High Hopes on Ariad (ARIA, MRK)
Ariad Pharmaceuticals Inc. (NASDAQ: ARIA) is seeing elevated trading today after a presentation and ahead of earnings. The difference here is that Ariad’s increased trading is in both the stock and in the bonds.
Joe Kunkle of OptionsHawk.com noted, “implied volatility is 10% higher to 87.8% as shares gain 2.7%, 4,140 calls trading, 4X average, with buyers of April $3 and May $3.50 calls. Shares are at 52 week highs and breaking a long term downtrend, trading as high as $7.50 in 2005. The Company is expected to announce earnings on March 16th and presented at the Cowen Healthcare Conf. This morning. Ariad’s leukemia drug recently received orphan drug status adn is expected to announce Phase 3 results for its soft tissue and bone sarcoma drug, ridaforolimus. Ariad has a $1B+ collaboration agreement with Merck & Co. (NYSE: MRK), potentially making it a takeover target.” (NOON EST)
Ariad’s shares are higher by 4.4% at $3.09 on over 3 million shares with more than an hour to the close. Average volume is only about 1.7 million shares per day and the 52-week trading range is $1.15 to $3.48. Today’s added gain may be as there was another biotech merger as well.
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Contribution from optionshawk.com
Review of New Patent on Lupus (IMMU, HGSI)
Immunomedics, Inc. (NASDAQ: IMMU) has made an announcement that may need to be reviewed by Human Genome Sciences, inc. (NASDAQ: HGSI) investors. This is not a deal-killer or anything like that, but this could be at least get a glance from investors based upon the headline. Immunomedics issued a press release today titled “Potential Lupus Drug Gains U.S. Patent”…. Keep in mind that the company’s investor presentation lists some 141 US patents and 302 worldwide patents.
The company said that its patent for “Immunotherapy of autoimmune disorders using antibodies which target B-cells” has been issued. The USPTO assigned U.S. patent number 7,641,901 covering the use of monoclonal antibodies “that bind to the CD22 antigen on B-lymphocytes for treating autoimmune disorders.”
This covers the use of epratuzumab, Immunomedics’s proprietary humanized anti-CD22 monoclonal antibody, and other anti-CD22 antibodies, alone and in combination with other therapeutics. These other therapeutics are listed as antibodies, cytokines, or drugs, for the treatment of a wide range of autoimmune diseases that include systemic lupus erythematosus. Also noted though, above and beyond lupus, were rheumatoid arthritis, Sjogren’s syndrome, multiple sclerosis, myasthenia gravis, diabetes mellitus, and ulcerative colitis.
The company also noted that its partner, UCB, has recently reported encouraging top-line results from their Phase IIb study of epratuzumab in lupus and is planning to initiate a Phase III program for 2010.
The issue here is that this is still moving from Phase II to Phase III rather than already being in Phase III studies. Human Genome Sciences is up for FDA approval and that decision for or against approval will likely come long before this lupus candidate could even come to market. It is also implausible that the FDA will consider patent issues in its decision.
This morning came an analyst downgrade from Goldman Sachs, cutting Human Genome Sciences to a Neutral from Buy. The downgrade was before the open and not tied to this patent allowance for potentially another lupus drug down the road. It was merely a valuation call now that Human Genome Sciences had become worth more than $5 billion in market cap.
Immunomedics Inc. (IMMU) does not fit the same bill as the other quest for 10-baggers or 1,000% gainers in biotech entirely. Its $290 million market cap is larger than most stocks which suddenly run on strong volume of about 1.5 million shares as of 10:28 AM EST, but even after a rapid 18% pop-up the share price is still only $3.86. The 52-week trading range is $0.84 to $7.17 and average daily trading volume is 823,000 shares.
JON C. OGG
Lexicon Punches One Out for IBS (LXRX)
Lexicon Pharmaceuticals Inc. (NASDAQ: LXRX) is getting some very positive reaction after the closing bell today as investors love buying up low-priced and small cap biotechs in the current climate. The reason is that the company showed interim data on its LX1031. This is Lexicon’s investigational new drug that is a tryptophan hydroxylase inhibitor for the treatment of non constipating irritable bowel syndrome.
The potential IBS treatment did demonstrate positive results in the clinically-important parameters it set for the Phase II trial. The company noted that the top-line results showed that treatment with one gram of LX1031 in a four-times daily regimen resulted in a statistically significant improvement in the global assessment of IBS pain relief and discomfort. The tests were measured over a four-week dosing period and were compared to placebo.
Lexicon also noted that the improvements in the global assessment parameters corresponded with a statistically significant improvement in stool consistency.
The company also noted that the top-line results from this study will be presented at the GASTRO 2009 conference in London on November 25, 2009. Shares closed down 6.7% at $1.39 today and the after-hours reaction has shares up almost 16% at $1.61.
JON C. OGG
More TYSABRI MS Woes, Sort Of (BIIB, ELN, ACOR)
Biogen Idec Inc. (NASDAQ: BIIB) is feeling the pain of regulatory review this morning. And Elan Corp. plc (NYSE: ELN) is feeling it even worse. The reason these are under pressure this Friday is because a European panel has begun a review of Biogen’s controversial yet effect multiple sclerosis drug TYSABRI. The review is over higher rates of PML brain infections (progressive multifocal leukoencephalopathy) than had been disclosed.
The European Medicines Agency’s Committee for Medicinal Products for Human Use showed some 23 PML cases since the launch of TYSABRI. Previous data showed that there were 13 cases since TYSABRI came back on the market in 2006 after the company voluntarily removed it to study the PML data. The European panel will discuss additional measures, if needed, to ensure a safe use of the drug and how to measure risks.
Biogen Idec is already in U.S. talks with the FDA over the TYSABRI label. Most recent data showed more than 46,000 people were taking TYSABRI, and over 13,000 patients had been taking TYSABRI for more than two years and were classified under long-term use.
It is impossible to pre-judge this situation, but personal discussions have given a personal belief here that the reason people keep taking TYSABRI is because many think it is the best MS drug on the market. As far as a 1 in a thousand risk, that is a very low incident ratio compared to other drugs that treat other diseases and many are willing to take that risk.
Biogen Idec is down 5.7% at $44.50 and Elan is down almost 17% at $5.35. Acorda Therapeutics, Inc. (NASDAQ: ACOR) has been noted this week as having an MS drug candidate pending under priority review date and that has been extended out to January 2010 by the FDA.
JON C. OGG
OCTOBER 23, 2009
BioHealth Job Cuts Keep Coming (AZN, PFE, BSX, BMY, LLY, JNJ)
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
Big Setback In Lasers for Wrinkles, Cellulite, and Acne (PMTI, JNJ)
Palomar Medical Technologies Inc. (NASDAQ: PMTI) has seen better days. The company disclosed that Johnson & Johnson (NYSE: JNJ) dropped its partnership and licensing for Palomar’s home-use light-based devices used to reduce or reshaping body fat including cellulite, reducing skin aging appearance, and the prevention of acne.
J&J cited the primary reason for dropping the partnership as being “weak economic conditions” in the disclosure. The sad part about this is that the new development is probably going to put a serious dent in the market for home-use lasers. We were never contacted back by company representatives over pricing of models in June, but Palomar’s $120+ million cash arsenal is probably going to be used up faster now on a standalone basis if it cannot secure a new partner. And J&J probably would not have dropped the deal if sales were tracking well.
The full description of the news is available at 24/7 Wall Street, but the damage is being done to the stock. Palomar shares are down some 15% at $12.90 on the news. and it is seeing exponential trading volume.
JON C. OGG
OCTOBER 16, 2009
Dendreon Merger Rumors Stay Alive (DNDN, SNY, AZN, RHHBY)
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
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