were indicated for its IPO, the filing notes a sale of up to $40.25 million in common stock and Piper Jaffray was designated as he underwriter. This is not quite stem cells, not RNAi, and not quite genomics. The company is focusing on a range of replacement organs and tissues.
Here is how Tengion desrcibes itself:
We believe we are the only regenerative medicine company focused on discovering, developing, manufacturing and commercializing a range of replacement organs and tissues, or neo-organs and neo-tissues. We currently create these functional neo-organs and neo-tissues using a patient’s own cells, or autologous cells, in conjunction with our Organ Regeneration Platform. We believe our proprietary product candidates harness the intrinsic regenerative pathways of the body to regenerate organs and tissues that are native-like, or substantially similar to native organs and tissues. We manufacture our product candidates in our scalable facilities using efficient and repeatable proprietary processes and we have implanted our neo-organs in clinical trials. We intend to develop our technology to address unmet medical needs in urologic, renal, gastrointestinal and vascular diseases.
Our lead product candidate, the Neo-Urinary Conduit, is an autologous implant that catalyzes regeneration of native-like bladder tissue for bladder cancer patients requiring a urinary diversion following bladder removal, or cystectomy. This tubular conduit passively transports urine from the ureters, through a hole in the abdomen, or stoma, into a removable, disposable bag, or ostomy bag. We have an effective investigational new drug application, or IND, and expect to start a Phase I clinical trial for this product candidate in the first half of 2010 in bladder cancer patients. We have also applied our technology in two Phase II clinical trials for our Neo-Bladder Augment for the treatment of neurogenic bladder, or dysfunctional bladder due to some form of neurological disease or condition. Our Neo-Urinary Conduit leverages recent advances in our technology platform that enable us to produce this product candidate more quickly and efficiently, and less expensively, than our Neo-Bladder Augment, enabling us to address larger market opportunities. Our product pipeline includes several candidates in early stage development, such as our Neo-Kidney Augment for patients with advanced chronic kidney disease, or CKD.
It also lists the following steps for the platform:
- Isolation and expansion. We receive a small tissue sample, generally by routine biopsy, and isolate the necessary committed progenitor cells, which are relevant to a specific organ or tissue type. Committed progenitor cells have not yet developed into a single cell type and retain the ability to promote regeneration. We then use our proprietary cell growth process to grow, or expand, the progenitor cells.
- Seeding and growth. We place, or seed, these expanded cell populations on a bioabsorbable scaffold and put the seeded structure in a bioreactor, or a closed container used for enhancing biological growth under controlled conditions.
- Implantation. The neo-organ or neo-tissue is shipped by a standard overnight courier service and implanted by a surgeon using standard surgical procedures.
- Regeneration. Based on clinical and preclinical data, we believe that our implanted product candidates serve as templates for the body to regenerate native-like organs and tissues. Blood vessels and nerves grow into the implanted neo-organ or neo-tissue and the scaffold is gradually absorbed by the body. In preclinical tests, we have observed that the newly grown tissue integrates with its surroundings and becomes substantially indistinguishable over time from the native organ. Clinical results indicate that the body regulates the growth and development of the organ to ensure that it is not under- or over-developed.
The company’s Organ Regeneration Platform is based on work that began in the early 1990s at Children’s Hospital Boston and Massachusetts Institute of Technology, and continued at the Wake Forest Institute for Regenerative Medicine and at the company. 5% stockholders are listed as follows:
- Oak Investment Partners XI, Limited Partnership 18,034,824 shares for a 19.6% stake.
- HealthCap Venture Capital 13,153,457 million shares for a 14.3% stake.
- Johnson & Johnson Development Corporation 11,522,503 shares for a 12.5% stake.
- Brookside Capital Partners Fund, L.P. 7,930,273 shares for a 8.6% stake.
- Bain Capital Venture Entities 7,850,970 shares for a 8.5% stake.
- Quaker BioVentures 7,671,363 shares for a 8.3% stake.
- L Capital Partners SBIC, L.P. 5,900,528 shares for a 6.4% stake.
The full SEC Filing is here. Tengion plans to list on the NASDAQ under the stock ticker “TNGN.”
JON C. OGG
Questcor Pharmaceuticals (QCOR) Up On FDA News
Questcor Pharmaceuticals (NASDAQ:QCOR) is up sharply to over $5 on news that U.S. Food & Drug Administration (FDA) now considers that the firm has provided a complete response to all prior action letters for its supplemental New Drug Application (sNDA) to market H.P. ActharGel (repository corticotrophin injection) for the treatment of infantile spasms. The FDA has set the user fee goal date (PDUFA) of June 11, 2010 for this sNDA.
Acthar is currently approved in the U.S. for the treatment of MS exacerbations, nephrotic syndrome and many other conditions. Acthar is not approved in the U.S. for the treatment of IS, a potentially life-threatening disorder that typically begins in the first year of life. However, pursuant to guidelines published by the American Academy of Neurology and the Child Neurology Society, many child neurologists use Acthar to treat infants afflicted with this condition. Previously, the FDA granted Orphan Designation to Acthar for the treatment of IS.
Douglas A. McIntyre
Analyst Sees Exponential Gains in Achillion (ACHN)
Achillion Pharmaceuticals, Inc. (NASDAQ: ACHN) is trading higher yet again as traders and investors continue to chase low-priced small-cap biotech stocks. A boutique brokerage firm called Roth Capital initiated coverage with a BUY rating, calling it one of the best value plays in the hepatitis C space currently. Achillion has been one of the small cap and low-priced stocks in biotech being chased around as traders look and hope for the next ten-bagger. We are checking on the firm’s target as we saw a $12 target on the stock, but that implies exponential upside to today’s price.
Now that the market has opened we have shares trading at $3.68, up 15% from its $3.18 close on Tuesday. The 52-week trading range is $0.65 to $3.89 and the market cap even after today’s gain is a mere $98 million.
The 52-week trading range is $0.65 to $3.89 and the average volume is only about 220,000 shares.
JON C. OGG
DECEMBER 23, 2009
pSivida Corp (PSDV) Rules
pSivida (NASDAQ:PSVD) a drug delivery company with two of the only three ophthalmic sustained release delivery products approved by the FDA for treatment of back of the eye diseases, today reported top-line 24 month results from the Phase III FAME study of Iluvien for the treatment of Diabetic Macular Edema (DME) being conducted by pSivida’s collaborative partner Alimera Sciences.
The FAME study was designed as two Phase 3 pivotal clinical trials (Trial A and Trial B). 956 patients with DME were enrolled and randomized to receive either a high dose Iluvien (0.45 µg/day), a low dose Iluvien (0.23 µg/day) or a sham insertion. The primary efficacy endpoint for the FAME Study is the difference in the percentage of patients whose best corrected visual acuity (BCVA) improved by 15 or more letters from baseline on the Early Treatment Diabetic Retinopathy Study (ETDRS) eye chart at month 24 between the treatment and control groups.
Based on Alimera’s analysis of the Full Analysis Set, as described by the International Conference on Harmonization (ICH) Guidance E9 and adopted by the FDA, the primary efficacy endpoint was met with statistical significance for both doses of Iluvien in each of Trial A and Trial B.
Shares are up over 65% to $5.83 giving the company a market cap of $106 million.
Douglas A. McIntyre
Douglas A. McIntyre
Athersys, The Next Wannabe 10-Bagger in Biotech (ATHX, PFE)
Athersys, Inc. (NASDAQ: ATHX) is soaring on the announcement by the company that it entered into a development and commercialization pact with Pfizer Inc. (NYSE: PFE). The pact is for MultiStem(R) for the treatment of Inflammatory Bowel Disease. As traders and investors look (and hope) for potential 10-baggers in small-cap and low-priced biotech shares, this one is seeing very exacerbated trading activity.
Athersys will receive a $6 million cash payment up front from Pfizer to fund the research during the first and initial part of this pact. The standout note from Pfizer is that it noted how Athersys represents a cornerstone of Pfizer’s stem cell and regenerative medicine plans. Athersys is eligible to receive milestone payments of UP TO $105 million upon the successful achievement of certain milestones in development, regulatory approvals and commercial limits.
Athersys shares are up a whopping 192% at $2.92 today after closing at 1.00 on Friday. Trading volume is almost 6.8 million shares as of 12:15 PM EST, and the average trading volume is only 30,000 shares per day… Sorry, it was only that amount. Even after the huge gain, the market cap is listed as a mere $54 million.
To show how much traders are willing to chase the companies on any such news, this stock has an intra-day high listed as $3.95. Athersys was very briefly an $8.00 stock back in 2007 when it came public. In 2008 it slid from over $4 down to under $1.00 throughout the year. Shares had recovered off of lows, but nothing at all like what we are seeing today.
As of September 30, 2009, the company had $18.8 million in cash and short-term investments, and listed another $3.94 million in long-term investments. Its total liabilities are listed as only $1.665 million.
JON C. OGG
DECEMBER 21, 2009
Winning With Swine Flu H1N1 Testing Clearance (AFFX)
Affymetrix Inc. (NASDAQ: AFFX) is the beneficiary of some swine flu or H1N1 news this morning. The company and TessArae LLC announced that the FDA granted emergency use authorization for a H1N1 influenza detection panel. While Affymetrix is up considerably from lows of the year, this has been a very volatile stock for long-term investors.
The product was created by TessArae, but using the GeneChip Platform technology from Affymetrix to analyze genetic information. TessArae is also not the only firm to receive emergency FDA clearance for H1N1 detection. This particular test is supposed to be unique in that it directly generates genomic sequence from multiple influenza virus genes to help identify which particular H1N1 virus strain is present in a single test.
Affymetrix is up 3.4% at $5.74 in early trading. At one point this morning shares were ar as high as $5.97, and its 52-week trading range is $1.78 to $10.06.
JON C. OGG
OncoGenex (OGXI) Down 30% To $21.23
Teva Pharmaceutical Industries (TEVA) and OncoGenex Pharmaceuticals, Inc. (OGXI) announced today that they have entered into a global license and collaboration agreement to develop and commercialize OGX-011, as well as an agreement to purchase shares in OncoGenex. OGX-011 is a Phase III cancer therapy designed to inhibit cancer treatment resistance. OGX-011 is expected to be used as adjunct therapy to enhance the effectiveness of chemotherapy and has shown promising results when added to currently available chemotherapies in several tumor types addressing a significant unmet medical need.
The agreement will further enhance Teva’s oncology offerings and strengthen its global branded product pipeline with a promising product candidate entering three Phase III trials involving large patient populations. Teva and OncoGenex will collaborate on a global Phase III clinical program, with two Phase III clinical trials expected to be initiated in 2010: a Phase III Study for Second-line Chemotherapy in Men with Metastatic Castrate Resistant Prostate Cancer (CRPC) and a Phase III Study in First-Line Chemotherapy for Metastatic CRPC. An additional Phase III Study in First-Line Treatment of Advanced, Unresectable Non-Small Cell Lung Cancer (NSCLC) is intended to be initiated by early 2011.
OncoGenex also announced that Isis Pharmaceuticals, Inc. (ISIS) will receive a $10 million payment from OncoGenex Pharmaceuticals, Inc. as a result of OncoGenex’ license of OGX-011 to Teva Pharmaceutical Industries Ltd. OGX-011 is a second-generation antisense drug co-discovered by Isis and OncoGenex that has completed a successful Phase 2 program in patients with advanced prostate cancer and advanced non-small cell lung cancer. Teva and OncoGenex will collaborate on a global Phase 3 clinical program for OGX-011 in patients with prostate and non-small cell lung cancer.
Douglas A. McIntyre
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